The Income Tax Treaty between Cyprus and Iceland entered into force on 23 December 2014 and its provisions apply from 1 January 2015. The treaty was signed on 13 November 2014.
Under the treaty, withholding tax on dividend will be 5 % if the beneficial owner of the dividends is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends, other wise 10 % in all other cases. Withholding tax on interest is 0% and is 5% on royalties.
Cyprus does not impose any withholding tax on dividends paid to foreign shareholders as well as on royalties if the intangible is used outside Cyprus.
