The Cyprus-France Double Tax Treaty underwent revision and was officially signed on December 11, 2023, with the announcement made in the Official Gazette on December 22, 2023. Replacing the previous agreement from 1981, the new treaty awaits activation upon the exchange of ratification instruments, with its provisions set to be enforced starting January 1 of the subsequent year.

This updated treaty was deemed necessary to align with contemporary international tax standards and to enhance the economic ties between Cyprus and France. It draws upon the latest edition of the OECD Model Convention for preventing double taxation, integrating modern protocols concerning information exchange, mutual agreement procedures, arbitration, and the principal purpose test, while also incorporating recommendations from the BEPS action plan.

Key features of the treaty include provisions on dividends, interest, royalties, and capital gains:

  • Dividends: A 0% withholding tax is applicable if the recipient company directly owns at least 5% of the paying company’s capital over a 365-day period encompassing the dividend payment date; otherwise, a 10% withholding tax applies.

  • Interest: No withholding tax is levied.

  • Royalties: A 5% withholding tax is imposed.

  • Capital Gains: Residents of one contracting state may be subject to taxation in the other contracting state if they realize gains from the sale of shares or similar interests in companies primarily involved in real estate, provided that within the 365 days preceding the sale, over 50% of the value of such shares or interests is derived directly or indirectly from immovable property situated in the other state.