On 8 November 2012 during an official visit of the President of Ukraine Viktor Yanukovych in Cyprus the two countries signed a new Double Tax Treaty (DTT). The agreement is to replace the 1982 treaty for the avoidance of double taxation as concluded between Cyprus and the USSR.
The DTT will come into effect on 1st January following the year in which the parties exchange notifications of ratification.
The most important provisions of the treaty are as follows:
Permanent Establishment
A 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 12 months.
Dividends
In cases where the beneficial owner holds at least 20% of the capital of the company paying the dividend or has invested an amount of at least €100,000 in the acquisition of the shares or other rights of the company, the withholding tax rate is set at 5%. In all other cases the withholding tax rate is 15%.
Interest
The withholding tax rate on interest is 2%.
Royalties
The withholding tax rate on royalties in respect of any copyright of scientific work, patents, trademarks, secret formula, process or information concerning industrial, commercial or scientific experience is 5% (10% in all other cases).
Gains
Capital gains arising from a disposal of shares or any other movable property are granted to the country in which the person making the disposal is a tax resident.
Find more information on Cyprus Tax.
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