2018 an Important Year for Cyprus in the Realm of Tax

Numerous important developments took place during 2017 and the first quarter of 2018 with regards to Cyprus signing new DTAs, Amending Protocols and other Protocols coming into force.

Cyprus currently maintains Double Tax Agreements with 63 countries, which is considered among the strongest DTA networks in the world.

The most recent DTAs signed with Cyprus and other nations were: 

  • The DTA with Saudi Arabia on January 3, 2018
  • The DTA with the UK on March 22, 2018
  • Both of these treaties are expected to come into force in 2019
  • Moreover, treaties that had been previously signed with Barbados, Iran and Jersey came into force at the beginning of 2018

Double Tax Treaty with Saudi Arabia:

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This new treaty signed with the Kingdom of Saudi Arabia, entails all of the following important provisions:

  • No withholding tax on dividends, provided that a minimum 25% participation exists. In all other cases, a 5% withholding tax will be applied.
  • No withholding tax on interest;
  • Withholding tax ranging between 5% and 8% on royalties; and
  • Capital gains tax arising on the alienation of shares is paid in the state where the seller is resident, provided that the minimum 25% participation test is met at any time within the 12-month period leading up to the disposal of shares.

Double Tax Treaty with Barbados:

The DTA between Cyprus and Barbados came into effect on January 1st 2018 and it provides for no withholding tax on dividends, interest and royalties.

San Marino new protocol:

Regarding the new protocol that was signed between Cyprus and San Marino, the main changes that were introduced related to the exchange of information procedures between the 2 countries.

Overall, the new and revised DTAs concluded by Cyprus enhance the pathway for investment into the countries concerned and further secure Cyprus as a world class business centre. It is important to note that new double tax agreements and changes to existing DTAs can have a substantial impact on existing Cyprus and foreign structures.  Professional advice should be sought if doing business in any of these countries via a Cyprus corporate structure.

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