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Cyprus: Cyprus expands its treaty network with Lithuania and Guernsey


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 (
Eurofast, Cyprus office

Tel: +357 22 699 222


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