(September 19, 2015)

The Cypriot Tax Department has published the text of the recently signed Agreement between the Government of the Republic of Cyprus and the Government of the Islamic Republic of Iran for the Avoidance of Double Taxation and Fiscal Evasion with respect to Taxes on Income (Hereafter: The DTA).

 

The DTA was signed on August 4, 2015.

 

Below we will discuss some of the regulations included in the DTA of which we think they might interest our readers.

 

Taxes covered 

According to Article 2, Paragraph 3 of the DTA (“Taxes Covered”) the existing taxes to which the DTA shall apply are:

a)     in the case of the Islamic Republic of Iran:

-         the income tax.

b)     in the case of the Republic of Cyprus:

(i)          the income tax;

(ii)         the corporate income tax;

(iii)        special contribution for the defense of the Republic; and

(iv)        the capital gains tax.

 

Paragraph 4 of Article 2 of the DTA subsequently arranges that the DTA shall apply also to any identical or substantially similar taxes, which are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes.

 

Residency

With respect to the residency of a person other than a an individual that is a resident of both Contracting States Paragraph 3 of Article 4 (“Resident”) arranges that it then shall be deemed to be a resident of the State in which its place of effective management is situated.

 

Permanent establishment

Paragraph 3 of Article 5 of the DTA (“Permanent Establishment”) arranges that a building site, a construction, assembly or installation project or supervisory activities in connection therewith, constitutes a "permanent establishment", but only where such site, project or activities continue for a period of more than 12 months.

 

Associated enterprises 

Paragraph 2 of Article 9 of the DTA (“Associated Enterprises”) contains a so-called appropriate adjustment clause.

 

Dividends

Paragraph 2 of Article 10 of the DTA (“Dividends”) maximizes the dividend withholding tax that a Source State is allowed to withhold over dividend distributions to:

a)     5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 25 per cent of the capital of the company paying the dividends;

b)     10 per cent of the gross amount of the dividends in all other cases.

 

Interest

Paragraph 2 of Article 11 of the DTA (“Interest”) maximizes the withholding tax that a Source State is allowed to withhold over interest payments to 5 per cent of the gross amount of the interest.

 

Royalties

Paragraph 2 of Article 12 of the DTA (“Royalties”) maximizes the withholding tax that a Source State is allowed to withhold over royalty payments to 6 per cent of the Gross amount of the royalties.

 

Capital Gains

With respect to capital gains Paragraph 1 of Article 13 of the DTA (“Capital Gains”) arranges that gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other Contracting State.

 

Paragraph 4 of Article 13 subsequently arranges that gains derived by a resident of a Contracting State from the alienation of shares in a company, deriving more than 50 per cent of their value directly from immovable property situated in the other Contracting State may be taxed in that other State.

 

Other

The DTA furthermore includes an article arranging for a Mutual Agreement Procedure (Article 24 of DTA) and an article on the Exchange of Information (Article 25 of the DTA).

 

Click here to be forwarded to the Agreement between the Government of the Republic of Cyprus and the Government of the Islamic Republic of Iran for the Avoidance of Double Taxation and Fiscal Evasion with respect to Taxes on Income as available on the website of Cypriot Tax Department

 

Are you looking for an other DTA? Then check our section DTAs & TIEAs, a very efficient way to locate numerous DTAs.

 

 

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