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Cyprus - Russia Double Tax Treaty amendment

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On 8 September 2020, Cyprus and Russia signed a protocol amending the double taxation treaty following the conclusion of negotiations in August.

 

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

 

Exceptions from 15% WHT

The two countries have agreed that 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;
  • a company the shares of which are listed on a registered stock exchange (subject to conditions);
  • the Government or a political subdivision or a local authority;
  • the Central Bank.

Moreover, the two countries have agreed that no WHT shall apply on interest payments if the beneficial owner is:

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

Furthermore, no WHT shall apply in respect of interest earned on the following listed bonds:

  • corporate bonds;
  • government bonds;
  • Eurobonds.

Finally, where the beneficial owner of the interest is a company whose shares are listed on a registered stock exchange (subject to conditions), the WHT shall not exceed 5%.

 

Nil WHT on royalty payments

The nil WHT on royalty payments from Russia to Cyprus will not change.

 

Local Withholding Tax Rates Remain at 0% for Non-Residents

Cyprus will continue to apply no withholding tax on dividend and interest payments to non-residents of Cyprus as per the local domestic legislation.

 

Effective date

The provisions of the amending protocol will come into force as from 1 January 2021.

 

 

The tax team of CosmoCo, monitoring all the ongoing developments, is able to provide you with professional tax advice on how you can incorporate this Double Tax Agreement in your tax planning strategy.

 

Contact persons

Leonidas Papadopoulos                          Pavlos Tsiaklides
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