Cyprus: New Double Tax Agreement Between Cyprus And Switzerland
Switzerland and Cyprus are among the the World’s leading financial centres, so the new double tax agreement (DTA), the first between the two countries, will be a valuable addition to Cyprus’s extensive treaty network and it is hoped that the remaining steps required to bring it into effect will be completed soon. The agreement relates to taxes on income and wealth. Income taxed at source and lottery winnings are excluded from the scope of the agreement.
- Income from immovable property: May be taxed in the contracting state where the property is situated
- Business profits: Taxable only in the contracting state in which the taxpayer is resident, unless it carries on business in the other contracting state through a permanent establishment there, in which case the profit derived from the permanent establishment will be taxed in the contracting state in which it is located
- International shipping and transport: Profits from the operation of ships or aircraft (including income from containers, trailers and related equipment) are taxable only in the contracting state in which the enterprise is resident
- Dividends: Cyprus has no withholding taxes on dividends paid to non-residents. Switzerland imposes a withholding tax at a rate of 35%. The DTA will exempt dividends paid by a company resident in one contracting state to a resident of the other from withholding taxes, as long as the beneficial owner of the dividend is a company (not a partnership).
- Interest and royalties: Taxable only in the country in which the recipient is resident, provided that the recipient is the beneficial owner
- Capital gains: Income from the sale of immovable property will be taxed in the state where the property is located. Income from the disposal of ships and aircraft used for international traffic are taxable only in the seller’s country of residence