Cyprus: Double tax agreement with Luxembourg

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The governments of Cyprus and Luxembourg have signed a convention for the elimination of double taxation with respect to taxes on income and on capital and the prevention of tax evasion and avoidance. The agreement was signed on 8 May 2017 in Nicosia.

The agreement is based on the OECD Model Convention for the Avoidance of Double Taxation on Income and on Capital and incorporates all the minimum standards of the Base Erosion Profit Shifting (BEPS) project, as issued by the OECD /G20 in October 2015, those of BEPS Action 6 (Treaty Abuse) and BEPS Action 14 (Making Dispute Resolution Mechanisms More Effective). Furthermore it includes the exchange of financial and other information in accordance with the relevant Article of the Model Convention.

Under the agreement, there is no withholding tax rate on dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 10 per cent of the capital of the company paying the dividends; otherwise 5%. Interest arising in a contracting state and paid to a resident of the other contracting state shall be taxable only in that other state. Royalties arising in a contracting state and beneficially owned by a resident of the other contracting state shall be taxable only in that other state.

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