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Luxembourg ratifies Double Tax Treaty with Cyprus

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Luxembourg ratifies Double Tax Treaty with Cyprus

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As per a relevant publication in the Journal Officiel du Grand-Duché de Luxembourg, Luxembourg ratified the Double Tax Treaty (DTT) with Cyprus on 17 April 2018.

The treaty, which is based on the OECD Model Tax Convention with some modifications, was signed on 8 May 2017.

In the case of Cyprus it applies on corporate and personal income tax, special contribution for defence and on the capital gains tax. For Luxembourg it covers the Cyprus Taxation Services">corporate and personal income tax, the capital tax and the communal trade tax.

The following withholding tax rates are provided by the DTT:

  • Dividends: 0% in case there is a participation of at least 10% and 5% in all other cases
  • Interest: 0%
  • Royalties: 0% as long as the recipient of the royalties 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.

The treaty will come in to effect on the 1st of January of the year following the year in which it is ratified by both parties.

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