How are the activities of non-tax resident business vehicles taxed?

There is no concept of non-tax resident business vehicles in Russia. All business vehicles registered in Russia, including separate units of business vehicles, are treated as residents and are subject to taxation.

Dividends, interest and IP royalties

17. How are the following taxed:

Dividends paid to foreign corporate shareholders?

Dividends received from foreign companies?

Interest paid to foreign corporate shareholders?

Intellectual property (IP) royalties paid to foreign corporate shareholders?

Dividends paid

Dividends paid by Russian companies to their foreign corporate shareholders are taxed at 15%.

Dividends received

Dividends received by Russian shareholders from their foreign shareholdings are taxed at 0% (if the shareholding stake exceeds 50% within the 365 days before announcement of dividends, and the foreign company is not registered in the offshore territory), or 9% (in all other cases).

Interest paid

Russian legislation does not provide for any specific tax rates for income derived from debentures issued by private companies. Any income received as interest accrued to relevant securities will be taxed based on the generally applicable income tax rate (see Question 15).

IP royalties paid

IP royalties are regarded as general income which is taxed based on the generally applicable income tax rate (see Question 15).

Groups, affiliates and related parties

Are there any thin capitalisation rules (restrictions on loans from foreign affiliates)?

The thin capitalisation rules apply when the following two criteria are met:

There is an affiliation between the Russian company (borrower) and its foreign shareholder (lender).

The Russian company has insufficient equity capital (that is, the loan amount exceeds at least three times the company's equity capital).

For the purpose of indentifying thin capitalisation, the Tax Code refers to controlled indebtedness, which means the indebtedness of a Russian company to its foreign shareholder(s) resulting from the shareholder loans.

For controlled indebtedness, there are marginal interest rates of 1.1 times the Bank of Russia rate for loans denominated in roubles, and 15% for loans nominated in a foreign currency (Tax Code). All interest payments exceeding these marginal rates are regarded as dividend payments and are taxed at the 15% rate applicable to dividends.