In accordance with the Russian Tax Code and Double Tax Treaty (DTT) agreements, actual recipients whose assets are held on beneficial owners’ accounts have to provide Certificate of Tax Residence issued in 2018 and the Beneficial Owner Representation (BOR) in order to benefit from the tax exemption/tax reduction for the income derived from the sources in the Russian Federation.
The Certificate of Tax Residence has to be provided in original, be valid for the calendar year of the issue, as well as be legalized and apostilled. Investors need also to take into consideration that depending on the specific DTT conditions additional documents, such as Purchase and Sale agreements and other related documents can be required for tax exemption/tax reduction and be requested by the Russian tax authorities for the purpose of verification of the correct tax calculation.
BOR can be presented separately on case-by-case or placed as a standing instruction valid until the end of 2018 by SWIFT MT599. The exact wording of the BOR can be received from your Account Manager at UniCredit GSS Russia.
The provision of Certificates of Tax Residence for the underlying clients of foreign nominee account holders that safekeep securities on foreign nominee accounts is not required for the purpose of tax collection. However, such documents can be required by the Russian tax authorities during the tax audit for verification of the correct tax calculation.
Please note that in order to benefit from a conditional tax rate under DTT (dependent on the term and/or the size of the investment or any other condition) the following documents have to be submitted additionally: purchase and sale agreement for the shares, payment confirmation any other documents that may be required.
In case of non-provision of COR and BOR, the statutory tax rates will be applied.
Impact: Certificate of Tax Residence for 2018 and Beneficial Owner Representation have to be provided by foreign investors for purpose of applying DTT tax.