The treaty is based on the OECD Model Tax Convention for the Avoidance of Double Taxation on Income and on Capital and it includes the exchange of financial and other information.

The key provisions of the agreement are summarised below:

• Permanent establishment means a fixed place of business through which the business of an enterprise is wholly or partly carried on. The term includes (a) a building site, a construction, assembly or installation project in connection therewith, but only where such site, project or activities continue for a period of more than 6 months; (b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue within the country for a period or periods aggregating more than 6 months within any 12- month period.
• No withholding tax on dividends so long as the beneficial owner holds at least 25% of the shares of the company paying the dividends. In all other cases the withholding tax rate is 5%.
• No withholding tax on interest so long as the recipient of the interest is the beneficial owner of the income.
• 5% withholding tax on royalties so long as the royalties are paid for the use of, or the right to use, industrial, commercial or scientific equipment. In all other cases the withholding tax rate is 8%.

Note that under the Cyprus tax legislation there is no withholding tax on dividends, interest and royalties paid to non-Cyprus tax residents.