The new Double Tax Treaty (the “New DTT”) between Cyprus and Egypt that was signed on 8 October 2019 was ratified by Cyprus on 25 October 2019. The New DTT will become effective on or after 1 January of the year following that in which all legal procedures are completed for the New DTT to enter into force. Once the New DTT becomes effective, it will replace the existing tax treaty between the two countries that has been effective since 1996.
The main provisions of the New DTT are briefly outlined below:
The New DTT provides for 5% withholding tax on dividends if the beneficial owner of the dividends (other than a partnership) holds directly at least 20% of the capital of the company paying the dividends throughout the period of 365 days that includes the day of the payment of the dividends. In all other cases, a 10% withholding tax applies.
With respect to interest and royalty payments, a 10% withholding tax applies provided that the recipient is the beneficial owner such interest/royalty payments.
With respect to capital gains, the country of tax residence of the seller retains the exclusive taxing rights on gains arising from the disposal of shares, except in the following cases:
Disposal of shares (other than shares listed on an approved stock exchange) or any other comparable interest which derive, at any time during the 365 days preceding the disposal, more than 50% of their value directly or indirectly from immovable property situated in the other Contracting State; and/or
Disposal of shares (other than shares listed on an approved stock exchange), comparable interests, securities or other rights, representing the capital of a company which is tax resident in the other Contracting State if the seller, at any time during the 365 days preceding such disposal, held directly or indirectly at least 20% of that company.
The full text of the New DTT and protocol can be found here.