Cyprus-UAE Double Taxation Treaty

Cyprus-UAE Double Taxation Treaty

Updated on Tuesday 22nd September 2015

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Cyprus-UAE-Double-Taxation-TreatyThe double taxation agreement between Cyprus and the UAE

Cyprus signed numerous tax agreements and among the last ones it signed is also the double taxation avoidance agreement with the United Arab Emirates. The Cyprus-United Arab Emirates double taxation treaty was signed in 2010 and enforced in 2014. The double taxation agreement between Cyprus and the UAE follows the Organization for Economic Co-operation and Development (OECD) model. However, the treaties the UAE usually sign have different patterns than the OECD model. The tax treaty between Cyprus and the UAE applies to residents of both countries and also contains provisions on tax planning.

Tax residency according to the Cyprus-UAE double taxation treaty

The main difference in the tax conventions the UAE usually sign refers to tax residency. Considering the Emirates do not really levy taxes, the agreement signed with Cyprus contains certain provisions with respect to tax residency issues. UAE residents must fall within the scopes of the UAE laws in order to benefit from all tax exemptions the country offers, while Cypriot residents will be subject to the island’s taxation system if an individual resided there. Therefore, while Cyprus follows the OECD model with respect to tax residency, the UAE does not.  However, a Cypriot citizen with an UAE residence visa will be considered a resident of one of the Emirates for the purpose of the double taxation agreement. If an individual is both an UAE and a Cypriot resident, he or she will be taxed in the country where the individual has a permanent home.

Our lawyers in Cyprus may provide you with all the information with respect to tax residency as it results from the double taxation treaty with the UAE.

Tax rates according to the Cyprus-UAE double tax agreement

UAE companies holding real estate property in Cyprus will be levied a 15% tax rate called special contribution of defense, only. Dividends, interests and royalties are subject to a 0% tax rate in Cyprus, while the capital gains tax will be levied in the country of origin of the resident, according to the double taxation treaty between the two contracting states.

For information about all the applicable tax rates according to the double taxation with the UAE, please contact our Cypriot attorneys.