Cyprus expects no “further consequences” from Russia’s suspension of tax treaties

By November 28, 2023 No Comments
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The government of Cyprus said it did not expect any further consequences after Russian President Vladimir Putin signed a decree on 8 August suspending Russia’s double taxation agreements with what it termed as “unfriendly countries” – those that have imposed sanctions on Moscow.

The decree immediately suspended the provisions of specific articles within the international treaties signed with Russia and is intended to ensure the adoption of measures aimed at reducing the impact on the economy of Russia of the consequences of the suspension of the provisions of these treaties.

It impacts Double Tax Agreements (DTAs) and Tax Information Exchange Agreements (TIEAs) made with: Albania, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Cyprus, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Iceland, Italy, Japan, Lithuania, Luxembourg, Malta, Montenegro, New Zealand, Norway, North Macedonia, Poland, Portugal, Romania, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, the UK and the US.

The decree suspends all DTA benefits for businesses from any of these countries operating within Russia. This includes withholding tax provisions, property income in Russia, dividends, interest, royalties, pensions and other relief.

The Cyprus Ministry of Finance said the Russian Federation had already imposed bans on currency export and payments to jurisdictions it considers “hostile” due to the sanctions imposed on it over Ukraine, including Cyprus. These had also led to the cessation of any extensive economic or trade relations with EU countries.

“Therefore, the Ministry of Finance does not expect any further consequences from the non-application of the DTA,” the statement said.

“As a member of the EU, the Republic of Cyprus did not have the opportunity for any consultations on this matter, nor was there any prior consultation with the competent authorities of the Russian Federation regarding the possibility of suspending the Agreement or issuing a decree by the Russian Federation.”

The decree states the agreements will be suspended until foreign countries eliminate violations of the legitimate economic and other interests of the Russian Federation, the rights of their citizens and legal entities. The provisions of the Cyprus-Russia Agreement affected are Articles 5-22, 24, 27, and Article 29.