Hong Kong and Cyprus Sign Double Taxation Avoidance Agreement

Hong Kong and Cyprus Sign Double Taxation Avoidance Agreement

On June 12, 2025, Hong Kong and Cyprus signed a Comprehensive Double Taxation Agreement (CDTA).

For Hong Kong, this is already its 58th tax treaty of this kind and the third one concluded since the beginning of the year.

This development is particularly important as Hong Kong and Cyprus are two significant jurisdictions for fintech, blockchain, and virtual asset businesses. Both regions continue to actively develop regulatory frameworks for innovative financial services and remain popular destinations for international business structuring.

What does this mean for companies?

✅ Elimination of Double Taxation

Companies and individuals earning income in both jurisdictions will be able to avoid double taxation.

✅ Reduction of Royalties Tax

One of the key changes is the reduction of withholding tax on royalties from 10% to 3%.

This is especially relevant for IT companies, technology holdings, software owners, and businesses working with intellectual property.

✅ Greater Tax Certainty

The agreement establishes clear rules for the taxation of dividends, interest, royalties, and business profits.

For international groups, fintech companies, and businesses operating in the virtual assets sector, this creates additional opportunities for efficient business structuring between Europe and Asia.

The experts at FinanceIQ Hub actively monitor global developments to provide clients with the best possible solutions. Looking to start your business today? Contact us for a consultation.