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Cyprus Tax Treaty Update (April 2017)

Cyprus-India: The new treaty replacing the 1994 treaty entered into force on 14th December 2016 and applies as from 1 January 2017 for Cyprus and as from 1 April 2017 for India. It provides for a 10% withholding tax rate on dividends, interest and royalties. The 10% rate also applies to technical service fees.

Cyprus-Iran: The treaty entered into force on 5th March 2017 and will apply as from 1st January 2018. It provides for a 5% withholding tax rate on dividends paid to a company that holds directly at least 25% of the capital of the paying company, otherwise, the rate will be 10%. It also provides for a 5% withholding tax rate on interest and 6% on royalties.

Cyprus-Jersey: The treaty entered into force on 17th February 2017 and will apply as from 1 January 2018. The treaty provides that dividends, interest and royalties will be taxable only in the state of residence of the recipient.

Please note that despite the above treaties, Cyprus does not withhold any taxes on dividends, interest and royalties paid to non-residents of Cyprus except in the case of royalties earned on rights used within Cyprus.

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