Cyprus and Luxembourg sign first time double tax treaty
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Introduction
On the 8th of May 2017, Cyprus and Luxembourg entered into a Double Tax Treaty (DTT) that enables both countries to expand their DTT network and strengthen their mutual economic and commercial relations. According to an announcement made by the Cyprus Ministry of Finance, the DTT shall be effective as from the 1st of January 2019.
Provisions of the DTT
1. Interest and Royalties: A 0% (zero per cent) withholding tax rate will be applied.
2. Dividends: A 0% (zero per cent) withholding tax rate will be applied for corporate investors who directly hold at least the 10% of the paying company’s capital whereas a 5% (five per cent) withholding tax rate will be applied in all other cases of dividends.
3. Capital Gains: Cyprus shall be retaining the exclusive taxing rights on disposal of shares in Luxembourg companies. Cases in which more than 50% of the share value is derived directly from immovable property situated in Luxembourg shall be excluded.
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Disclaimer
The information set out in this publication provides general guidance and for information purposes only. It does not constitute or substitute professional advice. We shall not be responsible for any loss occasioned by acting or refraining from acting on the basis of this publication.
