Skip to main content

On 1 June 2021, Cyprus and the Netherlands signed the Convention for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance (treaty) in Nicosia. The treaty will enter into force after the necessary legal procedures are completed. Once it enters into force, the treaty will have effect in both contracting states on or after 1 January following the date the treaty enters into force.

In order to implement the Base Erosion and Profit Shifting (BEPS) measures on dispute resolution and anti-tax avoidance, the treaty contains a Mutual Agreement Procedure (MAP) to resolve disputes (including dual tax residency of entities) and introduces a principal purpose test (PPT), which allows tax authorities to disallow the application of treaty benefits if the application of those benefits was one of the principal purposes of an arrangement or transaction.

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


No withholding tax if the beneficial owner is: a) a company that holds directly at least 5% of the capital of the company paying the dividends, throughout a 365-day period that includes the day of the dividend payment; b) a recognised pension fund which is generally exempt under the Cyprus Corporate Income Tax law. For all other cases, the treaty provides for a maximum 15% withholding tax.


Νο withholding tax as long as the recipient of the interest is the beneficial owner of the income.


No withholding tax provided that the recipient is the beneficial owner of the income.

Capital gains:

  • Gains from the disposal of immovable property are taxable at the country where the property is situated.
  • Gains from the disposal of movable property which is part of the ownership of a permanent establishment are taxable at the country where the permanent establishment is based.
  • Gains from the disposal of ships and aircrafts used in international aviation are taxable at the country where the real seat of the owning company is situated.
  • Gains arising from the disposal of shares of a company or comparable interest which derive more than 50% of their value (directly or indirectly) from immovable property, are taxable in the country where such immovable property is located. This does not apply in the following cases

a)    Shares or comparable interests which are listed in any recognised Stock Exchange
b)    Shares or comparable interest which are disposed as part of a corporate reorganization
c)    In cases where the immovable property out of which the value of the shares derives, comprises of immovable property out of which the activities of the company are carried out
d)    Where the seller holds (directly or indirectly), by itself or via other related parties, a percentage up to 25% of the capital of the company
e)    Where the seller is a recognised pension fund


This tax publication has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained herein without obtaining specific professional advice. Please contact Kyriakides, Savvides and Associates Ltd to discuss these matters in the context of your circumstances. Kyriakides, Savvides and Associates Ltd, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.