The income tax treaty between Cyprus and Jersey entered into force on 17 February 2017. The treaty, signed 11 July 2016, is the first of its kind between the two jurisdictions.
The treaty covers Cyprus income tax, corporate income tax, the special contribution for the defence of the republic, and capital gains tax. It covers Jersey income tax.
The following capital gains derived by a resident of one Contracting Party may be taxed by the other Party:
Gains from the alienation of other property by a resident of a Contracting Party may only be taxed by that Party.
Article 20 (Offshore Activities) provides that a permanent establishment will be deemed constituted if an enterprise of one Contracting Party carries on offshore activities in connection with the exploration or exploitation of the seabed or subsoil or their natural resources situated in the other Party, if such activities continue for a period or periods aggregating more than 30 days in any 12-month period. In determining if the 30-day period has been exceeded, activities of an associated enterprise that are substantially the same will be included.
Article 20 also provides that gains derived by a resident of one Contracting Party may be taxed by the other Party if derived from the alienation of exploration or exploitation rights, property situated in the other Party used in connection with exploration or exploitation, and shares deriving the greater part of their value directly or indirectly from such rights or property.
Both jurisdictions apply the credit method for the elimination of double taxation.
The treaty applies from 1 January 2018.
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