Double Tax Treaty (DTT) between Cyprus and the Netherlands

On the 1^st of June 2021 Cyprus and the Netherlands signed a double tax treaty (DTT) for the avoidance of double taxation. The new DTT was ratified and published in the Official Gazette of the Republic of Cyprus on the 4^th of June 2021 and will enter into force once the necessary procedures are executed between the two countries. Once the DTT comes into force, it will apply on or after the 1^st of January of the year following the date the treaty enters into force.

The treaty is based on the OECD Model Tax Convention and its main provisions are outlined below:

Dividends
Withholding tax of 15% except in the following two cases for which no withholding taxes are imposed:

a) When dividends are paid to a company which holds directly at least 5% of the share capital of the company paying the dividends, throughout a 365-day period that includes the day of the dividend payment
or
b) When dividends are paid to a recognised pension fund which is generally exempt from Corporate or Income Tax

Interest
There is no withholding tax provided that the recipient of the interest is the beneficial owner of the income.

Royalties
There is no withholding tax provided that the recipient of the royalties is the beneficial owner of the income.