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Cyprus: Details of Reservations and Notifications for Multilateral Convention
23/06/2017

As mentioned before, Cyprus has signed the OECD Multilateral Convention (the ‘Convention’) on 7 June 2017. The government has recently released a list of Reservations and Notifications, which will be confirmed upon deposit of the instrument of ratification based on the relevant provisions of the Convention.

The listed reservations are:

Article 3 (Transparent Entities): Cyprus reserves the right for the entirety of Article 3 not to apply to its Covered Tax Agreements.
Article 4 (Dual Resident Entities): Cyprus reserves the right for the entirety of Article 4 not to apply to its Covered Tax Agreements.
Article 5 (Application of Methods for Elimination of Double Taxation): Cyprus reserves the right for the entirety of Article 5 not to apply to its Covered Tax Agreements.
Article 8 (Dividend Transfer Transactions): Cyprus reserves the right for the entirety of Article 8 not to apply to its Covered Tax Agreements.
Article 9 (Capital Gains from Alienation of Shares or Interests of Entities Deriving their Value Principally from Immovable Property): Cyprus reserves the right for Article 9(1) not to apply to its Covered Tax Agreements.
Article 10 (Anti-abuse Rule for Permanent Establishments Situated in Third Jurisdictions): Cyprus reserves the right for the entirety of Article 10 not to apply to its Covered Tax Agreements.
Article 11 (Application of Tax Agreements to Restrict a Party’s Right to Tax its Own Residents): Cyprus reserves the right for the entirety of Article 11 not to apply to its Covered Tax Agreements.
Article 12 (Artificial Avoidance of Permanent Establishment Status through Commissionaire Arrangements and Similar Strategies): Cyprus reserves the right for the entirety of Article 12 not to apply to its Covered Tax Agreements.
Article 13 (Artificial Avoidance of Permanent Establishment Status through the Specific Activity Exemptions): Cyprus reserves the right for the entirety of Article 13 not to apply to its Covered Tax Agreements.
Article 14 (Splitting-up of Contracts): Cyprus reserves the right for the entirety of Article 14 not to apply to its Covered Tax Agreements.
Article 15 (Definition of a Person Closely Related to an Enterprise): Cyprus reserves the right for the entirety of Article 15 not to apply to the Covered Tax Agreement to which the reservations described in Article 12(4), Article 13(6)(a) or (c), and Article 14(3)(a) apply.
Article 35 (Entry into force): Cyprus reserves the right to replace several references contained in Articles 35(1), 35(4), 35 (5), 28(9)(a), 28(9)(b), 29(6)(a), 29(6)(b), 36(1), 36(2), 36(3), 36(4) and 36(5) of the Convention.

The notifications relate to the following articles:

Article 2 (Interpretation of Terms): Cyprus lists 61 tax agreements that it wishes to be covered by the Convention.
Article 6 (Purpose of a Covered Tax Agreement): Cyprus chooses to apply Article 6(3). Cyprus lists 61 agreements it considers are not within the scope of a reservation under Article 6(4) and contain preamble language described in Article 6(2). In addition, Cyprus lists 61 agreements it considers do not contain preamble language referring to a desire to develop an economic relationship or to enhance co-operation in tax matters.
Article 7 (Prevention of Treaty Abuse): Cyprus chooses to apply Article 7(4). Cyprus lists 4 agreements, together with the article and paragraph number, that are not subject to a reservation described in Article 7(15)(b) and contain a provision described in Article 7(2).
Article 16 (Mutual Agreement Procedure): Cyprus lists the following:

61 agreements, together with the article and paragraph number, containing a provision described in Article 16(4)(a)(i);
6 agreements, together with the article and paragraph number, containing a provision that provides that a case referred to in the first sentence of Article 16(1) must be presented within a specific time period that is shorter than 3 years from the first notification of the action resulting in taxation not in accordance with the provisions of the Covered Tax Agreement;
46 agreements, together with the article and paragraph number, containing a provision that provides that a case referred to in the first sentence of Article 16(1) must be presented within a specific time period that is at least 3 years from the first notification of the action resulting in taxation not in accordance with the provisions of the Covered Tax Agreement;
17 agreements that do not contain a provision described in Article 16(4)(b)(ii);
5 agreements that do not contain the provisions described in Article 16(4)(c)(i); and
6 agreements that do not contain the provisions described in Article 16(4)(c)(ii).
Article 17 (Corresponding Adjustments): Cyprus lists 45 agreements, together with the article and paragraph number, it considers contain a provision described in Article 17(2).

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