Treaty between Russia and Cyprus – Russian Appeal Court decided on applicability of beneficial owner and economic substance requirements

On 5 December 2012, the Appeal Court heard case No. ?40-60755/12-20-388 between the Russian branch of Eastern Value Partners Ltd. (EVP Co.), a company resident in Cyprus, and the tax authorities. The tax authorities denied the applicability of the Cyprus - Russia Income and Capital Tax Treaty (1998) on the grounds that the conditions regarding beneficial ownership and economic substance were not fulfilled.

(a) Facts. A British Virgin Island (BVI) company granted a loan to a Cyp…