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Corporate Services News

Cyprus signs Double Tax Treaty with Spain

28/02/2013


On Thursday the 14 of February 2013 at the residence of Spain’s Ambassador in Nicosia, Cyprus and Spain signed a new income tax treaty. This is expected to come in force on the 1st of January of the year following the ratification process by the governments of both countries.

The most important provisions of the treaty are;

Dividends
- 0% withholding tax applies if the beneficial owner is a company (other than a partnership) holding at least 10% of the capital of the company paying the dividend.
- 5% applies in all other cases

Interest
Interest payments will not be subject to any withholding tax;

Royalties
0 % withholding tax applies to income arising from Copyrights, artistic or scientific work including films, any patents and trademarks.

Capital gains
-Capital gains from the disposal of immovable property are taxed in the country where the immovable property is situated.
-Capital Gains from the direct sale of shares in property companies are taxed in the country where the immovable property is situated. 
-Capital gains from the disposal of any other type of shares are taxed in the country in which the seller is resident.

Cyprus has been on the Spanish ‘Black List’ since 1991 as an uncooperative jurisdiction. As the new treaty incorporates the latest version of the OECD Model convention for the exchange of information and so complies with tax and transparency standards it is expected that Cyprus will now be removed from this black list.

The signing of the treaty and the removal from the ‘Black List’ is expected to promote investment between the two countries.

For a full list of existing DDT’s with Cyprus please go to the following link for Cyprus companies informaiton.



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