Luxembourg signs 27th EU tax convention with Cyprus

Luxembourg and Cyprus on Monday signed a bilateral convention for the elimination of double taxation.

Luxembourg’s Finance Minister Pierre Gramegna was on a working visit in Nicosia and signed the convention with his Cypriot counterpart Harris Georgiades.

Cyprus was the last EU member state not to have a tax convention with Luxembourg. The signing of this treaty closes that gap, with Luxembourg now having bilateral conventions with all EU member states.

The convention is based on an OECD model convention for the avoidance of double taxation on income and on capital.

It incorporates minimum standards of the Base Erosion Profit Shifting (BEPS) project as issued by the OECD and G20 in October 2015.

Gramegna commented: ”The text includes the most recent international standards on the exchange of information and takes into consideration the OECD’s BEPS project. It will allow for judicial predictability and security and represents a new tool to strengthen the bilateral economic relations between our countries”.

During a joint press conference following the signing of the treaty Cypriot Minister Georgiadis cautioned against current plans to introduce a Common Consolidated Corporate Tax Base (CCTB) on a European level.

Gramegna reiterated his government’s position of favouring ”a level playing field” created by the BEPS project ensuring that taxation remains a national prerogative to make sure Europe remains competitive in this field.