SIGNING OF TREATY FOR THE AVOIDANCE OF DOUBLE TAXATION WITH LUXEMBOURG AND BARBADOS
The wide network of treaties for the avoidance of double taxation developed by Cyprus has been expanded with the signing of treaties with the Grand Duchy of Luxembourg on the 8th of May, as well as with Barbados on the 3rd of May.
Agreements for the avoidance of double taxation allow for the avoidance of taxation on income earned in either of the countries that are parties to the treaty twice, i.e. by both countries where the income in question is taxable. Usually, a credit is allowed against the tax levied in the country in which a company is tax resident, for tax levied in the other country that is party to the treaty.
The treaties incorporate the provisions of the Base Erosion and Profit Shifting framework and are based on the model convention of the Organisation for Economic Co-operation and Development for the avoidance of double taxation on income and on capital.
The signing of the treaties further strengthens the position of Cyprus as an international business centre, having over 60 treaties for the avoidance of double taxation in force.