Cyprus Tax News December 2009Tax Treaty Update: Agreement with Czech Republic |
The new treaty between Cyprus and the Czech Republic signed in April this year was ratified on November 26th 2009. As stated in our Cyprus Tax Alert issued in June 2009 this new treaty will replace the previous 1980 treaty with the then-Czechoslovakia.
The main changes to the treaty are the elimination of withholding tax on dividends (where holdings are 10% or more) and interest (previously 10%). Withholding tax on royalty payments will increase from 5% to 10%; however, as from 1 January 2011, royalties paid to Cypriot companies will be exempt from Czech withholding tax where the conditions of the EC Interest and Royalties Directive are satisfied.
The treaty comes into force from 1 January 2010.