RUSSIA WILL RECONSIDER THE TAX AGREEMENT WITH THE NETHERLANDS

This spring Vladimir Putin proposed to increase the taxes on dividends sent to the foreign accounts to 15%. The head of state noted that for this it would be necessary to revise a number of tax agreements with other countries in order to avoid double taxation.

The negotiations with Cyprus on this issue that has recently completed led to the beginning of the procedure for unilateral termination of the previously concluded agreement, initiated by Russia.

Next in line were the Netherlands, which was asked to raise the tax rate to a maximum of 15%.

If the foreign party does not accept the proposed conditions, Russia has the right to initiate the process of terminating the tax agreement.

According to the experts, if it nevertheless comes to the termination (although not everyone predicts such a scenario), the controlled foreign companies that receive passive income in Russia will suffer from this.

However, even if the agreement is terminated, it will only be expired by 2022. In this case, Russian business can use the abandonment of the companies in the Netherlands as a strategy. By the way, some entrepreneurs have already come to this decision due to the requirements to increase the level of presence in the country (by means of opening the offices and hiring employees).