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HMRC internal manual

Double Taxation Relief Manual

DT: Cyprus: double taxation agreement, Article 13: Royalties

(1) Royalties derived from a Contracting State by a resident of the other Contracting State who is the beneficial owner thereof shall be taxable only in that other State.

(2) Notwithstanding the provisions of paragraph (1) of this Article royalties received as consideration for the use of, or the right to use, cinematograph films including films and video tapes for television may be taxed in, and according to the law of, the Contracting State from which they are derived, but the tax so charged shall not exceed 5 per cent of the gross amount of such royalties.

(3) The term `royalties` as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films or tapes for television or broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the beneficial owner of the royalties, being a resident of one of the Contracting States, has in the other Contracting State from which the royalties are derived a permanent establishment with which the right or property giving rise to the royalties is effectively connected. In such a case the provisions of Article 8 shall apply.

(5) Where owing to a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties paid, having regard to the use, right or information, for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such a case, the excess part of the payment shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention.