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New double taxation agreement

Cyprus and Russia have signed a double taxation agreement that will remove Cyprus from a so-called Russian tax black list. Companies incorporated in countries appearing on the list are denied the benefit of the participation exemption introduced by Russia with effect from January 1 2008. Most Russian-owned companies in Cyprus are holding companies rather than subsidiaries, so inclusion on the blacklist directly affects only a small number of Russian companies in Cyprus. Nevertheless, removal from the list is an important matter for Cyprus, which, as a member of the OECD so-called white list of countries complying with international best practice, is keen to demonstrate its commitment to information exchange.

The Russian finance ministry confirmed that Cyprus will be dropped from the list once the agreement comes into effect.

The in-principle agreement will reinforce Cyprus's advantages as an investment portal between the EU and Russia by eliminating double taxation on assets and business activities for both individuals and companies.

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