25th of August, 2014
The double tax agreement between Cyprus and Lithuania, which was signed in June 2013, is now in force and will take effect from 1 January 2015.
Lithuania’s economy is one of the fastest-growing in the EU and the new agreement should further economic ties between Cyprus and Lithuania.
The key provisions of the agreement are the following:
- There is no withholding tax on dividends paid by a company resident in Lithuania to a company (but not a partnership) resident in Cyprus provided that the recipient is the beneficial owner of at least 10 per cent of the shares in the company paying the dividend. Otherwise the maximum rate of withholding tax is 5 per cent.
- There are no withholding taxes in Cyprus on dividends paid to non-residents.
- Interest paid by a resident of one state to a resident of the other is taxable only in the state of residence of the recipient.
- The maximum withholding tax on royalties is limited to 5 per cent.
- Gains derived by a resident of one contracting state from the alienation of immovable property situated in the other contracting state, or from the disposal of immovable or movable property associated with a permanent establishment situated in the other contracting state, may be taxed in the contracting state in which the immovable property or the permanent establishment is situated.
- All other gains, including gains on disposal of shares in “property-rich” companies, are taxable only in the country of residence of the disponor.