🇬🇧 Tax Treaty
Cyprus–United Kingdom Double Tax Treaty
The Cyprus-UK double tax treaty is one of the most used in Cyprus tax planning. It provides 0% withholding on royalties and 0% on dividends for qualifying holding companies, making Cyprus the natural holding and IP location for UK businesses.
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) | 0% | companies holding ≥25% 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 Cyprus exemption) |
Treaty signed: 1974. In force: 1975. Rates are treaty maxima — domestic law or EU directives may reduce them further.
Key Treaty Benefits
- ✓ 0% withholding tax on royalties paid from UK to Cyprus
- ✓ 0% withholding on dividends when Cyprus company holds ≥25% of UK company
- ✓ 10% withholding on interest (vs 20% UK domestic rate)
- ✓ Capital gains on UK shares largely protected from UK CGT for Cyprus-resident sellers
Common Cyprus–United Kingdom Structures
- → Cyprus IP company licensing software to UK operating subsidiary
- → Cyprus holding company owning UK Ltd — dividends extracted with 0% WHT
- → UK founder moving to Cyprus as non-dom, retaining UK company — dividends flow tax-efficiently via treaty
Planning Notes
One of Cyprus's most important treaties. Zero withholding on royalties makes Cyprus an efficient IP holding location for UK-originated income. The 0% dividend rate (for 25%+ holding companies) is frequently used in UK→Cyprus holding structures.
Dual Residency Tiebreaker
Mutual agreement procedure; place of effective management
Planning a Cyprus–United Kingdom 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–United Kingdom double tax treaty — with genuine substance and robust documentation.