Natalia Demina has commented on changes in the agreement between Russia and Cyprus for the French edition

Russia and Cyprus approved the text of amendments to the Agreement on avoidance of double taxation between the countries. The step was taken after the Russia announced its intention to denounce the Agreement. The Russian-Cypriot Tax Agreement since 1998 had allowed Russian citizens living on the island to pay tax on dividends at the rate adopted in Cyprus (5%), which was more beneficial than in Russia (15%). If the new agreement is ratified by the end of 2020, the tax rate will be increased. These measures were initiated by Moscow in order to prevent losses due to profit payments to offshore accounts.

Cyprus is currently the most popular tax haven for Russian businessmen: Russian companies contributed to Cyprus accounts more than 1.9 trillion rubles (22 billion euros) in 2019. French edition of the Le Courrier de Russie has analysed the consequences of the innovations in the international agreement for business and individuals.

Natalia Demina, Senior associate, Head of Private Wealth practice at Maxima Legal commentedon the situation in terms of finding alternative jurisdictions to preserve tax benefits for the Le Courrier de Russie. Natalia noted: “Among the most popular offshore zones among Russians are the British Virgin Islands (BVI), the Netherlands, Switzerland, Luxembourg, Jersey Island, Singapore, Seychelles, Bahamas and Hong Kong. However, the list is constantly changing due to changes in national legislation in these jurisdictions”.

“We can say that all the jurisdictions are under threat where both interest and dividends are subject to minimum or no tax”, mentioned Natalia. According to the expert, Hungary may become a new safe haven if Russian companies do not gradually refuse to place their assets in offshore accounts.

To read the full article (in French), please see the Le Courrier de Russie website >>>