The new Protocol agreed in April 2009 between the two governments will take Cyprus off the Russian black list.  The most important changes brought about by the Protocol are:

1. Effective 2014, gains from the sale of shares in Cyprus companies which derive more than 50% of their value  from immovable property in Russia will be taxable in Russia. The current regime exempts this sale of shares from taxation in both countries.

2. Russian withholding tax for dividends remains at 5% (subject to an amended minimum investment of €100.000) and now includes distributions from mutual funds as well.

3. The two countries agreed to exchange tax information with each other. This exchange does not cover random searches but specific requests for information obtained through legal means.

4. The definition of permanent establishment is extended to include transactions carried out by company representatives for more than 183 days in a year. This restricts the use of general powers of attorney.

5. Finally, the definition of effective management and control is also amended to mean a substantial presence in the country of residence.