Cyprus signs double tax treaty with Iran

Cyprus signs double tax treaty with Iran

On August 4th, 2015 Cyprus signed an agreement with Iran for the avoidance of double taxation.

The tax treaty, which is based on the OECD Model Convention for the Avoidance of Double taxation on Income and on Capital, adds to Cyprus’ extensive network of double tax agreements, which currently covers more than 50 countries.

The agreement opens up new opportunities for trade and cooperation between the two countries, following the lifting of international sanctions against Iran.

The most significant provisions of the treaty are the following:

Dividends: If the recipient is the beneficial owner of the dividends the withholding tax shall not exceed:

  • 5% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 25% of the capital of the company paying the dividends;
  • 0% of the gross amount of the dividends in all other cases. Interest: 5% of the gross amount of interest, if the recipient is the beneficial owner of the interest.

Royalties: 6% of the gross amount of royalties, if the recipient is the beneficial owner of the royalties.

Capital gains: Gains derived by a resident of a Contracting State from the disposal of immovable property situated in the other Contracting State may be taxed in that other State. Gains derived by a resident of a Contracting State from the disposal of shares in a company (other than those listed on the Stock Exchange of either country), deriving more than 50 per cent of their value directly from immovable property situated in the other Contracting State may be taxed in that other State.

Permanent Establishment: The permanent establishment definition included in the treaty is in line with the definition provided in the OECD Model Tax Convention. In particular, a building site, a construction, assembly or installation project or supervisory activities in connection therewith, constitutes a ‘permanent establishment’ only if it lasts more than 12 months.

Cyprus signs double tax treaty with Iran

The treaty will enter into force once the ratification procedures on both sides are completed. The provisions of the treaty will come into effect on or after January 1st following the date upon which the treaty enters into force.

How Amicorp can assist you:

Amicorp Cyprus is available to assist with any queries you might have, help you understand and explore the opportunities that may arise for your business as a result of this DTAA.

Furthermore, we can:

  • assist in the set-up and maintenance of Cyprus as well as other jurisdiction entities; and
  • coordinate with Amicorp offices and selected advisors worldwide in presenting you with turnkey solutions that will fulfil your structuring requirements.

For further information and assistance in structuring investments contact your nearest Amicorp office or Amicorp Cyprus directly.