Suspension by Russia of Certain Provisions of Russia’s International Treaties on Taxation

On August 8, 2023, Russia issued a Decree on the suspension of the application of certain provisions of the Double Taxation Agreement regarding taxes on income for the avoidance of double taxation, with several member states of the European Union and third countries, namely with South Korea, United Kingdom, Albania, Canada, Switzerland, Montenegro, Poland, Hungary, Ireland, Slovakia, Belgium, Slovenia, Czech Republic, Denmark, Italy, Finland, Germany, France, North Macedonia, Spain, Lithuania, Iceland, Portugal, Austria, Greece, New Zealand, Australia, Singapore, Malta, Japan.

From the issuance of the Decree, the application of reduced tax rates or tax exemption in relation to incomes covered by double taxation avoidance agreements is suspended.

The provisions of the Cyprus Agreement with the Russian Federation that are affected are Articles 5-22, 24, 27, and Article 29. In view of the prohibitions already put in place by the Russian Federation, on the export of foreign currency and payments to jurisdictions it considers “hostile” due to the sanctions imposed on it, which include Cyprus, and the sanctions imposed on the Russian Federation which resulted in the cessation of any extensive economic/trade relations with European States, it is not expected that there will be any further consequences from the issuance of said decree from non-implementation of the Agreement.

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