🇩🇪 Tax Treaty
Cyprus–Germany Double Tax Treaty
The Cyprus-Germany DTA provides 0% withholding on royalties, making it a strong basis for Cyprus IP holding structures serving German customers. German anti-avoidance rules require genuine Cyprus substance.
Withholding Tax Rates at a Glance
(reduced rate)
(Cyprus side)
Full Withholding Tax Rates
| Payment Type | Treaty Rate | Conditions |
|---|---|---|
| Dividends (standard) | 15% | Standard WHT rate |
| Dividends (reduced) | 5% | companies holding ≥10% of payer capital |
| Interest | 10% | On interest payments between the countries |
| Royalties | 0% | On royalties, licences, and IP income |
| Capital Gains (Cyprus side) | 0% | 0% in Cyprus on disposal of shares (general exemption) |
Treaty signed: 1974. In force: 1977. Rates are treaty maxima — domestic law or EU directives may reduce them further.
Key Treaty Benefits
- ✓ 0% withholding tax on royalties from Germany
- ✓ 5% withholding on dividends for ≥10% holdings
- ✓ 10% withholding on interest (vs German domestic 25%)
- ✓ Capital gains on German shares exempted in Cyprus
Common Cyprus–Germany Structures
- → Cyprus IP company holding patents/software licensed to German operating company
- → Cyprus holding company above German GmbH — 5% WHT on dividends
Planning Notes
Germany applies domestic anti-avoidance rules (§50d EStG / treaty override) aggressively. The treaty benefits require genuine substance in Cyprus and should not be relied on for shell company structures.
Dual Residency Tiebreaker
Place of effective management
Planning a Cyprus–Germany structure?
Treaty rates are only part of the picture. We help you design and implement Cyprus company structures that take full advantage of the Cyprus–Germany double tax treaty — with genuine substance and robust documentation.