Cyprus Tax News - February 2013 - Double Tax Treaty Between Cyprus and Spain

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Tax News-February 2013

Double Tax Treaty between Cyprus and Spain

A double tax treaty was signed between Cyprus and Spain on 14 February 2013.

The treaty will be in force three months after its ratification and for taxes on income and capital at the beginning of the year following the date the treaty comes into force.


A summary of the most significant provisions of the treaty are as follows:

A) Permanent Establishment

The permanent establishment definition included in the treaty is in line with the meaning included in the OECD model tax convention. Specifically, any building site or construction or installation project or any supervisory activities in connection with such site or project falls in the definition of a permanent establishment only in the case if it lasts more than 12 months.

B) Dividends

0% withholding tax applies if the beneficial owner is a company (other than a partnership) holding at least 10% of the share capital of the company paying the dividend.
5% applies in all other cases.

C) Interest

0% withholding tax applies.

D) Royalties

0% withholding tax applies with respect to copyrights of literary, artistic or scientific work including films, any patent, trademark, secret formula or process or for information concerning industrial, commercial or scientific experience.

E) Capital Gains

The gains from the disposal of immovable property are taxed in the country where the immovable property is located. The gains from the disposal of shares or other similar securities not listed on the Stock Exchange of either country (in the case where more than 50% of their value derives from immovable property), are taxed in the country in which the immovable property is situated.
For the purposes of determining the value referred to above, what applies is the domestic law of the country where the immovable property is situated.
Gains from the disposal of any other type of shares are taxed in the country where the seller is resident.