Cyprus and Sweden have signed a new protocol in Nicosia amending the existing agreement for the avoidance of double taxation. The document was signed by Cyprus Finance Minister Makis Keravnos and Sweden's Ambassador to the Republic of Cyprus, Martin Hagström.
The signing of the protocol marks an important step in updating tax relations between the two countries. It is expected to improve transparency in international transactions and create more predictable conditions for companies and investors.
What Is Changing in the Agreement?
The new protocol introduces amendments to the basic Convention for the Avoidance of Double Taxation, signed in London on 25 October 1988. The main purpose of the update is to bring the agreement into line with modern international standards for tax cooperation. The document includes the minimum standards of the BEPS initiative (Base Erosion and Profit Shifting), developed by the Organisation for Economic Co-operation and Development. These standards are aimed at combating the erosion of the tax base and the artificial shifting of profits between jurisdictions. The protocol also updates provisions on the exchange of tax information between Cyprus and Sweden and clarifies a number of bilateral procedures related to the application of the tax agreement.
As explained by the Ministry of Finance of Cyprus, a separate document was required due to constitutional specificities in Swedish legislation, which made the direct application of the Multilateral Convention more difficult. This convention was designed to quickly and automatically introduce BEPS-related provisions into existing double taxation agreements. However, in the case of Sweden, the two sides decided to update the agreement through a separate bilateral protocol.
When Will the Changes Come Into Force?
The signed document has not yet entered into force. For the protocol to become effective, both countries must complete their internal ratification procedures. After that, the updated rules will apply to transactions between Cyprus and Sweden under the existing tax agreement.
Cypriot authorities stress that modernising the country's network of double taxation agreements remains one of the key elements of its economic strategy. Cyprus already has one of the broadest tax treaty networks in Europe, with more than 65 international agreements. Updating the agreement with Sweden is expected to strengthen the island's position as an international financial and business centre, increase foreign investor confidence, and ensure compliance with modern tax transparency requirements. Experts note that such changes are especially important for companies operating in international services, technology, investment, and asset management, as they reduce tax uncertainty and simplify cross-border transactions between Cyprus and the Nordic countries.