According to the current legal framework, capital gains of disposals of shares are subject to tax in the country of residence of the person disposing of the shares. The amended Protocol, which was expected to enter into force on January 1, 2017, had been introduced in alignment with the latest OECD principle providing that capital gains should be taxable in the country where the property is located (provided that more than 50% of the value of shares is represented by the said real estate). This means that  companies owning immovable property in Russia would be taxable in Russia.

However, this provision has been deferred until the introduction of similar provisions in the bilateral Double Tax Agreements of Russia with other EU member states. It is to be noted that an additional protocol is currently being finalized for the application of the aforementioned change.

Therefore, to summarise, according to the Double Tax Treaty concluded between Cyprus and Russia, capital gains arising from the disposal of shares of property-rich companies in either country will continue to be subject to taxation in the country of residence of the person disposing of the shares.

If you require further information on the said Double Tax Agreement and on how you can implement it in your tax planning strategy, it is recommended to seek professional legal/tax advice.