Cyprus and Luxembourg signed a first time Double Tax Treaty (DTT) on 8 May 2017, opening the way for new investment opportunities and trade relations between the two Countries. The text of the DTT was recently made available by the Luxembourg tax authorities. Neither county has yet ratified the DTT. The DTT will take effect as from 1 January of the year following that in which it enters into force.
The DTT provides for a 0% withholding tax (WHT) rate on interest and royalties. For dividends, a 0% WHT rate applies for corporate investors holding directly at least 10% of the capital of the paying company; a 5% WHT rate applies in all other cases of dividends.
Further details of the treaty may be found in the newsletter – N-10-2017