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Double Tax Treaty between Cyprus and Luxembourg – Details

As we have reported recently a Double Tax Treaty (DTT) was signed between Cyprus and Luxembourg on 8 May 2017.

The treaty generally follows the OECD Model Tax Convention, with some modifications. In the case of Cyprus it applies on corporate and personal income tax, special contribution for defence and on the capital gains tax. For Luxembourg it covers the corporate and personal income tax, the capital tax and the communal trade tax.

The following withholding tax rates are provided by the DTT:
– Dividends: 0% in case there is a participation of at least 10% and 5% in all other cases

– Interest: 0%

– Royalties: 0% as long as the recipient of the royalties is the beneficial owner of the income

Gains from the sale of shares of immovable property rich companies are taxed in the country where the immovable property is located.

The treaty will come in to effect on the 1st of January of the year following the year in which it is ratified by both parties.