| Double taxation treaties (“DTTs”) exist between many countries on a bilateral basis in order to prevent double taxation, i.e. taxation which is levied twice on the same income, profit, capital gain, inheritance or other item. The treaties generally guarantee non-discriminatory tax treatment and provide for cooperation between the tax authorities of the respective signatory countries. Tax treaties signed by Russia are usually based on the OECD Model Treaty and the United Nations Model Convention. The provisions of these treaties override Russian domestic law. The table below contains the tax rates applicable under several DTTs to which Russia is a signatory. The rates apply to withholding taxes on Russian sourced income. The numbers in brackets refer to the notes below the table. |
Recent developments | In 2019, amendments to DTTs with Austria and Sweden were ratified. These DTTs contain special provisions that limit tax benefits for taxpayers if they have tax evasion or avoidance objectives. Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (the “MLI”) The MLI is an OECD convention that updates DTTs to counteract tax avoidance and attempts by taxpayers to receive unjustified tax benefits. As of 1 October 2019, amendments to local tax legislation required by the MLI that Russia signed in 2017 came into force. However, some internal formalities have not been finalised. Therefore, the MLI’s implementation has been delayed until approximately 2021. Currently, the MLI has been ratified by 20 states (including Australia, Austria, Belgium, the United Kingdom, Luxembourg, the Netherlands, the United Arab Emirates, Singapore, Finland and France) whose DTTs with Russia are adjusted by the MLI, but the amended versions will reportedly come into force in 2021. It is planned that upon final ratification of the MLI, Russia will extend this to DTTs with more than 70 states. Mutual agreement procedure (the “MAP”) In 2019, the Tax Code was amended in line with the minimum standard of the dispute resolution mechanism proposed by the OECD. The MAP is now in place to resolve disputes on taxation of income, profits and property of the person under the applicable DTT. Specific aspects of the MAP depend on the other state involved in the dispute with Russia. They should be determined with reference to the provisions of the relevant DTT. |
"Russian tax authorities continue to tighten control over the activities of multinational groups of companies as well as Russian corporate taxpayers that carry out foreign trade transactions. In particular, the requirements for transfer pricing have been significantly amended and strengthened."
Country | Dividends | Interest | Royalties |
|---|
Austria | 5 or 15% [1] | 0% | 0% |
Belgium | 10% | 0 or 10% [2] | 0% |
Canada | 10 or 15% [3] | 10% | 0 or 10% [4] |
China | 5 or 10% [5] | 0% | 6% |
Cyprus | 5 or 10% [6] | 0% | 0% |
France | 5, 10 or 15% [7] | 0% | 0% |
Germany | 5 or 15% [8] | 0% | 0% |
Hong Kong | 5 or 10% [9] | 0% | 3% |
Ireland | 10% | 0% | 0% |
Italy | 5 or 10% [10] | 10% | 0% |
Japan | 5 or 10% [11] | 10% | 0% |
Korea (South) | 5 or 10% [12] | 0% | 5% |
Luxembourg | 5 or 15% [13] | 0% | 0% |
Netherlands | 5 or 15% [14] | 0% | 0% |
Singapore | 0, 5 or 10% [15] | 0% | 5% |
Spain | 5, 10 or 15% [16] | 0 or 5% [17] | 5% |
Switzerland | 5 or 15% [18] | 0% | 0% |
Ukraine | 5 or 15% [19] | 10% | 10% |
UK | 10% | 0% | 0% |
USA | 5 or 10% [20] | 0% | 0% |
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Notes:
[1] 5% for shareholdings of 10% or more, otherwise 15%; Back ↑
[2] 0% for bank loans or loans granted (or guaranteed) by a contracting state, otherwise 10%; Back ↑
[3] 10% for shareholdings of 10% or more, otherwise 15%; Back ↑
[4] 0% for (i) copyright royalties and other like payments in respect of the production or reproduction of any literary, dramatic, musical or other artistic work; (ii) royalties for the use of computer software; or (iii) royalties for the use of patents where the payer and the beneficial owner of the royalties are not related persons, otherwise 10%; Back ↑
[5] 5% for shareholdings of 25% or more, provided the investment is at least EUR 80,000, otherwise 10%; Back ↑
[6] 5% if the initial investment is greater than EUR 100,000, otherwise 10%; Back ↑
[7] 5% if the investment is not less than EUR 76,225 and if the recipient pays tax; 10% if only one of these two circumstances applies; otherwise 15%; Back ↑
[8] 5% for shareholdings of 10% or more, provided the investment is at least EUR 80,000, otherwise 15%; Back ↑
[9] 5% for shareholdings of 15% or more, otherwise 10%; Back ↑
[10] 5% for shareholdings of 10% or more, provided the investment is at least USD 100,000, otherwise 10%; Back ↑
[11] 5% for shareholdings of 15% held for more than 365 days, otherwise 10%; Back ↑
[12] 5% for shareholdings of 30% or more, provided the investment is at least USD 100,000, otherwise 10%; Back ↑
[13] 5% for shareholdings of 10% or more, provided the investment is at least EUR 80,000, otherwise 15%; Back ↑
[14] 5% for shareholdings of 25% or more, provided the investment is at least EUR 75,000, otherwise 15%; Back ↑
[15] 0% for government and state institutions, 5% for shareholdings of 15% or more, otherwise 10%; Back ↑
[16] 5% for shareholdings of at least EUR 100,000 and if the dividends are exempt from tax; 10% if either condition is met; otherwise 15%; Back ↑
[17] 0% if the actual recipient of interest is the government of the other contracting state, or for long-term bank loans (exceeding seven years); otherwise 5%; Back ↑
[18] 5% for shareholdings of 20% or more, if the investment is at least CHF 200,000; otherwise 15%; Back ↑
[19] 5% for shareholdings of at least USD 50,000; otherwise 15%; Back ↑
[20] 5% for shareholdings of 10% or more, otherwise 10%. Back ↑
