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On 10 August 2020, Cyprus and Russia concluded the negotiations of a new protocol to modify the existing provisions of the Cyprus-Russia tax treaty.

The intention of both countries is for the reviewed withholding tax rates to be effective from 1 January 2021, through the signature of a protocol amending the existing tax treaty over the next months.

According to the revised agreement, the existing withholding tax (WHT) rates on dividend and interest payments made from Russia to Cyprus will increase to 15% subject to certain exceptions. Until now, the Treaty provided for withholding tax of either 5% or 10% on dividends, and 0% on interest.

Exceptions

The two countries have agreed that the 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;
  • the Government, a political subdivision or a local authority;
  • The Central Bank.

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

  • an insurance undertaking company or a pension fund;
  • the Government, 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 and
  • 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%.

Please note that the zero WHT on royalty payments from Russia to Cyprus will not change.

If you require more information or assistance regarding the new Cyprus – Russia double tax treaty do not hesitate to contact us directly.

Visit our full list of double tax treaties between Cyprus and other countries.