A DTT agreement means that, a non-resident individual or company will not be taxed in both countries for the same income.
After an extensive period of negotiations, the agreement was signed at a technocrat-level in The Hague. This DTT agreement is considered especially important, as competition throughout the years in efforts by the two countries to attract investment and provide services to multi-national companies was strong and will continue to be.
Moreover, this agreement is Cyprus’s 66th to come in effect and represents an important milestone on Cyprus’ journey to be recognized as a preferred low-tax international financial centre. Cyprus now has DTTs with all European Union member states except Croatia.
The text of the agreement with The Netherlands has not yet been published but is likely to follow the OECD Model Tax Convention. DTTs safeguard fair taxation practices of both physical persons and legal entities by ensuring that the same income stream is not taxed twice. Additionally, they promote economic cooperation and information exchange between states.
Cyprus’s efforts to expand their DTT network are ongoing and is currently aiming for a taxation avoidance treaty to be signed with Hong Kong, Pakistan, Nigeria and Jordan.