Deoffshorisation

In early 2015, Russia’s new Deoffshorisation Law came into force via amendments to the Russian Tax Code. Individuals and companies classified as Russian tax residents already have an obligation to file the Foreign Ownership Notification form under the new law.

Entities affected:

Controlled Foreign Companies (CFC): The law establishes a mechanism for Russia to tax the income of CFCs where such companies do not distribute their income to the benefit of Russian controlling entities. As per the law adopted, the definition of a CFC refers to companies which are controlled by individuals or legal entities that are Russian tax residents.

Beneficial ownership: The beneficial owner according to the law is a person who has an actual right to income or authority to dispose the income in question. If deemed to be a tax resident of Russia, foreign companies directly or indirectly controlled by Russian beneficial owners (individuals or companies) will be subject to tax on profits in Russia.

Tax residency: The law extends the principle of effective management and control to foreign entities such that if it is determined that a foreign entity is effectively managed and controlled from Russia, it will become subject to Russian corporate income tax.

Real estate rich: Russian capital gains tax will apply to the disposal of shares in foreign companies if more than a half of the value of such shares is attributed to real estate in Russia.

We can help you with:

  • Russian CFC compliance for corporate and private clients
  • Filing of foreign ownership and CFC notifications and tax returns together with financial statements of CFCs
  • CFC accounting services, corporate administration and corporate real estate administration services
  • Corporate secretarial services including local corporate compliance services, health checks,  registered address, registration of legal entities and reorganisation, liquidation/winding up services and management company services.

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