Five new double tax treaties signed by Cyprus

| Published on 08 May 2014


With effect from 1 January 2014 five new double tax treaties for the avoidance of double taxation (DTA) between Cyprus and the following countries have come into force:

  • Spain
  • Finland
  • Estonia
  • Portugal
  • Ukraine

The first four are brand new agreements, extending Cyprus’s network of DTAs.  The agreement with Ukraine replaces the agreement between the USSR and Cyprus, which was adopted by Ukraine and Cyprus after the dissolution of the USSR.

All five new double tax treaties follow the OECD model convention.  The new DTAs with Estonia, Finland, Portugal and Spain are expected to lead to a substantial expansion of economic ties and reciprocal investment activities between Cyprus and the countries concerned.

The revised agreement with Ukraine retains one of the principal benefits of the DTA it replaced, namely the highly favourable provisions regarding capital gains on disposal of shares in property-rich companies. Cyprus imposes no tax on disposals of shares except and to the extent that the gain is derived from real estate in Cyprus. In this respect Cyprus companies have become an ideal means of holding real estate in Ukraine, effectively allowing property to be disposed of tax-free, making Cyprus one of the world's most tax-effective jurisdictions for holding Ukrainian property assets.

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