The double tax agreement between Cyprus and Lithuania, which was
signed in June 2013, is now in force and will take effect from 1
January 2015.
Under the agreement there is no withholding tax on dividends paid
by a company resident in Lithuania to a company (but not a
partnership) resident in Cyprus provided that the recipient is the
beneficial owner of at least 10 per cent of the shares in the
company paying the dividend. Otherwise the maximum rate of
withholding tax is 5 per cent. There are no withholding taxes in
Cyprus on dividends paid to non-residents. Interest paid by a
resident of one state to a resident of the other is taxable only in
the state of residence of the recipient. The maximum withholding
tax on royalties is limited to 5 per cent. Gains derived by a
resident of one contracting state from the alienation of immovable
property situated in the other contracting state, or from the
disposal of immovable or movable property associated with a
permanent establishment situated in the other contracting state,
may be taxed in the contracting state in which the immovable
property or the permanent establishment is situated. All other
gains, including gains on disposal of shares in
"property-rich" companies, are taxable only in the
country of residence of the disponor.
Lithuania's economy is one of the fastest-growing in the EU and the new agreement should further economic ties between Cyprus and Lithuania.
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.