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Russia Double Taxation Avoidance Treaties

Russia Double Taxation Avoidance Agreements

Updated on Tuesday 26th April 2016

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The role of the double tax treaties is to control the way the profits are taxed in different countries.

The main purpose of these treaties is to protect the investor for being double taxed for the same income in two different countries and to prevent tax discrimination against a signatory country abroad.  Especially the interest, royalties, pensions, dividends are subject of this double tax treaties.


Since 2002, when the new profit tax law came into force, it changed the tax regime applied to the foreign companies doing business in Russia. The former extremely bureaucratic procedure is now replaced with a much simplified procedure which allows the investors to take advantage faster of the double taxation treaties signed by Russia with different countries along the years.


The benefits of double tax treaties

A foreign company may beneficiate from the tax exemptions in Russia if it’s bringing relevant proves that it’s already paying taxes in the country part of the treaties. Treaties of exchange of information are signed between the countries. Every year, the signatory states make exchange of lists of investors who claim to be exempt from different taxes, on the ground of double taxation treaties. This list must be checked very carefully and additional documents may be claimed from the investors.

There are two ways to profit from the double tax treaties exemptions: without tax deducted or with tax deducted at a reduced rate of tax as agreed in the double tax treaty.


What do Russian double tax conventions contain?

Most of Russian double taxation treaties contain provide for the following elements composing the income to be taxed, such as:

  • -       income derived from business profits,
  • -       income generated by the payment of dividends;
  • -       interest payments;
  • -       capital gains, also known as income derived from owning or selling real estate;
  • -       royalties;
  • -       income derived from employment.

Most of Russia’s double tax agreements contain provisions on the permanent establishment status, which allows foreign companies to set up operations in this country under various forms. Under this status, foreign companies can benefit from advantageous tax conditions.

Following the Organization for Economic Co-operation and Development Model Convention, Russia has introduced tax information exchange clauses in its agreements.


Countries Russia signed double taxation agreements with

For the moment, Russia has signed treaties with 79 countries and 78 of them were enforced. Russia has also signed other treaties which are currently pending ratification. Here is the list with the signatory countries: Algeria, Austria, Armenia, Australia, Azerbaijan, Belarus, Belgium, Botswana, Brazil, Bulgaria, China, Albania, Croatia, Canada, Cuba, Cyprus, Denmark, Egypt, Czech Republic, Finland, Germany, Luxembourg, Greece, Hungary, France, Iceland, India, Iran, Ireland, Israel, Italy, Japan, Kazakhstan, Indonesia, North Korea, South Korea, Kuwait, Kyrgyz Republic, Lebanon, Lithuania, Macedonia, Malaysia, Mali, Mexico, Moldova, Mongolia, Montenegro, Morocco, Namibia, Netherlands, New Zealand, Norway, Romania, Philippines, Poland, Slovenia, Portugal, Qatar, Saudi Arabia, Serbia, Singapore, Slovakia, Spain, Switzerland, South Africa, Sri Lanka, Sweden, Syria, Tajikistan, Thailand, Turkey, Turkmenistan, Ukraine, UK, USA, Uzbekistan, Venezuela, Vietnam.

Foreign investors who are running businesses in Russia and who are interested in finding out more information about avoiding the double taxation may contact our lawyers in Russia.




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