The new treaty was signed on 11 October 2010 and will take effect once it has been ratified by both countries. Until such time the existing treaty of 1981 will continue in force.
Withholding tax rates
The new treaty eliminates withholding tax on dividends where the beneficial owner is a company that directly holds at least 10% of the capital of the distributing company for an uninterrupted period of at least 12 months; otherwise, the rate is 15% (subject to certain exemptions granted to government bodies and qualifying pension funds). The new treaty also eliminates the 10% withholding tax rate on interest that applied under the old treaty. The article on royalties continues to provide for a 0% rate of withholding tax.
Since both Denmark and Cyprus have implemented the EU Parent-Subsidiary Directive and the EU Interest and Royalties Directive, a 0% withholding tax rate should be achievable in most cases.
Permanent establishment
Under the new treaty, a building site or construction or installation project must last for 12 months in order to give rise to a permanent establishment. This is in comparison with 6 months under the 1981 treaty.
Pensions and social security
Under the old treaty, exclusive taxing rights over pensions, annuities and social security payments are given to the source country. The new treaty gives the exclusive taxing right over non-state pensions to the country in which the recipient is resident, unless tax relief was previously obtained in the source country or where the contributions by the employer made in the source country are tax free for the beneficiary in that country.
Mutual Assistance and Exchange of Information
The articles on mutual agreement procedures and exchange of information have been aligned with the equivalent provisions of the OECD model convention. The obligations and powers of the contracting states have also been further clarified.
3 Kuwait-Cyprus double taxation agreement
The new treaty, signed on 5 October 2010, will take effect when it has been ratified by both countries. Until then, the existing treaty of 1984 will continue to be in effect.
Taxes covered
The range of Kuwaiti taxes covered by the treaty has been significantly expanded and now explicitly includes:
Withholding tax rates
The most beneficial change introduced in the new treaty is the elimination of withholding tax on dividends and interest (the 1984 treaty provided for a withholding tax of 10%).
Permanent establishment
Under the new treaty, the provision of consultancy or managerial services through employees or other personnel for a period of more than six months within any 12 month period gives rise to a permanent establishment.
Mutual Assistance and Exchange of Information
The articles on mutual agreement procedures and exchange of information have been aligned with the equivalent provisions of the current OECD Model Convention equivalent provisions and the obligations and powers of the contracting states have been clarified.
Withholding tax rates
The new treaty eliminates withholding tax on dividends where the beneficial owner is a company that directly holds at least 10% of the capital of the distributing company for an uninterrupted period of at least 12 months; otherwise, the rate is 15% (subject to certain exemptions granted to government bodies and qualifying pension funds). The new treaty also eliminates the 10% withholding tax rate on interest that applied under the old treaty. The article on royalties continues to provide for a 0% rate of withholding tax.
Since both Denmark and Cyprus have implemented the EU Parent-Subsidiary Directive and the EU Interest and Royalties Directive, a 0% withholding tax rate should be achievable in most cases.
Permanent establishment
Under the new treaty, a building site or construction or installation project must last for 12 months in order to give rise to a permanent establishment. This is in comparison with 6 months under the 1981 treaty.
Pensions and social security
Under the old treaty, exclusive taxing rights over pensions, annuities and social security payments are given to the source country. The new treaty gives the exclusive taxing right over non-state pensions to the country in which the recipient is resident, unless tax relief was previously obtained in the source country or where the contributions by the employer made in the source country are tax free for the beneficiary in that country.
Mutual Assistance and Exchange of Information
The articles on mutual agreement procedures and exchange of information have been aligned with the equivalent provisions of the OECD model convention. The obligations and powers of the contracting states have also been further clarified.
3 Kuwait-Cyprus double taxation agreement
The new treaty, signed on 5 October 2010, will take effect when it has been ratified by both countries. Until then, the existing treaty of 1984 will continue to be in effect.
Taxes covered
The range of Kuwaiti taxes covered by the treaty has been significantly expanded and now explicitly includes:
- Contribution to the Kuwait Foundation for Advancement of Science;
- Zakat payable under Law 46/2006; and
- Tax payable under the National Employee Law.
Withholding tax rates
The most beneficial change introduced in the new treaty is the elimination of withholding tax on dividends and interest (the 1984 treaty provided for a withholding tax of 10%).
Permanent establishment
Under the new treaty, the provision of consultancy or managerial services through employees or other personnel for a period of more than six months within any 12 month period gives rise to a permanent establishment.
Mutual Assistance and Exchange of Information
The articles on mutual agreement procedures and exchange of information have been aligned with the equivalent provisions of the current OECD Model Convention equivalent provisions and the obligations and powers of the contracting states have been clarified.
