Michalis Parides
On 8 September 2020, the Protocol amending the double tax treaty (DTT) between the Republic of Cyprus and the Russian Federation was officially signed. The amendments introduced are expected to take effect on 1 January 2021.
A. Amendment of Article 10 of the DTT – Dividends
Withholding tax is increased from 5% to 15% on the gross dividend. The previous rate of 5% continues to apply where the recipient/beneficial owner of the income is:
1. an insurance undertaking or a pension fund;
2. the Government or a political subdivision or a local authority;
3. the Central Bank;
4. a company whose shares are listed on a recognized stock exchange, provided that at least 15% of the company’s voting shares are in free float and the company’s stake in the dividend payer is at least 15% throughout a 365-day period.
B. Amendment of Article 11 of the DTT - Interest amendment
Withholding tax is increased from 0% to 15% of the gross interest. Withholding tax rate of 0% shall apply if the recipient/beneficial owner of the income is:
1. an insurance undertaking or pension fund;
2. the Government or a political subdivision or a local authority;
3. the Central Bank;
4. a bank;
5. paid in respect of government bonds, corporate bonds or Eurobonds listed on a recognized stock exchange.
Interest may be subject to 5% withholding tax rate, where the recipient/beneficial owner of the income is a company whose shares are listed on a recognized stock exchange provided that, at least 15% of the company’s voting shares are in free float and the company’s stake in the interest payer is at least 15% throughout a 365-day period.
The official text will be released once the Protocol is published.
* This publication has been prepared as a general guide and for information purposes only. It does not purport to be comprehensive or to render legal advice.
