Despite the global economic crisis, the Cyprus government continues its efforts to further upgrade and improve the position of Cyprus as an important international investment hub, in order to attract foreign investments. In this context, on February 18, the Finance Minister of Cyprus and the Ambassador of Federal Republic of Germany on the island have signed the agreement between Cyprus and Germany for the "Avoidance of Double Taxation and the Prevention of Tax Evasion with respect to taxes on income and on capital ".This agreement replaces old agreement between the two nations which was in force on May 9, 1974. According to the announcement of the Cyprus Ministry of Finance, a review of the old agreement was necessary due to economic and other international developments since 1974, like the reunification of Germany and the accession of Cyprus to the European Union and the Eurozone.

The new DTA includes improved provisions for the shipping sector,dividends, interest and capital gains. Additionally, the new DTA adopts the provisions of the Organization for Economic Cooperation and Development(OECD) on transparency and exchange of information. The new DTA will come into effect from the date the contracting states shall notify each other that the internal procedures required for the DTA to come into force have been completed.

The agreement marks the commencement of a new favorable economic and trade relations framework between Cyprus and the Federal Republic of Germany, which is deemed to be of an extreme importance for Cyprus economic prospects.

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Charilaos Hadjiioannou, BSc, ACA