Double Tax Treaty (DTT) Cyprus and Egypt – Applicable 1 January 2021

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The newly amended sections relate to taxes on income and the prevention of tax evasion and avoidance. 

Pursuant to the latest discussions between the Republic of Cyprus and Egypt, an agreement has been concluded for the amendment of the DTT between the two States. Both countries have agreed to further develop their economic relationship and to enhance tax matters by eliminating double taxation without the creation of incentives for reduced taxes through tax evasion or avoidance. The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting is effective. 

As per the agreement dated 31 July 2020 http://mof.gov.cy/en/taxation-investment-policy/double-taxation-agreements/double-taxation-treeties the following articles have been amended: 

Article 8 – International Shipping and Air Transportation 

Paragraph 3 has been added, stating that interest on funds, related to the operation of ships and aircrafts in international traffic, shall be regarded as profits derived from these operations and the provision on interest of Article 11 shall not apply. 

Article 9 – Associated Enterprises 

Paragraph 2 has been added, stating that profits on which an enterprise of the other Contracting State has been charged tax in their State, and the profits included, are profits that would have accrued to the enterprise of the first mentioned State if the conditions made between the two enterprises were those between independent enterprises, then that other State shall make an appropriate adjustment on the tax charged of those profits. 

Article 10 – Dividends 

Income received in Cyprus:   5% (previously 15%) 

Payments from Cyprus:  5% (previously 15%) 

Article 11 – Interest 

Income received in Cyprus:   10% (previously 15%) 

Payments from Cyprus:  10% (previously 15%) 

Article 13 – Capital Gains 

Paragraph 4,5 and 6 have been added, stating that gains derived from the alienation of shares of a resident Contracting State with more than 50% of their value directly or indirectly from immovable property situated in the other State, may be taxed in their State. 

Article 14 – Independent Personal Services 

Paragraph 1b) has been amended stating income from individuals that are present in the other State for a period exceeding 183 days (previously 90 days) in any period of 12 months will also be taxed in the other State. 

Article 19 – Government Service 

Paragraph 2a) and 2b) have been added, stating that individuals receiving a pension or another type of remuneration from their Contracting State in respect of the individual’s services rendered to that State, shall be taxed only in that State. If on the other hand, the individual is resident and national in the other State, then the individual will be taxed only in the other State. 

Article 22 – Offshore Activities 

Article 22 has been added in the DTT, stating how offshore activities are taxed. Activities include those carried on offshore in a Contracting State in connection with the exploration or exploitation of the seabed and the subsoil and their natural resources situated in that State, including the installation and exploitation of pipelines and other under or above surface of the sea. 

Article 28 – Entitlement to Benefits 

Article 28 has been added in the DTT, stating that a benefit under this Agreement shall not be granted in respect of income or capital items, if it is reasonable to conclude that obtaining the benefit was one of the principal purposes of any transaction or agreement that resulted directly or indirectly in that benefit.  

We offer strategies tailor made to the needs of our clients designed to legally enhance your business by considering all applicable taxes. We offer knowledge and expertise to solve your multi-jurisdictional tax issues. 

For further information please contact Ms Claudia Ioannou, Tax Assistant, at claudia.ioannou@eurofast.eu 

Eurofast is a regional business advisory organisation employing local advisors in over 23 cities in South East Europe & Middle East . The Organisation is uniquely positioned as one stop shop for investors and companies looking for professional services in South East Europe & Middle East.