Cyprus and Russia reached an agreement to amend the Double Tax Treaty
On 10 August 2020, following extensive negotiations, Cyprus and Russia reached an agreement for the amendment of the Agreement for the avoidance of Double Taxation.
The aim of both sides is for the Agreement to be signed in autumn 2020 and become effective as from 1 January 2021.
The Russian side has confirmed the termination of the process to denounce the Agreement. At the same time, it confirmed that the same provisions will also apply to agreements that Russia has concluded with other treaty partners and with the effective date also being 1 January 2021, as this reflects Russia’s fiscal and tax policy to raise Government revenues.
The Russian Federation has asked for the amendment of two key articles of the Agreement, more specifically to increase the withholding tax on income from dividends and interest from 5% to 15%.
The Republic of Cyprus secured, among others, the reduction of the said withholding tax to 0% or 5% as appropriate for regulated entities, such as pension funds and insurance undertakings as well as listed entities with specific characteristics.
Additionally, exemption from the said withholding tax applies on interest payments from corporate bonds, government bonds and Eurobonds. The Republic of Cyprus has also secured the maintaining of 0% withholding tax on royalty payments.
Cyprus Ministry of Finance issued a written statement on Monday saying that "the updating of the existing network of double tax agreements in line with international developments is a priority for the Government."
You may read the respective announcement of Cyprus Ministry of Finance, in Greek and Russian (unofficial translation).
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Tax and Insolvency Department.