🇮🇱 Tax Treaty
Cyprus–Israel Double Tax Treaty
The Cyprus-Israel double tax treaty is central to planning for the thousands of Israeli founders and investors who have relocated to Cyprus. With 0% royalty withholding and 5% dividend withholding for qualifying holdings, it enables efficient profit extraction from Israeli operations.
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 ≥25% of payer shares |
| Interest | 10% | On interest payments between the countries |
| Royalties | 0% | On royalties, licences, and IP income |
| Capital Gains (Cyprus side) | 0% | 0% in Cyprus; Israel may tax gains from Israeli-sited assets |
Treaty signed: 1966. In force: 1966. Rates are treaty maxima — domestic law or EU directives may reduce them further.
Key Treaty Benefits
- ✓ 0% withholding tax on royalties from Israel
- ✓ 5% withholding on dividends (qualifying holdings)
- ✓ 10% on interest payments
- ✓ Strong treaty protection for Israeli founders operating through Cyprus companies
Common Cyprus–Israel Structures
- → Israeli tech company licensing IP to Cyprus IP company — 0% royalty WHT
- → Cyprus holding company above Israeli operating company — 5% dividend WHT
- → Israeli founder relocating to Cyprus, extracting profits from Israeli company via treaty
Planning Notes
Given the significant Israeli community in Cyprus, this treaty is heavily used. The 0% royalty withholding and 5% dividend rate for qualifying holdings make it attractive for Israeli founders relocating to Cyprus.
Dual Residency Tiebreaker
Mutual agreement procedure
Planning a Cyprus–Israel 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–Israel double tax treaty — with genuine substance and robust documentation.