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New Double Tax Treaty with Barbados

New Double Tax Treaty with Barbados

27 September 2018 Tax Law

On the 3rd of May 2017, Cyprus and Barbados have signed a Double Tax Treaty (DTT) which has been effective as from 1st of January 2018.  The recently concluded treaty is based on the Organization for Economic Co-operation and Development Model Tax Convention framework with several modifications, by which the Cyprus DTT cluster is additionally widened in juxtaposition with the new influx of investment opportunities and trade relations between the contracting states as well as other countries.

The DTT encompasses a 0% withholding tax on dividends, interest and royalties in payments made by a resident of a contracting state to a resident of the other, provided that, the royalties and interest do not exceed what would cover an arm's-length basis transaction.

In relation to capital gains stemming by a resident of one country from the alienation of immovable property located in the other, parallel to gains deriving from the alienation of movable property incorporated in a permanent establishment's business property, may be levied in the country in which the property is situated. In addition, amongst other capital gains, the buy-and-sell of shares in property-rich firms, are taxable only in the country in which the seller is located.