Cyprus Double Tax Treaties and International Buyers in Cyprus

Detailed guide to Cyprus’s double tax treaties. Explains treaty benefits, international buyer protections, case studies, checklists, and FAQs. Cyprus has signed over 60 double taxation treaties (DTTs) with countries worldwide. These treaties protect international investors from being taxed twice on the same income or capital gains.

Purpose of Double Tax Treaties

• Prevent double taxation of income and capital gains.
• Allocate taxing rights between Cyprus and the treaty partner country.
• Reduce or eliminate withholding taxes on dividends, interest, and royalties.
• Promote cross-border investment and legal certainty.

Impact on Foreign Property Investors

• Rental Income: Taxed in Cyprus but credited in home country.
• Capital Gains: Usually taxed only in Cyprus, not the home country.
• Dividends from Cypriot real estate holding companies are often exempt or reduced.
• Non-treaty countries may face double taxation risk.

EU versus Non-EU Buyers

• EU Nationals: Benefit from EU tax directives in addition to treaties.
• Non-EU Nationals: Rely primarily on DTTs for protection.
• Both categories enjoy the same property ownership rights under the Cyprus tax law.

Case Study: Investor Benefiting from Treaty

A UK investor sold property in Limassol:
• Profit €100,000 subject to 20% CGT in Cyprus.
• UK-Cyprus DTT prevented further UK taxation.
• Outcome: Avoided double taxation, saving £20,000.

Case Study: Investor Without Treaty Protection

A South African investor sold a villa in Paphos:
• Paid 20% CGT in Cyprus.
• The home country also taxes foreign gains.
• Outcome: Double taxation reduced net return significantly.

Checklist for International Buyers

1. Confirm if your country has DTT with Cyprus.
2. Review treaty articles on property income and capital gains.
3. Consult a tax advisor in both countries.
4. Keep detailed documentation of taxes paid in Cyprus.
5. Claim foreign tax credits in the home country.
6. Structure investments through Cypriot holding companies where beneficial.

FAQs on Double Tax Treaties in Cyprus

Q: How many DTTs does Cyprus have?
A: Over 60 with Europe, Asia, Africa, and the Americas.

Q: Do treaties apply to property rental income?
A: Yes, usually taxed in Cyprus but credited abroad.

Q: Can non-treaty investors face double taxation?
A: Yes, if home country also taxes gains.

Q: Are DTT benefits automatic?
A: No, must be claimed through proper filings.

Q: Do treaties apply to inheritance tax?
A: Cyprus has no inheritance tax, so DTT provisions vary.

Final Recommendations

Cyprus’s extensive double taxation treaty network is a major advantage for international buyers. Investors should consult tax professionals to maximise treaty benefits and avoid unexpected liabilities.