The Cypriot Minister of Foreign
Affairs, Erato Kozakou Markoulli, and the Austrian Finance
Minister, Andreas Schieder, have signed a Protocol recently
amending the current Convention for the Avoidance of Double
Taxation (DTT) between the Republic of Austria and the Republic of
Cyprus with respect to taxes on income and capital that was signed
in Vienna on 20 March 1990.
The updated treaty aligns the
existing agreement between the two countries dating from 1990 with
the new Organisation for Economic Cooperation and Development
The Protocol amends Article 26 of
the DTT relating to the Exchange of Information. In accordance with
the Protocol, the Contracting states shall exchange such
information as is forseeably relevant for the purpose of carrying
out the provisions of the DTT between Austria and Cyprus.
The Contracting States are not
obliged to exchange such information which is not obtainable under
the laws of a Contracting States; however a Contracting State is
expected to provide information to the Requesting State even if the
supply of such information is not of domestic interest to the
Contracting State supplying the information given that such
information is permitted to be collected by the laws of the
respective Contracting State.
Such information will be treated
with the strictest of confidentiality by the relevant Competent
Authorities. What is more, the Competent Authorities are not
allowed to supply information which may disclose any trade,
business, industrial, commercial or professional secret or trade
process, or information, the disclosure of which will be contrary
to public policy.
In line with the above, it should
also be noted that the legislation of Cyprus (Assessment and
Collection of Taxes Law) has been revised accordingly, as to enable
the exchange of information with other jurisdictions, by the
incorporation into the domestic legislation of the exchange of
information provisions of Article 26 of the OECD Model Treaty. This
is seen as a measure to tackle tax evasion, which has enabled the
removal of Cyprus from various blacklists for non-cooperative
As per the revised legislation of Cyprus, information may only
be collected by the Cypriot Tax Authorities if the written consent
of the Attorney-General is obtained.
When making a request, the competent
authority of the State requesting the information shall provide the
following information in order to demonstrate the foreseeable
relevance of the information to the request:
(a) The identity of the person under
examination or investigation;
(b) A statement of the information
sought including its nature and the form in which the applicant
State wishes to receive the information from the requested
(c) The tax purpose for which the
information is sought;
(d) Grounds for believing that the
information requested is held in the requested State or is in the
possession or control of a person within the jurisdiction of the
(e) To the extent known, the name
and address of any person believed to be in possession of the
(f) A statement that the applicant
State has pursued all means available in its own territory to
obtain the information, except those that would give rise to
disproportionate difficulties; and
(g) A statement that the request is
in conformity with the law and administrative practices of the
applicant State, that if the requested information was within the
jurisdiction of the applicant State then the competent authority of
the applicant State would be able to obtain the information under
the laws of the applicant State or in the normal course of
administrative practice and that it is in conformity with this
Once notifications are received by
both states that all legal procedures for the entry into force of
the Protocol have been completed, the Protocol shall enter into
force on the first day of the third month next following the date
of receipt of the latter of the notifications referred to
The updated treaty brings into line
the present agreement with OECD requirements for greater
transparency and prevention of tax avoidance making Cyprus a safe
destination for investments.
The Protocol is intended to enhance
legal certainty for businesses as it clarifies the Cyprus position
on exchange of information and will act to the advantage of
Austrian companies operating in Cyprus.
The Protocol to the DTT continues to
render Cyprus one of the most advantageous jurisdictions for
businessmen and is expected to further enhance financial growth and
economic cooperation between the two jurisdictions.
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