Cyprus: Tax Treaties

Cyprus has fundamentally changed how it taxes outbound dividends, interest, and royalties paid to associated companies. Depending on where the receiving shareholder is located, the same payment can now attract 0%, 5%, or 17% withholding tax—or trigger a complete denial of the deduction. Most international groups have not yet reviewed their ownership structures against these new rules, which took effect on 1 January 2026 and apply automatically based on the recipient's jurisdiction.

A question we hear constantly from international clients is whether a Cyprus company managed from abroad actually saves tax when the owner lives and works outside Cyprus.

To determine which Double Taxation Treaty (DTT) applies to a specific transaction in Cyprus, a structured approach is followed that considers the nature of the transaction, the parties involved, and relevant treaty...