The Cyprus - Netherlands Double Tax Treaty

On 1st June 2021 Cyprus and Netherlands have signed a Double Tax Treaty which follows the provisions of the OECD model. The Treaty will take effect in the year following the year in which the ratification process in both countries is completed.

The following are the main provisions of the Treaty.

Dividends

Dividends paid by a company which is a resident in a contracting state to a resident of the other contracting state may be taxed in that state. The tax charged shall not exceed 15% of the gross amount of dividends paid.

However dividends shall be exempt from withholding tax if the dividends are beneficially owned by:

• A recipient which holds at least 5% of the capital of the company paying the dividends throughout a 365 day period including the day of the dividend;
• A recipient that is a recognized pension fund of the other contracting state.

Interest

There is no withholding tax on payments of interest provided that the recipient is the beneficial owner of the income.

Royalties

There is no withholding tax on payments of royalties provided that the recipient is the beneficial owner of the income.

Capital Gains

Gains derived by a resident of a contracting state from the alienation of shares or comparable interests deriving more than 50% of their value directly or indirectly from immovable property situated in the other contracting state, may be taxed in that other state.

Limitation of Benefits

A benefit under this treaty shall not be granted, in respect of an item of income, if it is reasonable to conclude that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit.