Russian withholding tax rate on Cyprus offshore companies’ dividends to be increased to 15% in case of transferral to tax havens

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The Moscow Arbitration Court has ratified a resolution (А40-113217/16-107-982) under the Severstal case, which assumes that any dividends paid by Russian enterprises for Cyprus offshore companies are subject to a 15% tax rate instead of the 5% rate specified in the Avoidance of Double Taxation Agreement between Russia and Cyprus. The resolution concerns cases where dividends are subsequently transferred on to tax havens, with Cyprus companies not being their ultimate Beneficiaries.