Double taxation treaties
The development of international trade has increased the issue of double taxation and many countries have entered into agreements with other countries in order to limit taxation. A double taxation treaty enables the offsetting of tax paid in one country against the tax payable in another thus preventing double taxation although the rates and exemptions vary from one country to another. As of January 2010 Cyprus had entered into 45 double taxation agreements, these are listed in the table below. Although Cyprus has fewer DTT’s than some competing EU jurisdictions they are, in many cases, more beneficial such as those with Russia, Eastern Europe and the Middle East.
A significant number of double tax treaties concluded by Cyprus lowers and in some cases eliminates, foreign withholding taxes on dividends, interest, royalties or capital gains. Tax sparing credits (see below) are also prevalent in some jurisdictions.
A list of Double Taxation Agreements which have been concluded and their respective date of enforcement can be found below.
|Jurisdiction||Entry into force date|
* The treaty between Cyprus and the Socialist Federal Republic of Yugoslavia is still in force.
** The treaty between Cyprus and the Czechoslovak Socialist Republic is still in force. The treaty has ceased to apply between Cyprus and Czech Republic as from 01/01/2010 (date of application for the provision of the new agreement).
*** The treaty between Cyprus and the Union of Soviet Socialist Republics is still in force.
Tax Sparing Credits:
Tax sparing is a tax treaty provision whereby the contracting state agrees to grant relief from from resident taxation with respect to source taxes that have not actually been paid (taxes that have been ‘spared’). Tax sparing provisions can provide significant scope for international tax planning.
Tax sparing credit provisions can be found in the treaties concluded with the following countries;
Canada, China, Czech Republic, Slovakia, Denmark, Egypt, Germany, Greece, India, Ireland, Italy, Malta, Mauritius, Poland, Romania, Russia, Syria, Thailand, UK, Yugoslavia.
The taxes that are all or partly spared are as follows:
- Tax on interest paid on loans for economic development in Cyprus (Canada, Denmark, Germany, France, UK).
- Tax relieved because of deductions in respect of investment in Cyprus (Canada, UK).
- Tax on interest or profits which is unpaid because of tax incentives, reliefs or exemptions in Cyprus (Czech Republic, Greece, Ireland, Romania, Slovakia, Yugoslavia).
- Tax not withheld on dividends (15%) if the exemption is given for the purpose of economic development in Cyprus (Denmark, Germany, France).
If you require a copy of the double taxation agreements between Cyprus and any of the above countries please contact us.
Cryptocurrency & ICOs as securities & virtual commodities as per Hong Kong law
The Hong Kong Securities and Futures Commission has remarked upon the growth and popularity of Initial Coin Offerings (ICOs) for raising money not only in Hong Kong but other Asian countries. This article confirms and explains how digital tokens that are offered or sold may be defined as "securities" and as such are therefore governed by the relevant securities legislation of Hong Kong.
New licensing regulations for Trusts & Service Providers in Hong Kong
As per new regulations, all Hong Kong businesses providing Trustee Services, including Corporate Service Providers will not be able to operate without a valid trading license after March the 1st 2018. The new scheme is designed to better regulate individuals carrying out services within the financial sphere in Hong Kong and will be overseen and administered by the Hong Kong Companies Registry.
The terms of Hong Kong's new register of significant controllers and what it means for companies
As per new legislation, from March 1st 2018, every company incorporated in Hong Kong will be required to keep and maintain a register of all persons who have significant control of the company. The record must be updated as required and kept at the registered company address, even if there are no persons of significant control.
The pros & cons of European Passport-by-Investment schemes
In a bid to rebuild the dwindling economy in Cyprus shortly after the financial crisis four years ago, the government launched a passport-by-investment program to temp wealthy foreigners with citizenship in exchange for an investment of no less than €2 million into the Cyprus economy.
Using the Cyprus Non-Dom scheme for beneficial tax planning
In an attempt to improve and simplify the Cyprus tax system as well as to remain a highly compliant and attractive jurisdiction, the introduction of the non-domicile (shortened to Non-Dom) scheme aims to give Cyprus a competitive edge over other jurisdictions.
How are Cyprus banks handling the island's high rate of NPLs? Can more be done to combat them?
It is no secret that the Cyprus banking sector is struggling with the overwhelming level of Non-Performing Loans (NPLs), no matter the efforts exerted by the main banks in Cyprus by following conventional banking models to balance their profit/loss reports, NPLs remain to be the proverbial hole in the bucket.
Income tax exemptions for expats living in Cyprus: what are your options?
Situated in the Eastern Mediterranean, the Republic of Cyprus boasts a strategic geographical location at the hub of three continents; Europe, Asia and Africa and a pleasant sunny climate year round.
The UK Persons of Significant Control Register & its impact on companies
The requirement to maintain a register of people with significant influence or control, more commonly known as the PSC register was introduced to mandate all unlisted companies in the UK, including LLPs and dormant companies to maintain a register identifying those with significant control over a company.