The wide network of agreements to avoid double taxation is one of the advantages of Cyprus. At present, Cyprus applies 38 agreements covering more than 40 countries.
Negotiations with EU Member States
Cyprus is an EU Member State since 2004, but still has not signed contracts with all Member States. Negotiations with Spain, Latvia, Lithuania, Luxembourg, Netherlands and Portugal are being held, while an agreement was reached (but the signing of the agreement is pending) with Estonia, Finland, Portugal and Slovenia. New agreements with Denmark and Germany have been signed to replace the existing contracts. The new agreements will take effect when ratified by the competent authorities of those countries. In addition, a new protocol was added to the agreement between Cyprus and Italy in terms of sharing information. They have also begun negotiations with France to sign a new contract with Poland for amending existing legislation.
Negotiations with Non-EU Member States
With regard to countries outside the EU, Cyprus is currently negotiating double taxation agreements with several countries. An agreement was reached with some countries for which is pending either the entry into force (Armenia, United Arab Emirates and Kuwait) or the signing of the contract (Georgia, Iran, Monaco, and Bahrain). Ratification of the Protocol with South Africa for adoption of the Article 26 regarding exchange of information is also expected. Additionally, Cyprus is negotiating new agreements with Indonesia, Israel, Libya, Malaysia, Morocco, Norway (replacing the previous contract), Serbia, Sri Lanka and other countries.
Agreement between Cyprus and India
The negotiations between Cyprus and India remains stagnant for a new contract.
Agreement between Cyprus and Russia
The new Protocol on the Convention of double taxation between Cyprus and Russia was mutually agreed by governments in October 2010 and is expected to be applied from January 1st of the year following the year in which the Protocol will be ratified by the authorities of both countries. The Russian Duma has not yet ratified the Protocol. Once the Protocol is ratified (which should be done before the end of June), Cyprus will be removed from Russian black list, allowing the repatriation of profits from subsidiary company to its’ Cypriot parent one, without Russian taxation in Russia. The Protocol does not alter the rates of withholding tax on dividends, interest and rights, but extends the scope of information exchange in tax matters and assistance in tax collection. It also provides the taxation of profits from the sale of shares in companies that own real property provision to be implemented four years after entry into force of the Protocol.
Agreement between Cyprus and Ukrane
Negotiations have been resumed with the Ukrainian government for a new agreement between the two countries. There is the belief that any new agreement should be done on the same basis as the agreement with Russia. Until the reach of a new agreement, the provisions of the Agreement between Cyprus and the Soviet Union remain in effect, which contains very attractive conditions for investment in Cyprus. It is worth noting that on February 23rd, 2011 Ukraine issued a revised “black list” that does not include Cyprus.
To expand the network of government procurements
It has been said several times lately, that Cyprus needs to expand the network of peocurements to avoid double taxation as our competitors have more extensive network of agreements. It would be desirable if Cyprus acquired contracts with the so-called emerging second generation economies such as Brazil, Nigeria, Pakistan, etc.