Cyprus International Tax Treaty News

Tax treaty with Ukraine: -A new double tax treaty has been signed with Ukraine and the treaty shall be effective on January of the year in which the parties exchange notices of ratification.

Although the new treaty is significantly different than the one currently used (the old USSR treaty) it still maintains Cyprus attractiveness to channel inbound investment into Ukraine. The new treaty establishes a 5% withholding tax rate on dividends when the capital of the dividend paying company is at least 100.000 Euros and 15% in other rates. The basic withholding rate on interest payment has been set to a very low 2%, for royalties 5% or 10% depending on the type of IP. More importantly jurisdiction for taxing capital gains from the disposal of shares is allocated to the country where the alienator is resident irrespective of the underlying asset.