Cyprus has agreed to Russia’s terms and conditions for amendments to Double Taxation Avoidance Agreement
As a result of negotiations between the delegation of the Republic of Cyprus and the delegation of the Russian Federation, a decision was made to cancel the denunciation of the bilateral agreement on the double taxation avoidance (DTAA). Russian Federation Ministry of Finance informs that the Cypriot delegation fully agreed to the terms and conditions of the Russian side in terms of increasing the withholding tax rate up to 15% for dividends and interest.
Cyprus Ministry of Finance, in turn, informs that it has managed to maintain the benefits (tax rates of 0% or 5%) for pension funds, insurance companies and companies whose shares are traded on the stock exchange. The zero tax on royalties (license payments) remains the same, as well as the exemption from tax on interest payments on corporate bonds, government bonds and Eurobonds.
It is expected that the protocol to the DTAA between the Russian Federation and Cyprus is set be signed in September 2020 and ratified by the end of 2020. The new terms will take effect on January 1, 2021.
In the next month, the Russian Finance Ministry plans to complete negotiations with Malta and Luxembourg, and also expects a response from the Netherlands to the proposal sent. It should be recalled that all these countries were offered the same conditions for changing the bilateral DTAA as the Republic of Cyprus.