The Ministry of Finance announcement on the suspension of tax agreements with Russia

Suspension of US and EU tax agreements with Russia - What applies to Cyprus

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The Ministry of Finance issued an announcement on the suspension of tax agreements with Russia.

Such is the announcement

The Republic of Cyprus has been informed through the Diplomatic channel that the Russian President signed on August 8, 2023, a Decree on the suspension of the application of certain provisions of the Double Taxation Avoidance Agreement regarding taxes on income to avoid double taxation, with countries it considers hostile states, such as the United States, Japan, member countries of the European Union and others, including Cyprus.

The Decree suspends certain provisions of the said agreements with several member states of the European Union and third countries, namely with South Korea, the 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.

The Decree states that the agreements are suspended until "the elimination by foreign states of violations of the legitimate economic and other interests of the Russian Federation, the rights of its citizens and legal entities."
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 of 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.

The Ministry of Finance also wishes to assure that, as a member of the European Union, the Republic of Cyprus did not have the opportunity for any consultation on the matter, nor was there any prior consultation with the competent authorities of the Russian Federation regarding the possibility of suspending the Agreement or issuing decree from the Russian Federation.