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Cyprus-USA Double Taxation Treaty

Cyprus-USA Double Taxation Treaty

The tax convention between Cyprus and the United States

Cyprus and the United States of America signed an agreement for the avoidance of double taxation in 1984. The agreement was ratified at the beginning of 1985 and enforced at the end of the same year. The provisions of the Cyprus-US double taxation treaty cover the following types of taxes for the United States:

  • the income tax ,
  • the taxes applied on insurance premiums paid to foreign companies.

With respect to the taxes applied in Cyprus, the tax treaty covers the following taxes:

  • the income tax,
  • the capital gains tax,
  • the special contribution tax.

The treaty also contains a Non-Discrimination Clause through which the treaty applies to all taxes levied at national, state or local level. Additionally, the convention contains provisions for the exchange of tax information with the purpose of avoiding tax evasion.

Who does the Cyprus-US tax treaty apply to?

The double tax treaty between Cyprus and the United States applies to both individuals and companies. The provisions of the agreement cover both persons in Cyprus and the United States and refer to individuals, corporations, trusts and estates. The agreement also refers to corporations registered in Cyprus and in the United States. Cypriot corporations are considered any legal entities registered for taxation purposes in Cyprus. The double taxation treaty provisions that the competent authorities authorized to exchange tax information are the US Secretary of the Treasury and the Cypriot Minister of Finance.

The sources of income covered by the Cyprus-US taxation agreement

Article 6 in the double taxation agreement concluded by Cyprus and the United States refers to the following sources of income:

  • dividends, only if they are paid by a corporation in one of the two countries,
  • interests,
  • royalties derived from intellectual property rights registered in Cyprus or the United States,
  • incomes from real estate property,
  • incomes from rental of movable property,
  • incomes from selling real estate property,
  • other remunerations.

Under the local legislation, Cyprus does not levy any taxes on dividends and interests, which is what makes the country very attractive for foreign investors. For information about other double tax treaties, you may contact our lawyers in Cyprus.