Cyprus: Cyprus expands its treaty network with Lithuania and Guernsey

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Cyprus: Cyprus expands its treaty network with Lithuania and Guernsey

kokoni.jpg

Zoe Kokoni

Cyprus, which has been long-established as a solid economic and business centre worldwide, seeks to reinforce its title as a beneficial investment hub by expanding its double tax treaty network and creating stronger economic and trade relations with other contracting states.

Cyprus and Lithuania DTT

On June 21 2013, Cyprus and Lithuania signed their first double tax treaty (DTT). Since then, the countries have ratified the agreement, which will enter into force on January 1 2015.

In summary, the new provisions of the ratified agreement cover:

  • Dividends: No withholding tax (0%) where the recipient is a company and

    • is the beneficial owner of the dividends; and

    • owns at least (minimum) 10 % capital of the company.

    • In all other cases a 5% withholding tax shall be applicable.

    • Interest: No withholding tax (0%).

  • Royalties: 5% withholding tax provided that the recipient is the beneficial owner.

  • Capital gains: gains, resulting from the disposal of shares, are taxable in the country in which the alienator of the shares is tax resident.

Cyprus and Guernsey DTT

On July 15 2014 Cyprus and Guernsey signed a double taxation avoidance agreement, which will enter into force upon the ratification of the agreement by the two contracting states. The agreement is based on the OECD Model Convention for the Avoidance of Double Taxation on Income and on Capital.

Briefly, the main provisions of the agreement between the two contracting states provide a 0% withholding tax rate for dividends, interest and royalty payments. For capital gains, gains for a resident of one of the two countries (ex. A), resulting from the disposal of immovable property in the other country (ex. B), will be taxed in the country where the immovable property is situated (ex. B). Gains resulting from the disposal of shares are taxable in the country in which the alienator of the shares is tax resident.

Zoe Kokoni (zoe.kokoni@eurofast.eu)
Eurofast, Cyprus office

Tel: +357 22 699 222

Website: www.eurofast.eu

more across site & shared bottom lb ros

More from across our site

Canadian Prime Minister Mark Carney and US President Donald Trump have agreed that the countries will look to conclude a deal by July 21, 2025
The firm’s lack of transparency regarding its tax leaks scandal should see the ban extended beyond June 30, senators Deborah O’Neill and Barbara Pocock tell ITR
Despite posing significant administrative hurdles, digital services taxes remain ‘the best way forward’ for emerging economies, says Neil Kelley, COO of Ascoria
A ‘joint understanding’ among G7 countries that ‘defends American interests’ is set to be announced, Scott Bessent claimed
The ‘big four’ firm’s inaugural annual report unveiled a sharp drop in profits for 2024; in other news, Baker McKenzie and Perkins Coie expanded their US tax benches
Representatives from the two countries focused on TP as they met this week to evaluate progress under a previously signed agreement – it is understood
The UK accountancy firm’s transfer pricing lead tells ITR about his expat lifestyle, taking risks, and what makes tax cool
Dolphin Drilling intends to discuss the final liability amount and manner of settlement with HM Revenue and Customs
Winning the case against the 20% VAT imposition was always going to be an uphill challenge for the claimants, UK tax advisers argue
A ‘paradigm shift’ in Chile’s tax enforcement requires compliance architecture built on proactive governance, strategic documentation and active monitoring of judicial developments
Gift this article