Cyprus – Iran and Jersey: Double Tax Treaties Which Have now Entered into Force

April 2017

The double tax treaties with Iran and Jersey have now entered into force and will come into effect as from 1 January 2018.

Iran

The double tax treaty with Iran has now entered into force and will come into effect as from 1st January 2018.

The new treaty is generally based on the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention framework with some modifications.

The treaty applies to taxes on income as well as on gains from alienation of movable or immovable property. In the case of Iran, the treaty covers the income tax, whereas, in the case of Cyprus, it covers corporate and personal income tax, defence tax and capital gains tax.

The treaty provides for withholding taxes on payment of dividends at the following rates:

  • 5% in case where there is at least 25% participation by a tax resident company
  • In all other cases the withholding tax is 10%.

There is a 5% withholding tax on interest, as long as the recipient is the beneficial owner of the income.

There is a 6% withholding tax on royalty payments, as long as the recipient is the beneficial owner of the income.

Gains from the sale of shares of immovable property-rich companies are taxed in the country where the immovable property is located.

Jersey

The double tax treaty with Jersey has now entered into force and will come into effect as from 1 January 2018.

The new treaty is generally based on the OECD Model Tax Convention framework with some modifications.

The treaty applies to taxes on income as well as on gains from alienation of movable or immovable property. In the case of Jersey, the treaty covers the income tax, whereas in the case of Cyprus, it covers corporate and personal income tax, defence tax and capital gains tax.

There is no withholding tax on dividends, interest and royalty payments.

Capital gains arising from the sale of shares of a company are taxable only in the state where the seller is tax resident. This provision also covers the tax treatment of sales of shares of immovable property-rich companies.

Contact

Further information about this can be obtained by contacting Baker Tilly in Cyprus.

Head of Tax
Neofytos Neofytou
n.neofytou@bakertillyklitou.com
T: +357 22 458500
www.bakertillyklitou.com