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Norway-Cyprus

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Norway Ratifies Tax Treaty with Cyprus

On 3 June 2014, Norway ratified the tax treaty with Cyprus. As previously reported, the tax treaty was signed 24 February 2014 and once in force and effect will replace the 1955 tax treaty between the two counties.

Taxes Covered

The treaty applies to the following Norwegian taxes:

  • National tax on income
  • Municipal tax on income
  • County municipal tax on income
  • National tax relating to income from the exploration for and the exploitation of submarine petroleum resources and activities and related work, including pipeline transport of petroleum produced
  • National tax on remuneration to non-resident artistes

The treaty applies to the following Cyprus taxes

  • Income tax
  • Corporate income tax
  • Special contribution for the Defense of the Republic
  • Capital gains tax

Residence

If a company is a resident of both states, it will be deemed to be a resident of the State in which its effective management is located. If the competent authorities cannot reach mutual agreement in regard to a taxpayer's residence for tax treaty purposes, the taxpayer will not be considered a resident of either State nor eligible for the treaty benefits aside from those covered in Article 22 Elimination of Double Taxation, Article 23 Non-Discrimination, and Article 24 Mutual Agreement Procedure.

Service PE

In general, a service PE will be deemed constituted when an enterprise from one Contracting State furnishes services in the other State through one or more individuals present in that other country for an aggregate period of 183 days or more in a 12 month period.

Withholding Tax Rates

  • Dividends - 0% if the beneficial owner is a company directly holding at least 10% of the paying company's capital, otherwise 15%
  • Interest - 0%
  • Royalties - 0%

Double Taxation Relief

Both countries use the credit method for the elimination of double taxation.

MFN Provision

A protocol to the treaty, signed the same date, includes the provision that if Norway enters into an agreement with any EEA or EU Member State that provides for a lower withholding tax rate on dividends, then an amendment should be made to the Norway-Cyprus treaty to provide such lower rate.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged and will generally apply from 1 January of the year following its entry into force. However, Article 26 Assistance in Collection will not apply in the case of Cyprus until written notice is provided by Cyprus to Norway that confirms that Cyprus is able to provide such assistance.

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