The new Double Taxation Avoidance Agreement signed between Cyprus and Iran on 4 August 2015 entered into force on 5 March 2017 and its provisions will come into effect as from 1 January 2018.
The DTAA Cyprus - Iran is based on the OECD Model Convention and its main provisions are briefly outlined below:
DTAA Cyprus - Iran, Dividends:
If the recipient is the beneficial owner of the dividends the withholding tax shall not exceed:
- 5% of the gross dividend amount if the beneficial owner is a company which holds directly at least 25% of the capital of the company paying the dividends;
- 10% of the gross dividend amount in all other cases.
Please note that Cyprus is not charging any withholding tax in general.
DTAA Cyprus - Iran, Interest:
If the recipient is the beneficial owner of the interest, the withholding tax shall not exceed 5% of the gross interest amount.
Please note that Cyprus is not charging any withholding tax in general.
DTAA Cyprus - Iran, Royalties:
If the recipient is the beneficial owner of the royalty, the withholding tax shall not exceed 6% of the grossroyalty amount.
Please note that Cyprus is not charging any withholding tax in general. Please also note that income from royalties enjoys preferable taxation in Cyprus, if certain conditions apply.
DTAA Cyprus - Iran, Capital Gains:
Capital gains arising from the alienation of the shares of a company will be taxable only in the state of residency of the alienator, unless more than 50% of the value of such shares is derived directly from immovable property situated in the other state in which case taxation will be levied at the state where the immovable property is situated.
Please note that income from the disposal of securities, including company shares, is not taxed in Cyprus in general. You may wish to read more about the tax advantages of Cyprus.
The new Double Taxation Avoidance Agreement is expected to open the way for new investment opportunities between Cyprus and Iran.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
