The first Cyprus-Switzerland double tax treaty (DTT), signed in 2014, entered into force in October 2015 with its provisions taking effect as from January 1, 2016.
Under the treaty there is no withholding tax (WHT) on interest and royalties. There is also no WHT on dividends in those cases where the beneficial owner of the dividends is:
- a company (other than a partnership), the capital of which is wholly or partly divided into shares, holding directly at least 10% of the capital of the company paying the dividends for an uninterrupted period of at least one year (the time period criterion may be satisfied post the date of the dividend payment), or
- a pension fund or similar institution recognised as such for tax purposes, or
- the government, a political subdivision, local authority, or the central bank of one of the two Contracting States.
As Per the treaty, a 15% WHT on dividends applies in all other cases. Irrespective of this, per the provisions of Cyprus’ domestic tax legislation, Cyprus does not apply WHT on dividend payments out of Cyprus at all times.
Under the treaty, Cyprus retains the exclusive taxing rights on disposal of shares in Swiss companies except in certain cases when the disposed-of shares derive more than 50% of their value directly or indirectly from immovable property situated in Switzerland.
