One of the main reasons why Cyprus has become a very popular jurisdiction for establishing a base for international business is the availability of a large number of double tax treaties. Many of the well-known offshore tax jurisdictions impose low or nil income tax on the company profits; however, the problem with those jurisdictions is that they do not have double tax treaties. Cyprus offers a basket of incentives including the low tax on the net profits and the double tax treaties.
The following tables show the rates of withholding tax deducted from income, with countries that have signed a double taxation treaty with Cyprus:
* 10% in the case of royalties granted for use within the Republic.
5% on film and TV rights.
(1) 15% if received by a company controlling less than 25% of the voting power.
(2) 5% if received by a company controlling more than or equal to 10% of the capital. 15% in all other cases.
(3) Nil if the beneficial owner is a company (other than a partnership) which holds direct at least 10% of the capital of the company paying the dividend. 15% in all other cases.
(4) 5% if the amount invested by the beneficial owner is over €200.000 irrespective of the % of voting power acquired. 10% is imposed if received by a holder of at least 25% of the share capital of the paying company. Otherwise the rate is 15%.
(5) 5% if received by a company controlling at least 10% of the voting power. 15% in all other cases.
(6) 10% if received by a company, which has invested less than €100.000.
(7) 10% if received by a company controlling more than or equal to 10% of the capital. 15% in all other cases.
(8) Nil if paid to the Government of the other State.
(9) Nil if paid to the Government of the other State or in connection with the sale on credit of any industrial, commercial or scientific equipment or any merchandise by one enterprise to another or in relation to any form of loan granted by a bank or is guaranteed from government or other governmental organization.
(10) Nil if paid to the Government of the other State, to a bank or a financial institution or in respect to debt
obligations arising in connection with sale of property or the provision of services.
(11) Nil on literary, dramatic, musical or artistic work with the exception of films used for television programs.
(12) 5% on film royalties (except films shown on TV).
(13) 10% on literary, musical, artistic work, films and TV royalties.
(14) Nil on literary, artistic or scientific work including films.
(15) 5% on royalty payments in respect of any copyright of scientific work any patent, trade mark, secret formula, process or information concerning industrial, commercial or scientific experience. 10% in all other cases.
(16) Nil if paid to the Government of the other State, a political subdivision or a local authority, the National Bank or any institution the capital of which is wholly owned by the State or a political subdivision or a local authority or in the form of interest income from bank deposits.
(17) 10% on interest received by financial institutions, on interest paid in connection with industrial, commercial, scientific equipment or the sale or merchandise between two companies.
(18) 10% on right to use industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience and 15% for patents, trademarks, designs, models, plans, secret formulas or processes.
(19) 5% if the dividend is received by a company owning directly at least 25% of the capital of the company paying divided. 10% in all other cases.
(20) This rate does not apply, where 25% or more of the capital of the Cypriot resident is owned directly or indirectly by the Bulgarian resident paying the royalties and the Cyprus company pays less than the normal rate of tax.
(21) 5% is applicable if the dividend is received by a company owing at least 20% of the capital of the dividend paying company or has invested in the acquisition of shares or other rights of the dividend paying company of at least €100.000. 15% in all other cases.
(22) The treaty provides that the tax on the gross amount of the dividends shall not exceed that chargeable on the profits out of which the dividends are paid.
(23) 7% if paid to a bank or similar financial institution. Nil if paid to the government.
(24) The treaty provides for 15% withholding tax but the local taxation provides for 0% withholding tax.
(25) Nil if paid to or is guaranteed by the Government, statutory body the Central Bank.
(26) 5% on film royalties, including films used for television programs.
(27) The treaty between the Republic of Cyprus and the United Soviet Socialist Republic still applies.
(28) The treaty between the Republic of Cyprus and the Socialist Federal Republic of Yugoslavia still applies.
(29) The treaty between the Republic of Cyprus and the Czechoslovak Socialist Republic still applies.
(30) Nil if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends where such holding is being possessed for an uninterrupted period of not less than a year. 5% in all other cases.
(31) The treaty has been signed but has not come into effect until the time of publication of this fact sheet.
(32) 5% if the beneficial owner has invested in the capital of the company less than the equivalent of €150.000 at the time of the investment.
(33) NIL if paid to the Government or to a local authority, or to the Central Bank.
(34) NIL if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends, where such holding is being possessed for an uninterrupted period of no less than 12 months NIL if the beneficial owner is the other Contracting State or the Central Bank of that other State, or any national agency or any other agency (including a financial institution) owned or controlled by the Government of that other State.
NIL if the beneficial owner is a pension fund or other similar institution providing pension schemes in which individuals may participate in order to secure retirement benefits, where such pension fund or other similar institution is established, recognized for tax purposes and controlled in accordance with the laws of that other State. 15% in all other cases.
(35) NIL if the dividend is received by a company (other than a partnership) holding at least 10% of the capital of the dividend paying company. 5% in all other cases.
(36) NIL if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends, where such holding is being possessed for an uninterrupted period of no less than 24 months. 5% in all other cases.
(37) 5% if the dividend is received by a company (other than a partnership) which controls directly at least 10% of the voting power in the company paying the dividends. 15% in all other cases.
(38) NIL if the beneficial owner is:
(i) a company (other than a partnership) the capital of which is wholly or partly divided into shares and which holds directly at least 10% of the capital of the company paying the dividend for an uninterrupted period of at least one year.
(ii) a pension fund or other similar institution recognised as such for tax purposes, or
(iii) the Government, a political subdivision, local authority or Central Bank of one of the two contracting states. 15% in all other cases.
(39) 5% if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends. 10% in all other cases.
(40) NIL if the beneficial owner is a company (other than a partnership) which holds directly at least 10% on the capital of the company paying the dividends. 5% in all other cases.
(41) 5% if the dividends is received by a company which holds at least 10% of the capital of the company paying the dividend. 10% in all other cases.
(42) NIL if the beneficial owner is a company (other than a partnership). 10% in all other cases.
(43) NIL if the beneficial owner is a company (other than a partnership). 5% in all other cases.
(44) NIL if the beneficial owner is a company which holds directly or indirectly at least 25% of the capital of the company paying the dividends. 5% in all other cases.
(45) 5% on royalty payments in respect of any copyright of scientific work any patent, trade mark, secret formula, process or information concerning industrial, commercial or scientific experience. 8% in all other cases.
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