Federal Law on taxation of „controlled foreign companies“ to be applied from January 1, 2015

AO UniCredit Bank
Summary: 
As of the start of 2015, the Law on Controlled Foreign Companies (CFC), which introduces taxation procedures for the profit of Controlled Foreign Companies, will be applied.
Wed, 03/12/2014

The president of Russia has signed the Law on Controlled Foreign Companies, which obliges Russian taxpayers to pay taxes on retained profits of CFC. The rate, applicable from January 1, 2015, will be 20% for legal entities and 13% for individuals.

Non-resident organisations are recognised as CFC if they are controlled by a Russian individual or legal entity who

  • directly or indirectly owns more than 25%, or
  • directly or indirectly owns 10% of a CFC of which the total share participation by Russian residents exceeds 50 percent.

The Law sets the threshold of 50% for the transition period which ends by January 1, 2016.

The profits of CFC are required to be declared and subject to taxation in Russia if they exceed a threshold of RUB 50 mln in 2015, RUB 30 mln in 2016 and then this threshold will be reduced to RUB 10 mln.

The law also affects the duties and responsibilities of the tax agents in their relations with the controlled foreign companies.

For more details of the law please refer to the below newsletter.

Related Newsletters: GSS Newsletter December 2014 - Issue 164 02/12/2014, GSS Newsletter November 2014 - Issue 163 03/11/2014

Impact on investors: Russian residents both legal entity and individuals will be obliged to pay taxes on retained profits from their foreign assets starting from 2015.