Cyprus recently signed two significant new tax agreements.
On July 25, Switzerland and Cyprus signed a new agreement for the avoidance of double taxation. It is the first double tax agreement between the two countries and will contribute to the development of bilateral economic relations. The agreement will come into force once it has been ratified by both countries.
The new agreement closely follows the 2010 Organisation for Economic Cooperation and Development (OECD) Model Convention, with only minor modifications, and the protocol to the agreement clarifies certain detailed provisions.
The agreement covers all taxes on income and wealth levied by a contracting state or by any of its subdivisions or local authorities, including taxes on capital appreciation and on gains from the alienation of property. Income taxed at source and lottery winnings are excluded from the scope of the agreement.
As well as being one of the world's most important financial centres, Switzerland is the base for many ultra-high net worth individuals with business and personal interests in Cyprus. The new double tax agreement will be a valuable addition to Cyprus's extensive treaty network and it is hoped that the remaining steps required to bring it into effect will be completed soon.
Cyprus signed the CoE-OECD Convention on Mutual Administrative Assistance in Tax Matters (ETS no.127) and its Protocol (ETS no.208) in Strasbourg on 10 July.
The Convention seeks to strengthen international cooperation among member states of the Council of Europe and the Organisation for Economic Cooperation and Development (OECD) with a view to combating and countering tax avoidance and evasion.
The Convention was developed jointly by the OECD and the Council of Europe in 1988 and amended by Protocol in 2010. It is the most comprehensive multilateral instrument available for all forms of tax cooperation to tackle tax evasion and avoidance.