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Cyprus. Double Tax Treaties with Iran and Luxembourg

Double Tax Treaties signed earlier with Iran and Luxembourg will come into force on 1 January 2018.

The Double Tax Treaty with Iran was signed by Cyprus on 4 August 2015 and like most Double Tax Treaties, the Treaty complies with the Organisation for Economic Co-operation and Development Model Tax Convention for the Avoidance of Double Taxation (the OECD Model Convention) and applies to taxes imposed on behalf of each Contracting State, regardless of the manner in which they are imposed.

Thus, the Treaty is expected to further promote the development of trade and economic relations between two States and to offer assurance and tax privileges for investors looking to invest into and out of Iran, via Cyprus.

The Treaty covers the follows specific taxes:

Iran: 

- Income tax

Cyprus:

- Income tax

- Corporate Income tax

- Special Contribution for Defence of the Republic tax (SDC) tax

- Capital gains tax

 

The Double Tax Treaty with Luxembourg finally was signed by Cyprus on 8 May 2017 after ten years of negotiations. It also complies with the OECD Model Convention, including two follows slight adjustments:

1.    1. A preamble, which clarifies that the Treaty is not designed to create possible opportunities for non-double-taxation, or any form of reduced taxation through evasion, or avoidance;

2.    2. A principal purpose test based anti-avoidance rule, in order to avoid “treaty abuse”, whereby one of the contracting states were to acquire benefits unjustifiably.

The Treaty do not indicate any condition for the assistance of charge of tax, since both states are members of the EU, thus being subject to EU Directive 2011/16/EU on administrative cooperation. Furthermore, the exchange of information between the two states complies with Article 26 of the OECD Model Convention verbatim.

The Treaty covers the follows specific taxes:

Luxembourg:

- Income tax

- Corporation tax

- Capital gains tax

- Communal trade tax

Cyprus:

- Income tax

- Corporation Income tax

- Capital gains tax

- Special Contribution for Defence of the Republic tax (SCD tax)

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