A tax treaty has been signed between the Netherlands and Cyprus

tax treaty

The Netherlands signed a tax treaty with Cyprus. This treaty contains agreements that should prevent citizens or companies from paying double taxation on the one hand and avoiding taxation on the other.

The treaty was signed in Nicosia on Tuesday, June 1, 2021. As a result, the Netherlands has now concluded a tax treaty with all countries of the European Economic Area (EEA).

Important is that the tax treaty removes potential barriers (double taxation) that could otherwise hinder economic activities in Cyprus and from Cyprus in the Netherlands. Also, a treaty provides legal certainty for taxpayers in both treaty countries.

Preventing tax evasion

In addition, agreements have been made in the treaty to prevent tax avoidance. For example, the treaty includes an anti-abuse

provision that prevents the treaty from being used solely to avoid taxation. If this is the case, the possibility to invoke the benefits of the tax treaty will lapse.

With this anti-abuse provision and the other agreements in the treaty, this tax treaty complies with the minimum standards of the so-called BEPS (Base erosion and profit shifting) project of the OECD/G20 against tax avoidance.

Approval process

The treaty will now go through the required approval process in both countries. In the Netherlands, the treaty first has to be submitted to the Council of State for advice and then to parliament for approval.

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