On 8 October 2019 Cyprus and Egypt have concluded and signed a new Double Taxation Avoidance Agreement (DTAA), which replaces the existing tax treaty between the countries and was published in the official Gazette on 25 October 2019.

The DTAA will be applicable as soon as it has been ratified by both states and any tax provisions will be effective from the 1st of January following the year in which the DTAA becomes applicable.

The treaty is based on the OECD Model Tax Convention.

Dividends

The withholding tax rate on dividends is set at 5%, as long as the recipient is a company which holds directly at least 20% of the capital of the paying company for a period of minimum 365 days including the dividend’s payment day. In any other case the withholding tax rate on dividends is set at 10%.

Interest

The withholding tax rate on interest is set at 10%, as long as the recipient of the interest is the beneficial owner of the income.

Royalties

The withholding tax rate on royalties is set at 10%, as long as the recipient of the royalties is the beneficial owner of the income.

Capital gains

The general rule is that gains derived by a resident of a contracting state from the alienation of immovable property may be taxed in the seller’s state of residence.

Gains derived from the alienation of shares in capital of a non-listed company which more than 50% of its value derives, any time during the 365 days before the disposal, directly or indirectly from immovable property located in the other contracting state, maybe taxed in that other state.

Gains derived from the alienation of shares, securities or rights in capital of a non-listed company resident in the other contracting state and the seller, any time during the 365 before the disposal, held directly or indirectly at least 20% of that company, maybe taxed in that other state.