Cyprus has signed almost 50 double tax treaties
for the avoidance of double taxation, among which the Cyprus – UK tax agreement
is part of, as well. This double tax treaty was initially signed in 1974 and then amended in 1980. In this article, our company formation advisors in Cyprus
offer a brief overview of the Cyprus – UK double tax treaty
Business profit taxation according to the Cyprus – UK double tax treaty
Under the above-mentioned treaty, business profits are taxed as follows:
• The profits of a company based in one of the two jurisdictions is taxed only in the state where the company is based. Exception to this is when the company undertakes activities in the other contracting jurisdiction through a permanent legal entity located in it;
If a company undertakes activities in the other contracting jurisdiction through a permanent legal entity, the profits earned by this permanent legal establishment are attributed to this entity as if it was an independent one. Our company registration consultants in Cyprus
can offer more information on this matter;
• When determining the profits of the permanent legal entity, there are allowed deductions for all the expenses, such as general administrative and executive ones. These are deductible if the permanent legal entity is an independent company;
• Other stipulations. Our Cypriot company formation experts can provide further details on what these other stipulations of the Cyprus – UK double tax treaty related to the taxation of business profits are.
Tax rates according to the Cyprus – UK double tax treaty presented by our Cyprus company formation agents
As mentioned earlier, companies have to pay their corporate or income tax
depending on in which jurisdiction they are located. Permanent legal entities of Cypriot and English businesses, though, are taxed as mentioned above.
As about the taxation applied to other types of income, the Cyprus – UK double tax agreement rules that the income received in Cyprus by non-residents is taxed as follows:
• Interests: 15%;
• Dividends: they are taxed at 15%;
• Royalties: are exempt from taxation.
The withholding tax due on income paid in Cyprus are:
• 0% - royalties;
• 10% - interests.