Cyprus: Tax treaties with Iran, Jersey enter into force

Cyprus: Tax treaties with Iran, Jersey enter into force

Two new tax treaties—with Iran and Jersey—will enter into force on 1 January 2018. Each is expected to help strengthen the Cypriot income tax treaty network.

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Cyprus-Iran income tax treaty

  • Dividend payments will be subject to withholding tax at a rate of 10%, which may be reduced to 5% if the beneficial owner holds directly at least 25% of the capital of the dividend paying company.
  • Withholding tax on interest payments will not exceed the rate of 5%, provided that the recipient is the beneficial owner of such interest income.
  • Withholding tax on royalty payments will not exceed the rate of 6%, provided that the recipient is the beneficial owner of such royalty income.
  • Capital gains arising from the alienation of the shares of a company will be taxable only in the state of residency of the alienator, unless more than 50% of the value of such shares is derived directly from immovable property situated in the other state in which case taxation will be levied at the state where the immovable property is situated.

 

Read a March 2017 report prepared by the KPMG member firm in Cyprus

Cyprus-Jersey income tax treaty

  • There is no withholding tax on dividend, interest, and royalty payments.
  • Capital gains arising from the alienation of the shares of a company will be taxable only in the state where the alienator is a resident. This provision also covers the tax treatment of alienations relating to shares of property-rich companies.

 

Read a March 2017 report prepared by the KPMG member firm in Cyprus

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