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June, 2015
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  New opportunities presented by Cyprus; Cyprus-Spain and Cyprus-Bahrain:
Cyprus-Spain DDT, and the Cyprus Double Tax Avoidance Agreement (DTAA)
with Bahrain

Cyprus signs Double Tax Treaty with Spain, following the removal from Spain’s ‘Black List’

On 14 February 2013 Cyprus and Spain signed a double taxation agreement, which came into force on 28th May 2014. On 23 December 2014, Spain removed Cyprus from the ‘Black List’ described as a ‘tax haven’, and both authorities stated that they will allow benefits with effect from 1 January 2015.

Main Provisions

  • Dividends: 0% withholding tax (WHT) if the UBO is a company holding at least 10% of the capital of the company paying the dividend. If the dividends are received by an individual or a non-limited company or by a holding of less than 10%, then 5% WHT applies
  • Interest: 0% WHT, Interest payments shall be exclusively taxed in the country of residence of the lender
  • Royalties: 0% WHT
    Irrespective of the treaty-provided rates, Cyprus legislation does not provide for WHT on dividends, interest and royalties paid to non-Cyprus residents.
  • Capital Gains: Gains from the disposal of immovable property are taxed in the country where the immovable property is situated. Gains from the disposal of shares not listed deriving more that 50% of their value from immovable property, are taxed in the country in which property is situated whereas disposal gains from any other shares are taxed in the country of residence of the seller.

Main Opportunities

  • Efficient investment structuring into Spain through Cyprus
  • Investments in Europe through Spain. Specifically, utilization of Spain’s 100 plus DTAA, especially with Latin American countries
  • Investments in Latin America through Cyprus and Spain

Cyprus signs Double Tax Avoidance Agreement (DTAA) with Bahrain

The Republic of Cyprus and the Kingdom of Bahrain signed on 9th March a double taxation avoidance agreement on income and other taxes.

Provisions in a nut-shell

  • Status: The treaty has been signed on 9th March 2015 and it applies from 1st January 2016

  • Withholding Taxes:

Cyprus and Bahrain legislation does not provide for withholding taxes on dividends, interest or royalties paid to non-state residents.

  • Immovable Property Income: Income derived from a resident of one state in the other state may be taxed in that other state

  • Business Profits: Such profits are only taxable at the state where the enterprise is conducted. This excludes private equity activities, but private equity expenses are deductible

  • Shipping and Air Transport: Only taxable at the state where the enterprise is conducted

  • Transactions between associated parties: Profits should be accrued at an arm’s length principle and taxedaccordingly

  • Capital Gains are to be taxed in the state where the seller is resident

Opportunities Arising

The present DTAA opens up opportunities for structuring investment holdings from Cyprus. With Cyprus being a full EU member, it serves as excellent access to EU markets for Bahrain investors. Additionally, trading and infrastructure companies can exploit opportunities in Cyprus and the EU. Finally, Cyprus Trusts can be used for succession planning.

How Amicorp can assist

For more information on how to take advantage of either of these treaties, and in Amicorp’s broader service offering, please contact your Amicorp Account Manager, Sales Manager or your closest Amicorp office.

At Amicorp Cyprus we are 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 these agreements.

Furthermore, we can:

  • Assist in the set-up and maintenance of Cyprus and Spanish 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, please contact:

Amicorp (Cyprus) Ltd        
Marios Tofaros
Amicorp Cyprus Limited (Nicosia)
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This document is prepared for general information purposes only. Amicorp Group does not provide tax or legal advice to its clients. Any opinions contained herein should not be construed or interpreted as advice provided by Amicorp Group.