Cyprus has recently concluded a Double Tax Treaty (DTT) with Iran. The treaty was signed on 4 August 2015 and shall enter into force once each country completes the ratification process.
The new treaty is based on the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention framework and will contribute to the expansion of Cyprus' trade and economic relations with Iran and its main provisions are briefly outlined below:
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, any building site or construction or installation project or any supervisory activities in connection with such site or project constitutes a 'permanent establishment' only if it lasts more than twelve months.
Dividends
- 5% withholding tax on dividends paid, if the beneficial owner of the dividends is a company holding at least 25% of the capital of the company paying the dividend;
- 10% withholding tax on dividends paid , in all other cases;
Interest
- 5% withholding tax
Royalties
- 6% withholding tax
Capital Gains
- Gains from the disposal of immovable property may be taxed in the country where the immovable property is situated.
- Gains from the disposal of shares, deriving more than 50% of their value directly or indirectly from immovable property may be taxed in the country in which the immovable property is situated.
Why Cyprus
Cyprus as member of the EU gives its full support to the agreement Iran made, which creates the conditions for confidence building between the Middle East country and the international community. It will contribute positively to the neighbourhood and international peace and co-operation. Cyprus is the perfect country to help bridge relations between Iran and the European markets.
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