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New Laws voted by the Cyprus Parliament
New Law was enacted governing the provision of fiduciary and corporate services
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Amendments to the Assessment and Collection of Taxes Law
Sunday, March 10, 2013
 

On 19 November 2012 the representatives of the Cyprus and Portugal signed the double tax treaty and protocol which, together with the removal of Cyprus from the so called Portuguese “black list” should encourage investments between the two countries and will effectively reduce Portuguese withholding taxes.

 

The treaty is based on the OECD Model Convention on Income and Capital. The treaty will enter into force thirty days after the completion of the procedure through which the parties exchange notification of ratification and shall take effect on the 1st January following such date. The signature of the treaty follows the removal of Cyprus, in November 2011, from the so called Portuguese “black list” of jurisdictions with privileged tax regimes.

 

The most significant provisions of the treaty are as follows:

 

·         The treaty applies to personal income tax as well as corporate income tax for both States. In the case of Portugal, the treaty applies to surtaxes on corporate income, whilst in the case of Cyprus the treaty applies to Special Defence Contribution and Capital Gains Tax.

·         The withholding tax rate on dividends, interest and royalties provided for by the treaty is 10%.

·         The sale of shares in property rich companies may be taxed in the State in which the property is located.

·         Notwithstanding the above, it should be noted that withholding tax rates can be reduced to 0% under the provisions of domestic Portuguese tax legislation interposed as a result of the relevant EU directives. Under Cypriot domestic legislation there is no withholding tax on dividends and interest paid to non-residents and where withholding tax on royalties applies, if rights are used in Cyprus, such withholding tax can be reduced to 0% under the EU Interest and Royalties Directive.

 

Should you require more information regarding Cyprus Tax please to do not hesitate to contact us at: info@istosglobal.comor +357 22 256324.


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