Cyprus-Netherlands Double Taxation Treaty
Cyprus and The Netherlands have entered into their first ever Double Taxation Treaty (DDT). The DDT which was signed on the 1 June 2021 has since been ratified, but both countries now need to implement the legal practices before it can enter into force. Once the needful has been implemented then the DTT will take effect from the 1 January the next calendar year.
Interest and Royalties now have a 0% withholding tax rate provided that it is to the beneficial owner of the income. The rule on dividends is more complicated and whereas a 0% rate is available providing certain conditions are met a maximum rate of 15% is applicable in all other cases.
Persons resident in Cyprus need to fully understand the new rules where they are deriving income from The Netherlands as Cyprus mostly retains the right of taxation except under certain circumstances.
The clear beneficial taxation aspects and dispute resolution measures of the treaty means that it is expected to increase trade and economic relations between the two countries.