Amendment of the Agreement for the Avoidance of Double Taxation between the Republic of Cyprus and the Russian Federation

On 10 August 2020, the Republic of Cyprus and the Russian Federation concluded the negotiations of a new protocol to modify the existing provisions of the Cyprus-Russia tax treaty. The intention of both countries is for the reviewed withholding tax rates to be effective from 1 January 2021, through the signature of a protocol amending the existing tax treaty over the next months.

According to the revised agreement, the existing withholding tax (WHT) rates on dividend and interest payments made from Russia to Cyprus will increase to 15% subject to certain exceptions. These exceptions are:

Exceptions

The two countries have agreed that:

1. A 5% WHT should apply, where the recipient/beneficial owner of a dividend is

• a regulated entity such as a pension fund or insurance undertaking; or
• a company the shares of which are listed on a registered stock exchange; or
• a company the shares of which are listed on a registered stock exchange; or
• the Central Bank.

• an insurance undertaking company or a pension fund; or
• the Government, a political subdivision or a local authority; or
• the Central Bank; or
• A banking institution.

• corporate bonds;
• government bonds and
• Eurobonds.

Please note that the zero WHT on royalty payments from Russia to Cyprus will not change. The aim of both countries is for the Agreement to be signed in autumn 2020 so as to apply as from January 1, 2021.