Changes to the Double Tax Treaty of Russia and Cyprus

As per the announcement of the president of Russia on 25 March 2020, the withholding tax rate on dividends and interests paid to bank accounts outside Russia will be 15%. The tax will be withheld in Russia as part of the new measures introduced by Vladimir Putin.

A 15% rate currently exists for dividends paid to jurisdictions with which Russia has no tax treaty. Payments to entities in tax treaty partner countries are usually taxable at reduced rates of 5% or 10%. This was also the case so far with Cyprus, however after the new amendment, the double tax treaty between Cyprus and Russia will have no effect in regards to the new rules Russian government introduced.

The change announced by the President will require amendments to the existing DTTs. It was also noted that if foreign countries do not cooperate, Russia will unilaterally withdraw from the consequent DTT.

If your business is affected by the new changes, please contact us in order to discuss the matter. IBCCS has experience with Russian clients and can assist with any restructuring of the business in order to help our Russian clients to achieve the desired result.