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Cyprus-Lithuania Double Tax Treaty

The new year of 2015 also marks the implementation of the Cyprus – Lithuania Double Tax Treaty (DTT), which was initially signed in June, 2013.

On January 1st, Lithuania became the latest EU Member State to join the Eurozone, replacing the local currency (Litas) with the Euro.

The ever growing network of Cypriot double tax treaties is very significant and important, boosting trade relations with new markets, especially those in emerging countries, providing further tax incentives for investment etc and of course, strengthening Cyprus’ position as a good economic and tax friendly hub for engaging with other markets.

Specifically, in the case of Lithuania, investment in local real estate is now particularly beneficial, if effected through Cypriot companies.

The Key provisions of the DTT, can be summarized as follows:

  • 0% - 5% withholding tax on dividends payments, depending on whether the recipient is a company and is the beneficial owner of the shares for which dividends are paid and that the said company has a direct holding of at least 10% of the capital of the company paying the dividends, in which case there is 0% withholding. 5% in all other cases.

  • 0% withholding tax on interest payments.

  • 5% withholding tax on royalties provided that the recipient is the beneficial owner of the royalties.

  • Taxation of capital gains on sale of shares will be made in the country in which the alienator is resident. The exception to this, is when the said sale of shares will result in a gain or majority of the gain is from exploration or exploitation rights or property situated in the other Treaty Party’s country and is used in connection with exploration or exploitation of the seabed or subsoil or their natural resources situates in the other State, in which vase it will be taxed in the other State.

  • There is no “Limitation of Benefits” clause in the Treaty.

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