An agreement between Cyprus and Russia has postponed the application of the Protocol amending Article 13 “Gains from Alienation of Property” of the Cyprus and Russian Federation Double Tax Treaty (DTT), as announced on 29 December 2016 by the Cyprus Ministry of Finance.
As a result of recent sanctions imposed on Russia, countries have refused to renegotiate provisions within their DTTs with Russia, therefore leaving Cyprus at a disadvantage. Provisions within Article 13 had been deferred initially due to these other renegotiations, however with the change in circumstances, which sees no renegotiations taking place, the original Protocol surrounding Cyprus’ DTT has been amended to remove the provision altogether.
Article 13 of the Cyprus and Russia DTT of the Protocol was amended so that as of 1 January 2017, profits obtained by a Cypriot tax resident from the alienation of shares or similar rights deriving more than 50% of their value from immovable property situated in Russia may be taxed in Russia.
The Ministry of Finance have published a press release stating that a supplementary Protocol is being compiled where revised provisions of Article 13 of the DTT will be suspended until the introduction of agreed provisions in other bilateral agreements with other European countries.
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