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Benefits for the few: protocol to the DTT between Russia and Cyprus announced

On 10 August 2020 representatives from Russia and Cyprus initialed a new Protocol to the Double Taxation Treaty (DTT) between the countries

On 10 August 2020 Russia and Cyprus initialed a new Protocol to the DTT

On 10 August 2020, representatives from Russia and Cyprus initialed a new Protocol to the Double Taxation Treaty (DTT) between the countries. As you will recall, in March the Ministry of Finance of Russia sent an official letter to the Ministry of Finance of Cyprus proposing to revise the then-current DTT, and bringing in a draft Protocol to introduce the amendments to the DTT (the Protocol). For more details on the buildup, click here.

In the draft Protocol, the Ministry of Finance of Russia proposed altering Articles 10 Dividends and 11 Interest of the DTT so that dividends / interest paid may also be subject to taxation in the country that is the source of income at a rate not exceeding 15%. No option for applying lower tax rates was provided.

The parties held several rounds of negotiations to agree upon a list of persons for whom benefits for dividends and interest might be preserved, against the background of Russia announcing it was happy to potentially bring about a denunciation of the DTT with Cyprus. However, a compromise was achieved.

Please, see the pdf print version below for details.