Cyprus/October 2015
On 13 May 2015, during the 24th Annual Meeting of the European Bank of Reconstruction and Development (EBRD) in Tbilisi, Cyprus signed an agreement with Georgia for the Avoidance of Double Tax Payment (‘’Double Tax Treaty’’).
The agreement signed by Cyprus and Georgia is harmonized with the OECD Model Tax Convention with some modifications. In particular, any building site or construction or installation project or any supervisory activities in connection with such site or project constitutes a permanent establishment only if it lasts more than nine months.
Moreover, the withholding tax rate for dividends is set at 0% of the gross amount and withholding tax on interest is also set at 0% of the gross amount.
In addition, withholding tax on royalties is 0% of the gross amount.
Capital Gains derived by a resident of a Contracting State from the disposal of immovable property situated in the other Contracting State may be taxed in that other State.
Capital Gains that arise by a resident of a Contracting State from the disposal of shares in a company are to be taxed only in the Contracting State where the alienator is resident.
The agreement has been signed in order to strengthen the economic relations between the two countries, to eliminate the fiscal evasion with respect to taxes on income and on capital and in order to attract investments in both countries.
The treaty was published in the Official Gazette of the Republic of Cyprus on 29 May 2015 and will enter into force on 1 January 2016 provided that Cyprus and Georgia confirm that their formal ratification procedures have been completed.
Myranda Chatzimatthaiou
Eurofast Cyprus Office
Tax and Legal Associate
myranda.chatzimatthaiou@eurofast.eu