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Cyprus- Russian Federation double tax treaty amendment of Article 13

MEDIA / News / 2017 NEWS / Cyprus- Russian Federation double tax treaty amendment of Article 13

Cyprus- Russian Federation double tax treaty amendment of Article 13

The Ministry of Finance of the Republic of Cyprus announced that the state authorities of Cyprus and Russia have agreed to postpone the implementation of the Protocol amending Article 13 of the Double Tax Treaty (DDT) between Cyprus and Russia for the Avoidance of Double Taxation with respect to taxes on income and on capital, signed by the Republic of Cyprus and Russian Federation on the 7th of October 2010.

According to the 1998 double taxation agreement between the two countries, gains on disposals of shares are taxable only in the country of residence of the person disposing of the shares. The amended Protocol, which was expected to enter into force on the 1st of January 2017 was based on the latest OECD principles providing that capital gains should be taxable in the country where the property is located. That is to say, companies owning immovable property in Russia would be taxable in Russia.  Nevertheless, the application of the aforementioned provision has been deferred until the introduction of similar provisions in the bilateral Double Tax Treaties of Russia with other European countries.

As a result, capital gains arising from the disposal of shares of property-rich companies in either country will continue to be taxable only in the country of residence of the person disposing of the shares. Shares in other companies will not be affected. Following, the official announcement of the Ministry of Finance of the Republic of Cyprus, an additional Protocol is being finalising in order to formalise the deferral.

Cyprus and Russia have historically developed strong ties in political, economic, cultural and religious level. Russia is one of the Cyprus’ major economic partners and the abovementioned agreement will strengthen even more their business and economic relations.

If you wish to know more about the Cyprus Russian Federation double tax treaty amendments and how it may affect you, please contact our director, George Hadjipavlou at ghadjipavlou@oneworldweb.net  for a complimentary consultation.
 



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