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Russia Clarifies Tax Treaty Access Rules For Non-Res Holding Companies

Friday, September 27, 2019

In a letter dated August 8, 2019, the Russian Federal Tax Service amended the rules for non-resident holding companies to be considered as the beneficial owner of Russia-sourced income.

The letter states that foreign holding companies are no longer automatically precluded from accessing treaty benefits if they do not independently carry out economic activities.

To gain access to preferential treatment for cross-border income under a double tax agreement, the holding company must show that the structuring is commercially driven, rather than being artificial to inappropriately access a treaty.