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Cyprus offshore entities offer unique opportunities for international tax planning since they can avail themselves of the benefits or the numerous double tax treaties to which Cyprus is a signatory. Avoidance of double taxation The primary purpose of these treaties is the avoidance of double taxation of income earned in any of the treaty countries. This is usually achieved either through the allowance of a credit against the tax levied by the country in which the taxpayer resides for taxes levied in the other treaty country or through tax exemption in one treaty country on the income taxed in the other treaty country. The effect of these arrangements is normally that the taxpayer pays no more than the higher of the two rates Treaty countries The treaties currently in force are those with Austria, Bulgaria, Canada, China, the Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Norway. Poland, Romania, Russia, Slovakia, Sweden, Syria, the United Kingdom, the United States, and the former Yugoslavia. Treaties with Eastern Europe The recent political and economic changes in Central and eastern European countries have placed Cyprus in a unique position. As a result, Cyprus has been increasingly used by foreign companies for their investments in these countries. Withholding tax The following table gives a summary of the withholding taxes provided by the double tax treaties entered into by Cyprus with other countries. |
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