Nicosia – The Double Tax Treaty (DTT) between Cyprus and Bahrain was entered into force, the Cyprus Ministry of Finance has announced.

The treaty, signed 9 March 2015, was activated on 26 April 2016 and provides for zero withholding tax on payments of dividends, interest, and royalties.

The treaty further provides that capital gains from the sale of property are taxable only in the country of the seller’s residence except for sales of immovable property or sales attributed to a permanent establishment.

As such, under the treaty, any gains arising from the sale by a Cyprus resident of Bahrain stock can be taxed only in Cyprus, even if the company holds Bahrain real estate.

Cyprus does not currently tax profits from the disposal of shares unless the company whose shares are disposed directly holds immovable property located in Cyprus or indirectly holds a company or companies that own immovable property located in Cyprus, and at least 50% of the market price of the shares results from the market value of that immovable property.

The DTT was originally signed during an official visit by Cypriot President, Nicos Anastasiades to the Arab kingdom.

During the two-day high level visit, Anastasiades, the King of Bahrain, Hamad bin Isa Al Khalifa and the delegations of the two countries held official talks at the Palace in Manama. Issues relating to the Cyprus problem, bilateral relations, EU-Bahrain ties, regional and international matters, as well as the economy were discussed.