Changes in taxation in Russia

AO UniCredit Bank
Changes to the taxation of income on Russian securities: new DTTs with Cyprus, Malta, and Luxembourg; introduction of the MLI.
Thu, 26/11/2020

As earlier reported in our Newsflash dated August 11, 2020, Cyprus, Luxembourg and Malta signed protocols amending their Double Taxation Treaties (DTTs) with Russia. New version of the DTT with Luxembourg will come into effect after ratification by both parties. The protocols signed with Cyprus and Malta will be applied on the temporary basis from January 01, 2021, and will also come into full effect after ratification. The DTT amendments will have practical impact on the taxation of income on Russian securities (increase of tax rates).

We would also like to remind that the earlier postponed implementation of the MLI convention in Russia will take place in 2021 (for the additional details please refer to our Newsflash dated November 25, 2019). Therefore, the actual recipients of income, confirmed (disclosed) by our clients to AO UniCredit Bank, will need to satisfy its requirements. Depending on the client’s specifics (tax domicile, account structure, etc) MLI may also have other practical implications.

In case of any questions related to the above, please do not hesitate to contact your relationship manager at AO UniCredit Bank, GSS.

Impact on investors: taxation of Russian securities will be impacted by the implementation of the international MLI convention and by the amendment of bilateral DTTs which is expected to have practical implications for the respective investors.
In view of the above, clients are kindly requested to pay attention to all further notifications/requests from AO UniCredit Bank aiming to address the described amendments in the tax environment.

Clients are also encouraged to consult their tax advisors in order to identify whether a particular recipient of income would be entitled to apply for the reduced withholding tax rates in Russia under the amended DTTs and subject to the MLI provisions.