background image

Amending Protocol to Tax Treaty between Cyprus and Russia has Entered into Force — Orbitax Tax News & Alerts

The amending protocol to the 1998 income and capital tax treaty between Cyprus and Russia entered into force on 15 January 2021. The protocol, signed 8 September 2020, is the second to amend the treaty and includes the following changes:

  • Paragraph 2 of Article 10 (Dividends) is replaced, providing for a standard withholding tax rate of 15%;
  • A new paragraph 3 is added to Article 10 (Dividends), providing for a reduced withholding tax rate of 5% if the beneficial owner of the dividends:
    • is an insurance undertaking or a pension fund; or
    • is a company whose shares are listed on a registered stock exchange provided that no less than 15% of the voting shares of that company are in free float and which holds directly at least 15% of the capital of the company paying the dividends throughout a 365-day period that includes the day of payment of the dividends; or
    • is the Government of a Contracting State or a political subdivision or a local authority thereof; or
    • is the Central Bank of a Contracting State;
  • New paragraphs 2 and 3 are added to Article 11 (Interest), providing for a 15% withholding tax on interest, with an exemption if:
    • the beneficial owner is:
      • an insurance undertaking or a pension fund; or
      • the Government of a Contracting State or a political subdivision or a local authority thereof; or
      • the Central Bank of a Contracting State; or
      • a bank; or
    • the interest is paid in respect of the following securities listed on a registered stock exchange:
      • government bonds;
      • corporate bonds; or
      • Eurobonds;
  • A new paragraph 4 is added to Article 11 (Interest), providing for a reduced withholding tax rate of 5% if the beneficial owner of the interest is a company whose shares are listed on a registered stock exchange provided that no less than 15% of the voting shares of that company are in free float and which holds directly at least 15% of the capital of the company paying the interest throughout a 365-day period that includes the day of payment of the interest; and
  • References made in Article 24 (Non-Discrimination) to paragraphs in Article 11 (Interest) are adjusted to account for changes in paragraph numbering.

The protocol applies from 1 January 2021 as specified in the protocol.