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Cyprus-Belgium Double Tax Treaty

Cyprus-Belgium Double Tax Treaty

The scope of the Cyprus-Belgium double taxation agreement

The double taxation agreement between Cyprus and Belgium was signed in 1996 and was enforced gradually. The treaty was enforced in 1999 for all types of taxes, except for the provisions on the income tax. The income tax governed by the Cyprus-Belgium double taxation treaty was regulated starting with January 1st, 2000. The double taxation agreement also contains provisions about the prevention of tax evasion with respect to the income and the capital gains taxes. The Cyprus-Belgium double tax treaty applies to residents of both countries and encompasses the following taxes:

  • in the case of Belgium the income tax, the corporate tax, the income tax on legal entities, the income tax on non-residents, the special levy to the individual income tax and the supplementary crisis tax,
  • in the case of Cyprus the corporate tax, the income tax, the capital gains tax, the immovable property tax, the defense tax, the local taxes.

The convention applies on the total income or capital or on certain elements of income or capital in both countries.

Tax residency according to the double tax treaty between Cyprus and Belgium

According to the double taxation agreement Cyprus signed with Belgium, the resident of a contracting state is defined as any individual liable to pay taxes by reason of domicile, residence or place of management with respect to companies. If an individual has both Belgian and Cypriot residency, his or her taxes will be withheld in the country he or she has a permanent home into.  In the case of companies, the treaty applies to permanent establishments of Belgian companies in Cyprus and Cypriot companies in Belgium.

The elimination of double taxation according to the treaty between Cyprus and Belgium

The taxation of the income resulted from operations with immovable property of a Cypriot resident in Belgium may be taxed in Belgium. The same rules apply to Belgian citizens owning properties in Cyprus. With respect to business profits, the profits made by a company will be taxed in the country the income arises. Dividends will be taxed as it follows:

  • 10% under the participation exemption scheme, if the recipient holds at least 25% of the voting shares in the company paying the dividends,
  • 15% in all other cases.

For detailed information about the provisions of other tax treaties, please contact our lawyers in Cyprus.