Pursuant to the latest discussions and talks between the Republic of Cyprus and the Russian Federation, an agreement has been concluded for the amendment to the Double Tax Treaty between Cyprus and the Russian Federation. The following announcement was issued on the 11th August 2020 by the Ministry of Finance of the Republic of Cyprus:

The Ministry of Finance is expressing its satisfaction for the conclusion today, 10th August 2020, of the extensive negotiations on the Agreement for the avoidance of Double Taxation between the Republic of Cyprus and the Russian Federation.

The Russian side has requested the amendment in two key elements of the Agreement, namely the increase of the withholding tax on income from dividends and interest to 15% respectively.

The Cyprus side secured, among others, the reduction of the said withholding tax (to nil or 5% as appropriate) of 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 Cypriot side has also secured the maintaining of zero withholding tax on royalty payments.

The aim of both sides is for the Agreement to be signed in Autumn 2020 so as to apply as from January 1, 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 effective date also being January 1, 2021, as this reflects Russia's fiscal and tax policy to raise Government revenues.

It should be emphasised that the updating of the existing network of double tax agreements in line with international developments is a priority for the Government.

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