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In early April, Russia sent a letter offering to amend the text of the agreement on avoidance of double taxation (DTT) by increasing tax rates in terms of taxable dividends and interest payments to Cyprus. However, after almost four months of negotiations, the parties failed to reach a consensus.

According to the information published by the Russian Ministry of Finance, with due regard to close economic and historical ties between the two states, the Russian party formulated options for a compromise and offered to swiftly hold (the ongoing week) face-to-face negotiations in Cyprus but received a refusal. Consequently, Russia’s Ministry of Finance announced that it would initiate denunciation of the DTT.

Similar proposals to amend double taxation treaties (other than Cyprus) were also sent to Malta and Luxembourg. At the same time, at the end of June, a notice was published on the portal of draft regulatory legal acts about the start of the development of a federal law on denunciation of the agreement between Russia and Malta.

Will the agreements still be in effect in 2021 or not? Read more about the future of DTTs with these countries in our latest analytical review.