Double Tax Treaty between Cyprus and Luxembourg

On the 8 May 2017, a new agreement for the avoidance of double taxation was signed between the Republic of Cyprus and Luxembourg.

The Double Taxation Avoidance Agreement is expected to strengthen economic ties between the two EU member states.

The treaty is based on the OECD Model Tax Convention framework and provides for the following withholding tax rates on dividends, interest and royalty payments:

Dividends: 0% withholding tax on dividends paid to a company that holds directly at least 10% of the capital of the dividend paying company; otherwise, the rate will be 5%.

Interest and Royalties: 0% withholding tax on interest and royalties paid to a resident of the other contracting state.

Gains from the sale of shares of companies holding immovable property will be taxed in the country where the immovable property is situated.

The treaty will enter into force once both countries exchange notifications that their formal ratification procedures have been completed.