The treaty is active as of 01-01-’24. It includes a number of issues which can be relevant for Pensions and Payroll Tax. Therefore we will now mention the most relevant aspects thereof:
• Pensions are essentially subject to home state taxation. However, if the total in pension payments (including pensions which fall under the government clause) amounts to more than € 15.000,- the source state taxation will also apply.
• The wording of the directors’ clause deviates slightly from the OECD Model Treaty in that it uses the term "other remuneration" instead of "comparable payments’". This is to put beyond doubt that this provision also covers remuneration in kind and share options.
A second paragraph was added at the request of the Netherlands. It states that the expression "member of the board of directors" includes those charged with the day-to-day management of the company and those charged with the supervision of that, such as the members of the supervisory board.
• Income earned by a resident of one country from employment on the continental shelf of the other country may be taxed in the employment state.
An exception provides for an exclusive right to levy tax for the state of residence if the conditions laid down are cumulatively met. In other words: the 183-day rule for workers on the continental shelf has been replaced by a 30-day rule.
• The Netherlands is not required to apply the exemption method to income which is exempted by Cyprus on the basis of the provisions of the Treaty.
Which is intended to prevent that income is not taxed at all in both treaty countries (or only partially subject to tax) due to a different interpretation of the treaty provisions.