23 September 2014
According to a recent update published by the Norwegian Ministry of Finance, the new income tax treaty between Norway and Cyprus entered into force on 8 July 2014. The treaty, signed 24 February 2014, will replace the 1951 treaty between the two countries as extended by the 1955 exchange of notes.
The treaty applies to the following Norwegian taxes:
The treaty applies to the following Cyprus taxes
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 for treaty purposes. If the competent authorities cannot reach mutual agreement in regard to a taxpayer's residence, 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.
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 State for an aggregate period of 183 days or more in a 12 month period.
Both countries apply the credit method for the elimination of double taxation.
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.
The treaty applies from 1 January 2015. 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.
Once effective, the treaty replaces the 1951 treaty between the two countries as extended by the 1955 exchange of notes.
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