• INTRODUCTION
• DOUBLE TAXATION AGREEMENT WITHHOLDING TAX RATES
• EXPLANATORY NOTES
• TAX SPARING CREDITS
• ANTI - AVOIDANCE PROVISIONS

EXPLANATORY NOTES

1. 10% if recipient is a company with at least 25% direct share interest; 15% in all other cases.
2. 10% if recipient is a company with at least 10% direct share interest; 15% in all other cases. If recipient is an offshore company domestic rate (now at 25%) applies.
3. 10% if recipient is a company with at least 25% direct share interest; 27% if recipient is a company with more than 25% direct or indirect share interest as long as the German corporate tax on distributed profits is lower than that on undistributed profits and the difference between the two rates is 15% or more;15% in all other cases.
4. 5% if recipient is a company with at least 25% direct share interest; 15% in all other cases.
5. Nil if received by a company which controls, directly or indirectly, not less than 50% of the voting power.
6. U.K. has an imputation system and so dividends are paid net of underlying income tax. A resident of Cyprus, other than a company which either alone or together with one or more associated companies controls directly or indirectly at least 10% of the voting power, is entitled to a tax credit in respect of the dividend. Where a resident of Cyprus is entitled to a tax credit, tax may also be charged on the aggregate of the cash dividend and the tax credit at a rate not exceeding 15%. In this case any excess tax credit is repayable. Where the recipient is not entitled to a tax credit, the cash dividend is exempt from any tax.
7. Subject to certain exemptions.
8. Nil of royalties are on literary, artistic or scientific work including cinematographic films and films or tapes for television or radio broadcasting.
9. 5% on cinematographic films not including television films.
10. 5% on cinematographic films including films and video tapes for television.
11. 5% on cinematographic films.
12. Nil if royalties are copyright and other literary. dramatic, musical or artistic work not including film or videotape royalties.
13. 5% if recipient is a company with at least 10% direct share interest for all the prior taxable year and for the current taxable year up to the date of payment and less than 25% of the income is from interest or dividend. If recipient is an offshore company domestic rate (now at 30%) applies; 15% in all other cases.
14. There is a withholding tax of 30% on dividends and 25% on interest. The liability to tax of recipients of dividends or interest is determined as follows:
    1. Companies: on application, full tax withheld is refunded.
    2. Individuals: on objection, in accordance with personal tax rates starting at nil for chargeable income up to C£2.000 and reaching 40% for income over C£8.000. Tax withheld is given as a credit, any excess tax withheld is being refunded.
       
       N.B. The agents of recipients of interest or dividends are liable for the payment of the due amount of tax on such income.
15. Nil if recipient is a company with at least 25% direct share interest.
16. 10% if royalties are on literary, artistic or scientific work including cinematographic films and films or tapes for television or radio broadcasting.
17. At the rate applicable in accordance with domestic law.
18. 10% if recipient is a company with at least 10% direct share interest; 15% in all other cases.
19. Malta has an imputation system and so dividends are paid net of underlying tax.
20. In the case of Canada, France, UK, and USA the withholding tax rates shown below do not apply if the recipient is a Cyprus resident offshore company. In such cases the domestic law of the source country applies.
21. The rates specified are those provided in the treaty. If however domestic law provides for lower rates or for complete exemption then treaty rates do not apply.
22. The rates specified are based on the respective treaties. The tax however is fully refundable under domestic law if the recipient is a company.
23. Payments made by Cyprus resident offshore companies are not subject to any withholding tax.
24. With the exemption of Khazakstan the rest of the members of the Commonwealth of Independent States (CIS) have recognised the double tax treaty between Cyprus and the Soviet Union as applicable between them and Cyprus.