The Republic of Cyprus and The Netherlands, within the scope of developing further their economic relationship and enhancing their co-operation in tax matters, signed a double tax treaty with regards to income taxes and the prevention of tax evasion and tax avoidance on 1 June 2021.
The Treaty will be in effect in the year following the year in which the ratification process in both countries is completed.
The Treaty provides the following: -
The applicable maximum WHT rate for all other cases is 15%.
The treaty provides for certain exemptions.
The double tax treaty is based on the OECD Model Convention for the Elimination of Double Taxation on Income and on Capital and intends to the elimination of double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance.
In this respect, the treaty provides for limitation of benefits under Article 26 “Entitlement to Benefits” by which the Tax Authorities are entitled to deny the application of treaty benefits if the obtainment of such benefit was one of the principal purposes (Principal Purpose Test) of the relevant arrangement/transaction, unless the granting of such benefit would be in accordance with the object and purpose of the treaty.
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