On 4 August 2015, the Republic of Cyprus and Iran, signed an agreement on the avoidance of double taxation and fiscal evasion with respect to taxes on income, paving the way for the expansion of business and investment opportunities that will strengthen the economic ties and trade relations between the two countries.
The Agreement on the Avoidance of Double Taxation and Fiscal Evasion was signed in the capital of Cyprus, Nicosia in the presence of the Cypriot Minister of Finance Mr. Harris Georgiades and Deputy Finance Minister of Ira, Ali Askari.
Mr. Georgiades stated that “Today, we have signed an especially important agreement, an agreement to avoid double taxation, which I am sure will open new opportunities, new avenues of co-operation, new investment prospects, and trade and financial relations between Cyprus and Iran". He pointed out that the timing of the deal could not have been better. He clarified:
After the signing ceremony, Mr. Yiannos Athiainitis, Deputy Chairman of the Cyprus – Iranian business association stated that “this historic agreement opens a channel for investments from Iran to Cyprus”.
The tax treaty is based onnthe OECD Model Convention for the Avoidance of Double taxation on Income and on Capital. In accordance to the provisions of the treaty the following withholding taxes will apply:
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Dividends:
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5% if the beneficial oenwe is a company (other than a partnership) which holds firectly at least 25% of the capital of the company paying the dividends
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10% in all other cases
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Interest:
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Royalties:
The treaty also provides for the taxation of capital gains arising from the sale of shares of "property rich" companies.
The provisions of the treaty will come into effect on or after January 1
st following the date upon which the treaty enters into force.
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