The parties were unable to reach a compromise solution: during the negotiations, Cyprus put forward its proposals, and after analyzing them, the Russian Ministry of Finance concluded that, in essence, they dilute and make unattainable the effect the Russian side expected from the measures being taken.

Managing Partner Sergey Gerasimov spoke about the consequences of terminating the DTA at one of the webinars in April; you can watch the recording again on our YouTube channel via the link: https://www.youtube.com/watch?v=xEhx3Pi8LJs (the section on the termination of the DTA starts at minute 26:10).

In addition to the absence of mechanisms for avoiding double taxation between the countries, as well as a significant increase in withholding tax rates on dividends, interest, and royalties, the termination may also threaten to end the exchange of information between Russia and Cyprus.

There is a risk that the relevant agreements with Malta and Luxembourg may also be terminated — in that case, we can expect a wave of restructurings taking into account the new tax realities.