The double tax treaty with Andorra which was signed on 18 May 2018 will come into effect on 1st January 2020.
The main provisions of the treaty are as follows: -
- Dividends, interest and royalties - no withholding tax will be levied on dividend interest or royalty payments.
- Capital gains – Cyprus retains the exclusive taxing rights on disposal of shares made by Cyprus tax residents, with some exceptions.
- Principal purpose test (PPT) – the treaty incorporates the BEPS project action 6 which provides that a benefit under the treaty shall not be granted if obtaining that benefit was one of the principal purposes of the arrangement or the transaction taking place.