Overview of Cyprus-Norway Tax Treaty
On 20th of June, the double tax treaty (DTT) between Cyprus and Norway was published in the official Government Gazette.
Background and Previous Agreements
Double taxation avoidance between the two countries is regulated by the 1951 DTT in place between Norway and the UK extended in 1955 to include several British colonies, including Cyprus.
Effective Date and Implementation
The provisions of the new DTT will come into effect on the first day of January 2015. The DTT shall enter into force once the two countries exchange notifications that all necessary procedures have been completed.
Key Features of the New Treaty
The new DTT is based on the OECD Model Convention and provides for the exchange of information, the assistance in the collection of taxes and specific guidance for the avoidance of double taxation with regards to offshore activities.
Withholding Taxes on Dividends and Royalties
The main provisions of the new DTT and the applicable withholding tax rates with respect to dividends, interest and royalties are as follows:
- Permanent Establishment: Any building site or construction or installation project or any supervisory activities in connection with such site or project constitutes a permanent establishment only if it lasts more than twelve months.
- Dividends: 0% withholding tax if the beneficial owner is a company (other than a partnership) holding at least 10% of the voting power of the capital of the company paying the dividend or 15% in all other cases.
- Interest: Nil withholding tax.
- Royalties: Nil withholding tax.
- Capital Gains: Gains derived by a resident of a Contracting State from the disposal of immovable property situated in the other Contracting State may be taxed in that other State.
