New Cyprus / Netherlands Double Taxation Treaty

On 1 June 2021 the Government of the Republic of Cyprus and The Kingdom of The Netherlands signed the first-of-its-kind Double Taxation Treaty (DTT) based on the OECD Model Tax Treaty. The DTT is expected to enter into force the year following the year in which the ratification process in both countries is completed.

The DTT adds to the wide range of existing Cyprus DTTs and is expected to enhance economic and trade relations between Cyprus and The Netherlands.

The most significant provisions of the new treaty are summarised below:

Dividends

Dividends paid by a company which is a resident in a Contracting State to a resident of the other Contracting State may be taxed in the latest State. The tax so charged shall not exceed 15% of the gross amount of dividends.

Dividends shall be exempt from withholding tax if the dividends are beneficially owned by:

• A recipient holding at least 5% of the capital of the company paying the dividends throughout a 365-day period (including the day of the dividend);
• A recipient that is a recognized pension fund of the other Contracting State.

Interest

No withholding tax on payments of interest provided that the recipient is the beneficial owner of the income.

Royalties

No withholding tax on payments of royalties provided that the recipient is the beneficial owner of the income.

Capital Gains

Gains derived by a resident of a Contracting State from the alienation of shares or comparable interests deriving more than 50% of their value directly or indirectly from immovable property situated in the other Contracting State, may be taxed in that other State.

Certain exemptions have been agreed.

Limitation of Benefits

A benefit under this Treaty shall not be granted in respect of an item of income, if it reasonable to conclude that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit.  

How Trident Cyprus can assist

• Incorporation of Cyprus companies;
• Ongoing company administration, registered office and company secretarial services, including compliance and board meetings;
• Directorship and nominee shareholder services;
• Bank account opening, administration and signatory services;
• Ensuring compliance with Cyprus regulations;
• Accounting, bookkeeping and VAT services;
• Liaison with the external auditors in respect of annual audit;
• Legal services (through associates);
• Tax advice (through associates);
• Office facilities – both physical and virtual.

If you or your clients would like to discuss these recent developments, please contact your Trident representative officer directly or our Cyprus office by telephone at +357 258 20650 or email at cyprus@tridenttrust.com.