The most important change to the agreement concerns the withholding tax of state tax on capital gains in companies that primarily hold real estate as their main activity. If more than half of the company`s assets consist of Russian real estate, Russia can apply its national capital gains tax. This corresponds to the articles of the OECD Model Convention. Prior to this amendment, capital gains tax was applied in the country of residence of the selling company. In addition, dividends from mutual funds and real estate funds are treated as income from real estate for the purposes of the contract. The aim of the Treaty between Cyprus and the Netherlands is to further strengthen cross-border cooperation and promote cross-border investment. The text of the agreement generally follows the Organisation for Economic Co-operation and Development (OECD) standard contract and contains standard provisions to avoid double taxation of income and capital. On 18 February 2011, Cyprus signed a revised double taxation agreement with Germany. This allows for the exchange of information in tax matters between the tax authorities of the two countries in accordance with Article 26 of the OECD Model Convention. The agreement is in line with the 20003 OECD model and allows the tax authorities of the respective countries to request information on tax offences and civil tax matters. The Ministry`s statement acknowledges Cyprus` commitment to implement the internationally agreed standard. On 11 July 2016, the Bailiwick of Jersey signed a double taxation agreement with Cyprus. Jersey`s Minister for External Relations, Philip Bailhache, said at the time: «The signing of the DTA with Cyprus continues Jersey`s firm and long-standing commitment to international standards of transparency and exchange of information.» Regarding Cyprus and the financial importance of Jersey, he added: «The signing of a DTA with Cyprus is particularly welcome as we have a lot in common as international financial centres.» In October 2010, Russia and Cyprus signed a protocol to their double taxation treaty, which allows for a full exchange of tax information and removes Cyprus from Russia`s infamous «blacklist» of jurisdictions that have not shown sufficient cooperation with the Russian tax authorities.
Cyprus has concluded almost 50 double taxation treaties (which is unusual for a low-tax jurisdiction). The general effect of these agreements is that offshore companies registered in Cyprus that benefit from tax exemptions in Cyprus benefit from the same exemptions in the contracting countries (see tax savings provisions below). The contract also contains an article «Limitation of services». The Treaty aims to prevent potential obstacles (double taxation) that could otherwise hinder the Netherlands` economic activities in Cyprus and vice versa. The Treaty also aims to ensure legal certainty for taxpayers in both contracting countries. In September 2010, Panamanian President Ricardo Martinelli met with his Cypriot counterpart Demetris Christofias to discuss improving economic cooperation, including the signing of an agreement to avoid double taxation and tax evasion. The Netherlands is known for its extensive network of tax treaties around the world. However, a tax treaty with Cyprus was never concluded. On 1 June 2021, it was officially announced that the Netherlands and Cyprus have concluded an agreement on the elimination of double taxation in the field of taxes on income and on capital and on the prevention of tax evasion and avoidance (Treaty). The contract contains clauses to prevent double taxation and clauses to prevent tax evasion.
The Netherlands now has tax treaties with all countries in the European Economic Area (EEA). In January 2017, a double taxation agreement between Cyprus and Iran was ratified. This Agreement shall enter into force on 1 January 2018. The agreement is based on the OECD Model Convention for the Avoidance of Double Taxation on Income and on Capital. The main impact of the treaty is likely to be on real estate and maritime transport. It will also allow Iranian businessmen to access the EU market. * The treaty between Cyprus and the Socialist Federal Republic of Yugoslavia is in London, Cyprus and Barbados signed a double taxation avoidance agreement for the first time on 3 May 2017. The full title was «Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income between the Republic of Cyprus and Barbados». The agreement is based on the OECD Model Convention for the Avoidance of Double Taxation. The treaty was ratified by Cyprus on 12 May and is expected to enter into force on 1 January 2018.
The 1. In June 2021, the Kingdom of the Netherlands and the Republic of Cyprus signed in Nicosia the Convention on the Elimination of Double Taxation in the Field of Taxes on Income and on the Prevention of Fiscal Evasion and Avoidance (Agreement). Cyprus was the last member of the European Economic Area with which the Netherlands has not yet concluded a double taxation agreement. On 8 May 2017, an «Income and Capital Tax Agreement» was signed between Cyprus and Luxembourg. Cyprus has now signed double taxation agreements with all 28 EU Member States. The contract complies with the latest international standards for information exchange and is fully in line with the OECD Recommendations on Base Erosion and Profit Shifting (BEPS). It confirms the definition of «permanent establishment» and defines what is meant by residence. The 1. In April 2017, a revision of the double taxation agreement between Cyprus and India entered into force. The revised text, signed on November 18, 2016, allows the taxation of capital gains from the sale or other disposal of shares at source.
Investments made before the entry into force of the revision are not subject to its principles. Most Cyprus treaties follow the OECD Model Convention, although the United States Treaty follows the most recent model of the United States agreements. Normally, therefore, the country of residence will grant a credit for taxes paid in the other contracting country. The Cypriot offshore entity is entitled to contractual protection under all existing contracts except those with Canada, France, the United Kingdom and the United States, and even in these cases, the restrictions only apply to income flows to Cyprus and not to income flows from Cyprus to the countries concerned. The contract provides for a withholding tax rate of 0% on dividends, interest and royalties. With regard to the capital gains tax of Cypriot residents who sell shares in Barbadian companies, Cyprus generally retains the right to levy taxes. In April 2016, Ukraine and Cyprus announced the two countries` amendments to their existing double taxation agreements. The amendment closes a gap whereby real estate income in Ukraine was not taxed in Ukraine. From now on, income received by Cypriot residents from the sale of shares or other business rights will be subject to tax in Ukraine if more than 50% of the value is related to real estate in Ukraine. It should be noted that the recently signed tax treaty provides for a complete relief from withholding taxes on dividend payments to corporate investors, provided that they directly hold at least 5% of the capital of the company paying the dividends over a period of 365 days.
This exemption also applies to certain recognised pension funds, which are in principle exempt under the corporate tax legislation of the contracting jurisdictions. Combined with the withholding tax rate of 0% for interest and royalties, the Cyprus-Netherlands tax treaty provides an advantageous legal framework for cross-border investments. In order to implement Base Erosion and Profit Shifting (BEPS) measures to resolve disputes and combat tax evasion, the agreement includes a Mutual Understanding Procedure (MAP) for the resolution of disputes (including dual tax residency of companies) and introduces a Main Purpose Test (TPP) that allows tax authorities to prohibit the application of contractual benefits if the application of those benefits is one of the The main objectives of a settlement or transaction was. The following countries are among those that have double taxation agreements with Cyprus, although not all of them are in force at the time of writing: dividends paid by a company resident in Cyprus or Luxembourg are generally subject to a withholding tax of 5%. However, if the beneficial owner is a company (and not a partnership) that directly holds at least 10% of the capital of the dividend holding company, no withholding tax is levied. The contract also stipulates that no withholding tax is due on interest or royalties. .