* Cyprus And Germany Agree Double Taxation PactThe Cyprus Inland Revenue Department announced last week that a revised agreement between Cyprus and Germany for the avoidance of double taxation has recently been reached.
The "Agreement for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Tax on Income and Capital" between Cyprus and Germany was signed on June 10, 2005. However, its ratification by the German government may be delayed by the impending general election, which is expected to take place in September this year.
One of the more significant outcomes of the agreement is a clarification of taxation in the shipping sector. According to the new deal, profits from international ships and aircraft in international traffic "shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated".
The new agreement also clarifies the taxation of ships' crews who will be taxed according to the residential status of their employer, rather than according to an individual crew member's residential status, and includes provisions which seek to prevent fiscal evasion.
The new agreement will be particularly welcome to the large contingent of German ship-owning firms based on the island of Cyprus, which is the third-largest ship management centre worldwide after Singapore and Hong Kong.