On 29 June 2016 the negotiations for a double tax agreement between Cyprus and India were successfully concluded in New Delhi, for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion pertaining to taxes on income between the two countries, as confirmed by the Finance Ministry, with Cyprus accepting the proposed changes regarding capital gains and taxation, as set by the Indian government and the agreement is expected to be signed over the next couple of months.

All investments undertaken prior to April 1, 2017 will be grandfathered as confirmed by the Cyprus Ministry of Finance, “The agreement reached provides for source-based taxation for gains from the alienation of shares. Investments undertaken prior to April 1, 2017 are grandfathered with the view that taxation of disposal of such shares at any future date remains with the contracting state of residence of the seller.” Investments further to this date, with view to taxation and disposal of shares, will remain with the contracting state of residence of the seller.

This will have important implications for Cyprus, with Indian Authorities confirming that they will retrospectively revoke Cyprus’ classification in the ‘Notified jurisdictional Area’, as from 1 November 2013.

The agreement is set to further enhance business, trade, and political and economic links between the two countries, with further cooperation agreements being expected in key industry sectors such as agriculture, defence, energy and renewables.

Article by C. Savva & Associates Ltd