Cyprus: Cyprus and Russia amend their Double Taxation Avoidance Agreement (DTAA) – August 2020

Cyprus and Russia reached an agreement on 10 August 2020 for amending their DTAA signed in 1998 (as amended in 2010). 

The intention of both parties is to sign the protocol during Autumn 2020 with the amendments being applicable from 1 January 2021. The final details of the below mentioned provisions will be available once the text of the agreed amending protocol is released. 

Russia officially stated its intention to initiate negotiations of similar amendments to its tax treaties with Luxembourg, Malta and the Netherlands. 

Dividends and Interest 

It was agreed that the existing withholding tax (WHT) rates on dividend and interest payments received in Cyprus from Russia will increase to 15% subject to exceptions below. 

A WHT of 5% will be applied if the recipient/beneficial owner of the dividend is a regulated entity, a company the shares of which are listed on a registered stock exchange subject to conditions and the Government or a political subdivision or a local authority. 

Additionally, no WHT will be applied if the recipient/ beneficial owner of the interest is an insurance undertaking or a pension fund, the Government or a political subdivision or a local authority and a banking institution. Moreover, no WHT will be applied on interest earned on listed corporate bonds, government bonds and Eurobonds. 

Finally, if the recipient/beneficial owner of the interest is a company whose shares are listed on a registered stock exchange subject to conditions, the WHT is capped at 5%. 

Royalties 

The WHT on royalties received in Cyprus from Russia remain at NIL.

‍