| CYPRUS - Double tax treaties with 34 countries
Treaty with Ireland
Russia | Poland
| Romania | Hungary
| Ireland | Greece
| Czech Rep | India
| Sweden
The treaty concluded between Cyprus and Ireland applies in the
case of Cyprus
IBCs (offshore companies)
with no restrictions.
The treaty provides:
- elimination of double taxation in Ireland by way of tax credit
- there are no withholding taxes for dividends, interest and royalties
- there are tax sparing provisions in Ireland for tax not imposed
by Cyprus because of tax incentives in Cyprus (dividends, interest
and shipping profits)
- there are provisions for giving credit for underlying tax on
dividends
- capital gains from the sale of shares in Irish companies are
taxed in Cyprus only
Example - A Cyprus
IBCs (offshore company)
, which receives dividends
from its wholly owned Irish international financial services subsidiary
The following example compares the tax position of a company receiving
dividends from Ireland, using Cyprus, with the case of receiving
dividends directly, in the absence of a double tax treaty with Ireland.
| |
Using Cyprus |
Directly |
| Profits of Irish subsidiary before tax |
100,000 |
100,000 |
| Irish tax |
(10,000) |
(10,000) |
| Profits after tax |
90,000 |
90,000 |
| Withholding tax on dividends |
- |
(21,600) |
Net dividend
|
90,000 |
68,400 |
|
- No further tax is imposed in Cyprus on the dividends, because of
the tax credit in Cyprus for the underlying tax on the dividends received
by the Cyprus company from its Irish subsidiary, under the provisions
of the Cyprus/Ireland tax treaty. Thus the only tax cost is the profit
tax in Ireland of 10% |
