Netherlands concludes tax treaty with Cyprus

The tax treaty

The treaty was signed on Tuesday, June 1, 2021 in Nicosia. The Netherlands has now concluded a tax treaty with all countries of the European Economic Area (EEA).

The tax treaty removes potential thresholds (double taxation) that could otherwise impede economic activities in Cyprus and from Cyprus in the Netherlands. A treaty also ensures legal certainty for taxpayers in both treaty countries.

In addition, the treaty contains agreements to prevent tax avoidance. For example, the treaty includes an anti-abuse provision to prevent the treaty being used solely to avoid taxation. If this is the case, it will no longer be possible to invoke the benefits of the tax treaty.

With this anti-abuse provision and the other agreements in the treaty, this tax treaty meets the minimum standards of the so-called BEPS (Base erosion and profit shifting) project of the OECD/G20 against tax avoidance.

The treaty will now go through the required approval process in both countries. In the Netherlands, the treaty will first be submitted for advice to the Council of State and then to parliament for approval.

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