Cyprus-Russia Protocol ratified by Russian Duma

On 15th of February 2012, the Russian Duma ratified the amending Protocol to the Cyprus-Russia Double Tax Treaty of 1998, signed on Oct 7th, 2010.  Cyprus had ratified this Protocol earlier in August 2011.  Russia was waiting to ratify in order to make sure they were prepared for the procedures for information exchange between the two countries that this Protocol would permit.  By ratifying this Protocol Cyprus has been removed from the Russian "black" list.

The Protocol is just coming into force now. According to expert opinions, it is considered that Russia is the main investor in Cypriot economy. Therefore it is expected that Cyprus will protect all Russian investments in the country.  Russian investors should understand that the disclosure of the information would only follow after an official enquiry from the Russian Tax Authorities and also that the procedure is not straight forward. 

It is important to recognize the benefits of Cyprus now being taken off the "black" list of the Russian Federation.  Now it will be allowed for dividends paid from Cyprus tax resident companies and received from the Russian corporate shareholders to qualify for the Russian participation exemption and thus be exempt from Russian tax.  This is expected to create new opportunities for Russian investors for the use of Cyprus companies and funds as a gateway to Europe, Asia and Africa.

Areti Charidemou & Associates LLC Law Firm