Double Tax Agreement Cyprus Greece: Understanding the Taxation Agreement

If you’re a business owner or an individual who frequently deals with cross-border taxation, understanding the Double Tax Agreement (DTA) between Cyprus and Greece is crucial. This agreement is made between two countries to mitigate the burden of double taxation on individuals or companies that earn income in both countries.

The DTA between Cyprus and Greece was first signed in 1981 and has undergone a few revisions since then. The most recent revision was done in 2019, and it came into force from January 1, 2020. Let’s take a closer look at the key features of this agreement.

Who does it apply to?

The DTA between Cyprus and Greece applies to individuals and companies that are tax residents of either of the countries. To be considered a tax resident of a country, an individual or company must have a permanent residence or a permanent establishment in that country.

What income is covered?

The DTA covers many different types of income. These include:

– Income from employment, including salaries, wages, and other similar remuneration

– Income from real estate, such as rental income

– Income from royalties and other types of income generated from intellectual property (such as patents or trademarks)

– Income from dividends

– Income from interest

How is double taxation avoided?

The DTA provides a mechanism to avoid double taxation. To do this, the agreement provides for the following:

– Tax relief: The DTA ensures that income earned in one country is not taxed twice in both countries. Instead, the income is only taxed in the country of residence.

– Tax credit: If an individual or company pays tax in one country on income that is also taxed in the other country, they may be eligible for a tax credit in the country where they are resident. This ensures that they are not taxed twice on the same income.

– Exemption: In some cases, income may be exempted from taxation in one country if it has already been taxed in the other country. This is done to prevent double taxation.

What are the benefits of the DTA for businesses?

The DTA provides several benefits for businesses that operate in both Cyprus and Greece. These include:

– Increased certainty: The DTA provides a clear framework for how taxes will be applied to cross-border income. This reduces uncertainty and makes it easier for businesses to plan their operations.

– Reduced compliance costs: By avoiding double taxation, businesses can reduce their compliance costs. They will only need to file tax returns in the country of residence, rather than in both countries.

– Better cash flow: By avoiding double taxation and being eligible for tax credits, businesses can improve their cash flow and reduce the risk of double tax payments.

Conclusion

The Double Tax Agreement between Cyprus and Greece is an important agreement that provides tax relief and benefits for individuals and businesses that earn income in both countries. By understanding the features of the agreement, businesses can avoid double taxation, reduce compliance costs, and improve their cash flow. It is important to seek professional advice to ensure that the DTA is applied correctly for your specific circumstances.