On August 2015, during the visit of the Iranian delegation to
Cyprus; a double tax treaty agreement was signed between the two
The tax treaty agreement is based on the OECD Model Convention
for the Avoidance of Double Taxation on Income and on Capital. The
main provisions of the agreement are as follows:
Permanent Establishment: The permanent
establishment describes a building site, a construction, assembly
or installation project or supervisory activities in connection
therewith, and is considered as a 'permanent establishment'
only if it lasts more than 12 months.
Dividends: The withholding tax may
5% of the gross amount of the dividends; if the beneficial
owner is a company (other than a partnership), which holds at least
25% of the capital of the company paying the dividends;
10% of the gross amount of the dividends in all other
Payments of interest from Iranian to Cypriot Beneficial Owner
will be subject to 5% withholding tax;
Interest payments resulting from Iranian or Cypriot government,
governmental authority, central bank or other state-owned banking
would be exempt from any withholding tax;
However under Iranian law, interest payments to non-Iranian tax
residents are subject to a withholding tax of 3% and therefore, the
lower rate of 3% is expected to apply to interest payments from
Iran to Cyprus.
Royalties: If the
recipient of the royalties is the Beneficial Owner then the
withholding tax shall not exceed 6% of the gross amount of
Capital gains: Capital gains derived by
the disposal of immovable property are taxed in the country that
the disposal took place.
The tax treaty will enter into force upon the completion of the
ratification process in both countries. These ratifications
are expected to be finalised in the following few months.
The double tax treaty will enhance the commercial cooperation of
the two countries and looks to boost their investment and trade
Our tax experts can provide you detailed information and tax
advice, regarding the above tax treaty, as well as the extensive
network of double tax treaty agreements that have been signed by
the Cyprus government. For further information please contact email@example.com.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Common Reporting Standard (CRS) has been initiated by the Organization for Economic Cooperation and Development (OECD) aiming at improving international tax compliance and preventing tax evasion, through the automatic exchange of information between the countries that implement CRS.
The DITC has stated that it will issue updated CRS Guidance Notes in the first quarter of 2017 to cover the Regulations.
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