CYPRUS – DENMARK DOUBLE TAX TREATY ENTERS INTO FORCE
The new Double Tax Treaty (DTT) signed between Cyprus and Denmark on the 11th of October 2010 entered into force on the 7th of September 2011.
The new DDT includes the following provisions:
WITHHOLDING TAX
The new DDT provides 0% withholding tax on dividends in cases where the beneficial owner is a Company which directly holds at least 10% of the share capital of the company paying the dividend for an uninterrupted period of at least 12 months. If otherwise, then subject to certain exemptions, a 15% withholding tax shall apply. Also, the new DTT provides 0% withholding tax on interest (in old DTT was 10%). Withholding tax on royalties remains 0%.
PERMANENT ESTABLISHMENT
The new DDT provides that a building site or construction or installation project must last for 12 months in order to create a permanent establishment.
PENSIONS AND SOCIAL SECURITY
According to the new DTT the taxing right for non-state pensions is given to the country in which the recipient is resident. This can be avoided if tax relief was obtained in the source country or in case where the contribution made by the employer is tax free in the country for the beneficiary in that country.
DIRECTORS FEES
Directors’ fees can be taxed in the Country of residence of the payer.
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