Protocol to the Cyprus-Russia Double Tax Treaty (DTT)

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

15% WHT on dividend and interest payments

According to the Protocol, the existing withholding tax (WHT) rates on dividend and interest payments made from Russian companies to Cyprus companies will increase to 15% subject to certain exceptions noted below.

Exceptions from the 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.In addition, 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 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%.

0% WHT on royalty payments

The 0% WHT on royalty payments from Russia to Cyprus will remain as is.

Effective date

It is expected that the above WHT rates shall be effective as from 1 January 2021, through the signature of a Protocol amending the existing tax treaty.

How can we help?

We are at your disposal to discuss the effect of the above provisions to your corporate structure and arragements.

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