Cyprus has an impressive double taxation treaty network which one of the main reasons why Cyprus has become a very popular jurisdiction for establishing a base for international business. Even though many of the well-known offshore tax jurisdictions impose a low or nil income tax on the company profits, they do not have double tax treaties. Cyprus offers a basket of incentives including the low tax on the net profits and the double tax treaties.

The Cyprus double tax treaties have been drafted very closely to the Organisation in Economic Cooperation and Development (OECD) Model Treaty. All the treaties provide relief from double taxation by applying the credit method to the taxation of dividends and interest, i.e. by allowing tax payable in the other country as a credit against tax payable in Cyprus, including the special defence tax, so that the taxpayer only pays the higher of the two rates of tax and is not taxed twice on the same income.

The following table gives a summary of the withholding taxes provided by the double tax treaties entered into by Cyprus with other countries. It is worth noting that several other double tax treaties are currently under negotiation, or awaiting ratification.