Tax Alert - new Double Tax Treaties with Luxembourg and Barbados
Cyprus has proceeded with the signing of two new Double Tax Treaties (DTT) with Luxembourg and Barbados, waiting for their ratification. The summary of the main provisions of these two new DTTs are illustrated below.
Luxembourg
The DTT with Luxembourg has been signed and assuming the ratification from both countries will be completed within 2017 then this new DTT will come into force as from 1 January 2018 onwards. The main provisions are as follows:
- It is based on the OECD Model Tax Convention Framework;
- Withholding tax on dividends is 0% in case where there is at least 10% participation and 5% in all other cases;
- No withholding tax on interest;
- No withholding on royalties if the recipient is considered as the beneficial owner of the income;
- Gains from the sale of shares are property rich companies are taxed where the immovable property is situated;
Barbados
The DTT with Barbados has been signed and assuming the ratification from both countries will be completed within 2017 then this new DTT will come into force as from 1 January 2018 onwards. The main provisions are as follows:
- It is based on the OECD Model Tax Convention Framework;
- No withholding tax on dividends;
- No withholding tax on interest;
- No withholding on royalties;
- Gains from the sale of shares are taxable only in the state where the seller is tax resident. There is no property rich clause in this DTT;
d.
07
Jun,17