Newsflash: Cyprus Russia. Double Tax treaty.
We have been watching closely for the past two month the issue of the Double Tax Treaty negotiations between Cyprus Government and Government of Russian Federation (“DTT”), which eventually came to a positive outcome and imperative amendments were agreed between Russia and Cyprus.
The goal which the parties set is to sign the DTT by Autumn 2020, so that it can be implemented on January 1, 2021.
Background
Cyprus jurisdiction was always very popular with Russian companies. According to estimates cited by the Russian Ministry of Finance, more than 1.4 trillion rubles were withdrawn to Cyprus in 2018, and more than 1.9 trillion rubles in 2019.
Until now, the tax agreement with Cyprus provided attractive conditions in terms of taxation. The rate for the payment of dividends to Cyprus could be reduced to 5% or 10%, and on interest on loans - to 0%.
What has been amended?
Through extensive negotiations Cyprus ensured amongst others, the following:
Fixing the withholding tax (the “WHT”) to 15%.
Exemptions from WHT
15% withholding tax WHT will not apply to (i) dividends for regulated entities i.e. pension funds, insurance companies, listed companies (ii) the interest payments from corporate and government bond, as well as, Eurobonds.
Updates are to follow.
For further information on this topic please contact
Mrs. Liza Bokova ( lbokova@pittaslegal.com ) at SOTERIS PITTAS & CO LLC,
by telephone (+357 25 028460) or by fax (+357 25 028461)
The content of this article is intended to provide a general guide to the subject matter. Specialist advise should be sought about your specific circumstances.
