International agreements for the avoidance of double taxation applied on the territory of the Russian Federation are part of the system of law of the Russian Federation and have priority over the provisions of national tax legislation.

Article 15 of the Constitution of the Russian Federation establishes that international treaties of the Russian Federation are an integral part of its legal system and if an international treaty establishes rules other than those provided for by law, then the rules of the international treaty are applied.

Similar rules are established by the Tax Code of the Russian Federation.

In this regard, when taxing foreign persons, it is necessary to proceed primarily from the provisions of international treaties in the field of taxation.

The international treaty referred to in the Tax Code of the Russian Federation can have different names in international law: treaty, agreement, convention and others.

The purpose of concluding an international treaty is to achieve an agreement between states or other subjects of international law establishing their mutual rights and obligations in tax relations to avoid double taxation.

Issues of taxation of persons who are residents of one state in relation to their income paid in another state are regulated by the legislation of these two countries. Moreover, any state has the exclusive right to levy taxes on its territory in accordance with national tax legislation, which also applies to foreign organizations.

It is for this reason that double taxation of foreign organizations arises when a person who is a resident of one country receives income from sources located in another country, owns property (usually real estate) in another country, or carries out activities that result in income or other income in another country. country. These situations are characterized by the fact that the same person is considered by tax legislation as a taxpayer or the same object is considered as an object of taxation simultaneously in two or more countries.

For example, income received by a foreign organization from sources in the Russian Federation is subject to taxation in the Russian Federation in accordance with the provisions of the Tax Code of the Russian Federation. Moreover, these incomes received on the territory of the Russian Federation are also subject to taxation in accordance with the legislation of the foreign state of the recipient of the income. Accordingly, the tax in this case is paid twice: the first time - in accordance with the norms of the tax legislation of the state - the source of income, the second - in accordance with the norms of the internal legislation of the state - the recipient of the income.

The provisions of an international treaty determine the rules for delimiting the rights of each state regarding taxation of organizations of one state that have an object of taxation in another state.

In addition, tax amounts paid in the source state under that state's domestic tax laws may be credited against a foreign entity's tax payment abroad. The procedure for crediting taxes paid abroad is regulated by the tax legislation of the foreign state. In Russia, a similar procedure is applied, provided for in Article 232 of the Tax Code of the Russian Federation.

Generally, the amount of creditable taxes paid in the source state cannot exceed the amount of tax payable by that entity abroad on the related income, calculated in accordance with the tax laws and regulations of the foreign state. The offset is made subject to the taxpayer's presentation of a document confirming the withholding of tax in the state of the source of income.

It is necessary to take into account that the current international tax agreements (on the avoidance of double taxation) determine only the rules for delimiting the rights of each state regarding the taxation of organizations of one state that have an object of taxation in another state, however, the methods for implementing these provisions: the procedure for calculating, paying taxes, collecting tax amounts , not paid on time, and bringing to responsibility for violations committed by the taxpayer are established by the internal rules of tax law.

In addition to eliminating double taxation, international agreements are aimed at developing mechanisms to prevent tax evasion and reduce the possibility of abuse of agreement provisions in order to avoid tax through the exchange of information between the competent authorities of the relevant states.

Agreements for the avoidance of double taxation (treaties, conventions) are multilateral and bilateral agreements that establish rules in accordance with which the avoidance of double taxation is achieved:

1) income received by individuals and legal entities;

2) property and income from the sale of property;

3) income and property in the field of international transportation;

Accordingly, double taxation in international economic relations may arise in relation to the following taxes:

1) income tax from individuals;

2) corporate income tax;

3) (both individuals and legal entities, and other laws).

Double taxation agreements usually contain:

1) listing the types of taxes regulated by the agreement (article “Taxes covered by the agreement”);

2) determination of the circle of persons to whom the agreement applies;

3) determination and establishment of taxation conditions (taxation restrictions) in the state that is the source of income for such types of income as:

Profit from commercial activities;

Dividends;

Interest;

Income from dependent personal activities (income from employment);

Income from independent personal activities (remunerations and fees);

Other income;

4) determination of ways to avoid double taxation (exemption from taxation or application of foreign tax credit);

5) establishing the procedure for the implementation of the agreement by the parties (entry into force, validity period, procedure for termination of the agreement, application of mutual agreement procedures).

Certain provisions of these Agreements differ from each other, since the Agreements are bilateral in nature and are concluded based on the nature of relations between Russia and a particular country. However, many agreements are based on the Organization for Economic Cooperation and Development (OECD) Model Convention on Taxes on Income and Capital and contain similar provisions.

In this regard, it is possible to summarize the principles of income taxation in accordance with international agreements.

For the purpose of applying double taxation agreements concluded by the Russian Federation (former USSR), income is divided into:

1) on income (profit) from commercial activities;

2) for special types of income for which special taxation regimes, tax exemptions, and tax credits are provided.

Profit from commercial activities in the context of double taxation agreements recognizes the income of foreign organizations operating through a permanent representative office in the Russian Federation.

For this type of income, the norms of double taxation agreements, as well as the norms of the national tax legislation of a number of countries, establish the basic taxation regime and standard forms of eliminating double taxation.

TO OS Common types of income for which special tax regimes and tax exemptions are provided include:

a) income from international transportation, dividends, interest;

b) income from real estate, from the sale of real and movable property, from copyrights and licenses (intellectual property);

c) income from employment;

d) income from independent personal activities (professional services), fees of directors of enterprises, remuneration or other income from public service, pensions;

e) income of artists and athletes, teachers, scientists, students and trainees;

f) other income.

Differences in approaches to taxation of income from certain types of activities are determined by the specifics of these incomes, the conditions and nature of the activity, as well as the characteristic features of the activities of individual categories of taxable subjects.

The article of the agreements “Profit from commercial activities” affects all types of income with the exception of those types, the taxation procedure of which is determined in special articles.

The relevant article of the agreement determines in which state this or that income or this or that part of it will be taxed. The very procedure for the taxation procedure, conditions and mandatory requirements are always established in accordance with the national legislation of the state that carries out taxation.

In the article of the agreement “Profit from commercial activities”, the parties to the agreement consider profit as an object of taxation, that is, the difference between income received and expenses incurred to obtain this income, and in articles related to special types of activities, we are talking about income .

Subject to an agreement, profits from commercial activities derived in one contracting state by a person resident in the other contracting state may be taxed in the first state only if they are received through his permanent establishment (permanent establishment of a foreign organization) located there and only to that extent , which can be attributed to the activities of this permanent mission. In this approach, the principle of territoriality finds its application, according to which in the territory of one state only profits received from sources located in the territory of this state are taxed. The application of this principle of international agreements is usually specified as follows: “If a person with a permanent residence in one contracting state carries out commercial or other economic activities in another contracting state through a permanent establishment located there, then in each contracting state the profits that it could receive if it were a separate and independent person, carrying out the same or similar activities under the same or similar conditions and acting completely independently.” Thus, on the one hand, those types of profits that a person receives from sources in a given country, regardless of the activities of the said representative office, do not belong to the profit of a representative office, and on the other hand, a possible understatement of the amount of profit received by a person from the activities of his permanent representative office is prevented.

As a rule, agreements provide a general description of the procedure for calculating the profit of a permanent establishment and indicate those types of expenses that are allowed to be deducted from taxable income to determine the object of taxation - profit received through a permanent establishment. In the model Agreement, this is formulated as follows: “When determining the profit of a permanent establishment, expenses incurred for the purposes of the activities of this permanent establishment are allowed to be deducted. In this case, a justified redistribution of documented expenses between a person with a permanent residence in one Contracting State and his permanent establishment in another Contracting State is allowed. Such expenses include management and general administrative expenses, research and development expenses, interest and management fees, consultations and technical assistance, whether incurred in the State in which the permanent establishment is situated or elsewhere.”

Profits attributable to a permanent establishment must be determined annually using the same method unless there is a good and sufficient reason for changing it.

If the profit includes types of income that are separately mentioned in other articles of the agreement, then the provisions of these articles are not affected by the provisions of the article “Business profits”.

The Russian Federation has concluded agreements with many states to avoid double taxation.

Currently, there are over 70 international agreements (conventions, treaties). Along with the agreements concluded by the Government of the Russian Federation, agreements concluded by the Government of the USSR continue to apply.

Russia's current international agreements on the avoidance of double taxation of income and property differ significantly on a number of issues, including the use of special concepts and terms in individual agreements.

In addition to general international agreements on the elimination of double taxation, there are a number of special bilateral agreements, mainly on the elimination of double taxation in the field of international (sea and air) transport, concluded by the government of the USSR. Such agreements were concluded with the Algerian People's Democratic Republic (from 06/11/88), the Argentine Republic (from 03/30/1979), the Greek Republic (from 01/27/76), the Iraqi Republic (from 09/26/74), Ireland (from 12/17/1986), by the French Republic (from 03/04/70).

Russia is a member of the Geneva diplomatic and consular conventions, as well as the multilateral Convention for the avoidance of double taxation of royalties (Madrid, December 13, 1979).

In relations with individual countries in the 1990s, agreements continued to operate between the countries of the Council for Mutual Economic Assistance on the elimination of double taxation of income and property of individuals (concluded on May 27, 1977 in relation to Mongolia, Slovakia and the Czech Republic), as well as on the elimination of double taxation of income and property of legal entities (concluded on May 19, 1978; continued to be in force in relation to the same countries).

An independent group consists of bilateral agreements on the avoidance of double taxation of income and property of the Russian Federation with the CIS member countries: Agreement with the Republic of Azerbaijan (dated 07/03/97), Agreement with the Republic of Belarus (dated 04/21/95), Agreement with the Republic of Uzbekistan (dated 03/02/94; ratified on 04/24/95), with Ukraine (from 02/08/95).

You can find out more about issues related to accounting and tax accounting in foreign organizations on the territory of the Russian Federation in the book of JSC “BKR Intercom-Audit” “Foreign organizations and their representative offices”.

"Taxes and Taxation", 2006, N 7

The expansion of foreign economic relations and the development of cooperation between states is accompanied by the involvement of an increasing number of Russian taxpayers in international economic relations and the emergence of a number of problems associated with the application of foreign and international tax law to them. In accordance with the legislation of foreign countries, income received by Russian enterprises and citizens abroad is subject to taxation in these foreign countries. In turn, the legislation of the Russian Federation also provides for payments to the federal budget from the income of Russian enterprises and citizens. In such a situation, double taxation arises.

Double taxation is an extremely negative phenomenon that creates obstacles to the development of economic relations between states, and therefore the search for a mechanism to avoid it becomes a priority.

The realization of the fact that domestic measures cannot solve the problems of double taxation to the extent necessary for effective international economic cooperation required states to jointly search for solutions at the international level, due to which an international treaty became the most important element of the legal regulation system . As noted by E.A. Rovinsky and A.M. Cherepakhin, “the transition from unilateral actions of individual countries to interstate relations based on mutual obligations meant the transformation of double taxation from an object of influence of domestic law into an object of international legal relations, and the norms contained in special international acts regulating them formed ... a new international legal institute for the prevention of double taxation"<1>.

<1>Rovinsky E.A., Cherepakhin A.M. International legal regulation of double taxation. // Soviet state and law. 1975. N 6. P. 93.

The Agreement on the Avoidance of Double Taxation is a complex international legal act that includes rules relating to the taxation of profits (income) from commercial activities, international sea, air, road transport, dividends, interest, income from real estate, employment, remuneration from provision of professional services, royalties from the provision of professional services, pensions, income received by athletes, journalists, teachers, scientists, students, trainees, etc.<2>. The purpose of concluding such agreements is to find compromises in order to establish the scope of the rights and responsibilities of each state regarding the collection of taxes.

<2>Laboskin A.M. Some issues of international legal regulation of double taxation. // Journal of International Private Law. 1997. N 3. P. 20.

Tax treaties eliminate double taxation in three steps. At the first stage, the elimination of double taxation arising from differences between the rules for determining residence and source of income in the states parties to the agreement is carried out. For these purposes, the treaty includes a provision to eliminate the dual residence of a person, as well as articles granting one of the countries the right to tax a certain type of income. At the second stage, double taxation is eliminated, the reason for which is differences in the definition of taxable profit. The third stage is the elimination of double taxation generated by differences between the rules for establishing residence and taxation of income at source. When implementing this stage, the most important role is played by methods for eliminating double taxation, which can be enshrined in the domestic legislation of a particular country, or established in international treaties.

As of January 1, 2006, the Russian Federation has concluded and is in force on its territory 66 agreements on the avoidance of double taxation of income and property. Most agreements concluded with the participation of the Russian Federation are based on the Model Convention on Income and Property Taxes developed by the Financial Affairs Committee of the Organization for Economic Co-operation and Development (OECD).

The legal system of the Russian Federation is built on the principle that gives priority to the norms of international treaties over the norms of national law. In accordance with Part 4 of Art. 15 of the Constitution of the Russian Federation, generally recognized principles and norms of international law and international treaties of the Russian Federation are an integral part of its legal system. If an international treaty establishes rules other than those provided by law, then the rules of the international treaty apply. This principle is further confirmed in Art. 5 of the Federal Law “On International Treaties of the Russian Federation” and Art. 7 of the Tax Code of the Russian Federation (hereinafter referred to as the Tax Code of the Russian Federation).

In Russia, the document that is the basis for concluding an international treaty is Federal Law No. 101-FZ of July 15, 1995 “On International Treaties of the Russian Federation (hereinafter referred to as Federal Law No. 101-FZ), which determines the procedure for concluding, implementing and terminating international treaties of the Russian Federation. In accordance with the provisions of Articles 6 and 15 of Federal Law No. 101-FZ, international treaties, the implementation of which requires changes to existing or adoption of new federal laws, as well as establishing rules other than those provided for by the current law, are subject to mandatory ratification. Ratification is one of the forms of expressing the consent of the Russian Federation to be bound by an international treaty.

International agreements on the avoidance of double taxation of income and property concluded by the Russian Federation establish a different procedure for taxation of income than that provided for by domestic Russian tax legislation. In order for such treaties to be applied on the territory of the Russian Federation, they must be ratified. Agreements that expressly stipulate such a requirement are also subject to ratification, such as, for example, in Art. 27 of the Agreement between the Government of the Russian Federation and the Government of the Syrian Arab Republic on the avoidance of double taxation of income and property.

Considering the features and problems of applying international agreements, it should be noted that the implementation of the rights and privileges provided for by them is based on the norms and procedures provided for by national law. In the absence of such, the application of an international treaty becomes practically impossible.

A feature of international agreements on tax issues is the fact that they are concluded with the aim of eliminating various conflict situations between national legal systems, therefore a significant part of the content of international agreements consists of conflict rules. Their main purpose is to fully or partially attribute the resolution of certain issues to the legislation of one of the parties to the agreement, thereby limiting the tax jurisdiction of the other party. That is why the detailed and precise consolidation of all concepts, terms and procedures in the domestic legislation of the contracting states is of great importance.

Persons to whom the agreements apply. It should be noted that the approach of contracting states to determining the circle of persons to whom agreements apply has now changed somewhat. While early tax treaties applied to nationals of contracting states, most treaties now apply to residents or residents of one or both contracting states, without distinction of nationality. The expression “resident of a Contracting State” means any person who, under the laws of that State, is subject to taxation therein.

In Russian legislation, the residency criterion is established only for individuals. According to Art. 11 of the Tax Code of the Russian Federation, the term “tax resident” means an individual who is actually located on the territory of the Russian Federation for at least 183 days in a calendar year. This also means that the concept of “resident” characterizes a person’s residence in the Russian Federation strictly within one calendar year and cannot be extended to longer periods. In other words, residency in Russia is established annually.

It is impossible not to pay attention to a number of shortcomings of the criterion used by the legislator. Based on the literal interpretation of this norm, it turns out that in the first 183 days there is not a single resident on the territory of the Russian Federation and all persons, both Russian and foreign citizens, as well as stateless persons, must pay income tax at a rate of 30%. In this regard, changes should be made to the tax law, determining that a resident is an individual who is actually located on the territory of the Russian Federation for at least 183 days during a period equal to twelve consecutive months.

Difficulties also arise with the interpretation of the concept “183 days”. This problem arises when a citizen spent approximately six months in Russia and spent the remaining time in several foreign countries. It is necessary to determine whether he is a tax resident in the Russian Federation or not.

The difficulty lies in the fact that, depending on one or another way of interpreting the concept of “183 days” and the method of calculating the time period, a person may or may not be considered a tax resident of the Russian Federation. Thus, if staying in Russia for any period of time within 24 hours is counted as the day of actual stay on its territory, then the above person becomes a tax resident of the Russian Federation. On the contrary, if the day of actual stay on the territory of the Russian Federation is considered to be continuous stay in Russia for a full 24 hours, then the person does not become a tax resident. In the latter case, there is an alternative: on the one hand, any moment during the day can be considered as the beginning of a full 24 hours, and on the other hand, only midnight. Thus, at first glance, a simple question becomes complex, since depending on its solution, the tax status of an individual changes.

No normative act contains any interpretation or clarification of the expression “183 days”. There is also no clear definition of the concept “day”.

Moreover, in the Tax Code of the Russian Federation there are no general rules on the beginning of the running of deadlines. Attempts to eliminate this gap in tax legislation have never found practical implementation.

To interpret the concept of “day”, one should refer to other legal acts. Based on the norms of clause 1 of the Decree of the Government of the Russian Federation of 01/08/1992 N 23 “On the procedure for calculating time on the territory of the Russian Federation”: “time during the day is counted from 0 to 24 hours, taking midnight as the beginning of the day.” Although this norm does not directly define the concept of “day,” it clearly follows that a day is understood as a period of time starting at midnight and lasting 24 hours.

Thus, we can conclude that an individual will only be considered a tax resident of Russia when he was on its territory for at least 183 full time periods, each of which, equal to 24 hours, began at one midnight and ended at the next midnight.

The provision on 183 days is very vulnerable, it is easy to get around it, especially in conditions of open borders within the CIS. In addition, the calendar year rule allows for a situation where a subject, having lived on the territory of Russia for a total of one year, is not a resident, since this year cannot be distributed among calendar years in such a way that he lives in each of them no more than 183 days.

It should be noted that if the “183 days” criterion is fixed at the legislative level, it must be established in such a way that this provision of the law does not cause difficulties in application, otherwise this will lead to problems in the application of international agreements.

That is why such a criterion as “183 days” is not used so often in foreign practice.

The legislation of foreign countries provides for a more complex physical presence test for recognition of residence. The agreements define as a criterion for residency the place of residence, permanent home, center of vital interests, but not the time period.

As we mentioned earlier, Russian tax legislation uses the concept of residence only in relation to individuals. For legal entities, the concept of “resident” is applied only in currency legislation. In Russian tax legislation, unlike international agreements, this term is not used in relation to legal entities, just as the term “person with permanent residence” is not used.

Russian tax legislation establishes only the categories of “organization” and “foreign organization,” which clearly does not correspond to the terminology of international tax treaties. This gap makes it difficult to apply international agreements. Because the implementation of their provisions is based on the norms of national legislation. The question arises, what should be done if a concept is used in an international treaty, but it is not disclosed in domestic legislation?

For the purposes of applying the provisions of a particular agreement, the residence (permanent residence) of a person intending to benefit from the rules and regulations established by the relevant provisions of the agreements must be officially confirmed in the manner established by the internal rules of the law of the contracting state in which the income of this person is taxed. In accordance with Order of the Federal Tax Service of Russia dated 09/08/2005 N SAE-3-26/439 “On approval of the Procedure for confirming permanent residence (residence) in the Russian Federation”, the Federal Tax Service is authorized by the Ministry of Finance of the Russian Federation to confirm the status of tax resident of the Russian Federation for individuals (Russian and foreign), Russian organizations and international organizations that have such status under the legislation of the Russian Federation for the purposes of applying Agreements (Conventions) for the avoidance of double taxation.

Taking into account the fact that all agreements are individual and some use the concept of “resident”, and others “person with permanent residence”, and the definition of these concepts in each agreement has its own characteristics, it follows that the Ministry of Finance of Russia has authorized the Federal Tax Service to issuing certificates of status that does not exist in national legislation.

In accordance with currency legislation, a legal entity is a resident if it is created on the territory of the Russian Federation; its branches, representative offices and other separate divisions are also residents. Although in international agreements the incorporation criterion for establishing residence is rarely used, it seems that in order to avoid conflicts and comply with the principle of systematic law, the incorporation criterion should also be established in tax legislation to determine the tax status of legal entities.

This gap in national legislation acquires particular importance when determining the entities that fall under the treaties, because the correct identification of the entities and their assignment to one of the contracting states as its tax resident determines which taxes and what obligations of these entities fall under the tax jurisdiction of each of the contracting parties states So, paragraph 1 of Art. 4 of the Convention between the Government of the Russian Federation and the Government of the Italian Republic for the avoidance of double taxation with respect to taxes on income and capital and the prevention of tax evasion, signed on April 9, 1996, it is established that “the term “resident of a Contracting State” means any person who, subject to tax therein under the laws of that State by reason of his residence, place of registration or any other criterion of a similar nature. However, this term does not include any person who is liable to tax in such State only in respect of income from sources located in that State." In Russian legislation, none of the criteria mentioned above is a basis for taxation.

In accordance with paragraph. 1 tbsp. 19 of the Tax Code of the Russian Federation, taxpayers and payers of fees are organizations and individuals who, in accordance with the Tax Code, are obliged to pay taxes and fees. The obligation to pay tax arises for an organization if there is an object of taxation established in Art. 38 Tax Code of the Russian Federation.

As noted by V.V. Vitryansky, in the legal regulation of tax relations, the object is the defining characteristic for identifying the entity that fulfills the obligation to pay tax. “The obligation to pay tax arises for a person after the appearance of a corresponding object subject to taxation; for tax purposes, certain aspects associated with the registration of the subject as a legal entity do not have the same significance as they have for recognizing the relevant subject as having civil legal capacity.”<3>.

<3>Vitryansky V.V., Gerasimenko S.A. Tax authorities, taxpayers and the Civil Code: arbitration and judicial practice. - M., 1995. P. 120.

Consequently, the subjects of tax law - taxpayers and tax agents - are defined in the general part of the Tax Code of the Russian Federation only as potential carriers of the entire complex of tax rights and obligations, while the rules of the special part determine what taxes and when an organization or individual must pay.

Among the objects of taxation according to paragraph 1 of Art. 38 includes operations for the sale of goods (work, services), property, profit, income, cost of goods sold (work performed, services rendered) or another object that has a cost, quantitative or physical characteristic, the presence of which the taxpayer has legislation on taxes and fees relates to the occurrence of the obligation to pay tax.

It is obvious that the emergence of an object of taxation is the result of the participation of subjects in civil circulation. It seems that it is precisely in connection with this fact that in the definition of the concept of “foreign organization” given in Art. 11 of the Tax Code of the Russian Federation, a requirement has appeared for foreign subjects of tax legal relations to have civil legal capacity. According to paragraph 2 of Art. 11 of the Tax Code of the Russian Federation, foreign organizations for tax purposes are understood to include “legal entities, companies and other corporate entities with civil legal capacity, created in accordance with the legislation of foreign states.” Thus, to determine the status of a person, Russian tax legislation refers to the civil legislation of a foreign state, because a foreign legal entity is endowed with legal capacity precisely in accordance with the rules of foreign legislation. In turn, to establish the tax rules themselves, the substantive rules of national legislation are used, to which the conflict of laws rules of agreements refer.

Returning to the analysis of the Russian Agreement with Italy, we can see that in our legislation, none of the criteria specified in the agreement are grounds for taxation. The obligation to pay tax arises if the taxpayer has an object of taxation, and the specified criterion is not similar to the criteria given in the text of the Convention. In this regard, when determining residence, one should rely on the key phrase of the definition “subject to tax”, and should also exclude persons who are not considered residents under the Convention. The Convention determines that persons subject to taxation, in this case, in Russia only in relation to income from sources located in Russia, are not residents; therefore, all other persons subject to taxation are residents.

To resolve the issue of the legal capacity of a foreign legal entity, it is also possible to turn to civil law. In accordance with Part 1 of Art. 2 of the Civil Code of the Russian Federation, the rules established by civil legislation apply to relations with the participation of foreign legal entities, unless otherwise provided by federal law. Article 1202 of the Civil Code of the Russian Federation determines that the personal law of a legal entity is the law of the country where the legal entity is established.

Thus, the example of one of the agreements shows how gaps in national legislation complicate the application of international agreements and turn from purely theoretical to purely practical. A big mistake is that the works of some researchers repeat the misconception made by the legislator and use in their works concepts that do not exist in the legislation.

So, M.V. Semenova in her article “Taxation of profits and income of a permanent establishment” writes that the taxation of profits and income in the Russian Federation is based on the incorporation test, that is, legal entities formed in accordance with the legislation of the Russian Federation are recognized as residents for tax purposes<4>. As we have already said, Russian legislation does not establish the concept of residence in relation to legal entities at all.

<4>Semenova M.V. Taxation of profits and income of permanent establishments // Accounting, 2003, No. 7.

One of the tasks of the legislator is to eliminate the existing gap and legislate the residency criteria for legal entities, as well as improve the provisions defining the residency criterion for individuals.

Taking into account the current practice, it is proposed to enshrine in Art. 11 of the Tax Code of the Russian Federation, the concept of residence for legal entities based on the place of registration in accordance with Art. 1202 of the Civil Code of the Russian Federation.

Permanent representation. Permanent establishment is a key term in double tax treaties. The concept of “permanent establishment” was developed specifically to determine the degree of presence of a foreign organization in a tax jurisdiction, with which most states associate the obligation of this organization to pay established taxes. The concept of a “permanent establishment” involves granting the state in whose territory it operates the right to tax all income of a foreign legal entity attributable to such permanent establishment. Returning to the fact that the implementation of rights and privileges provided for in agreements is based on the norms and procedures provided for by national law, one cannot help but notice that there are also a lot of gaps in national legislation regarding the establishment of permanent representation. Despite the fact that the concept of “permanent establishment” established in the Tax Code of the Russian Federation differs significantly from the norms of previously existing legal acts, it can be argued that the legislator has not established a full definition of this term, having included in the Tax Code of the Russian Federation only a list of types of activities leading to or excluding establishment of a permanent representative office.

In accordance with Art. 306 of the Tax Code of the Russian Federation, a permanent representative office is understood as a branch, representative office, department, bureau, office, agency, any other separate division or other place of activity of this organization, through which this organization carries out business activities on the territory of the Russian Federation related to the use of subsoil and (or) use of other natural resources; carrying out work stipulated by contracts for the construction, installation, installation, assembly, commissioning, maintenance and operation of equipment, including gaming machines; sale of goods from warehouses located on the territory of the Russian Federation and owned or leased by this organization; carrying out other work, providing services, conducting other activities, with the exception of those provided for in paragraph 4 of Art. 306 of the Tax Code of the Russian Federation.

Thus, the criteria for “permanent establishment” are:

• availability of place of business;
• carrying out business activities;
• the regularity of such activities;
• carrying out activities on the territory of a Contracting State.

The least defined, perhaps, is the criterion of regularity or constancy of entrepreneurial activity. An explanation of this criterion is not contained either in international treaties or in Russian tax legislation.

In international practice, there are two methods for determining the continuity of activity - the method of assessing the intentions of a person and the method of determining the actual duration of the activity. None of the above methods are reflected in Russian legislation.

In accordance with clause 2.1.1 of the Regulations on the peculiarities of tax accounting of foreign organizations, approved by Order of the Ministry of Taxes of Russia of April 7, 2000 N AP-3-06/124, “if a foreign organization carries out or intends to carry out activities in the Russian Federation through a branch in during a period exceeding 30 calendar days per year (continuously or in aggregate), it is obliged to register with the tax authority at the place of activity no later than 30 days from the date of its start.” This provision indicates that Russian legislation indirectly refers to the method of assessing the taxpayer’s intention. At the same time, the obligation to register should not be completely linked to the occurrence of the obligation to pay taxes. It cannot be said that the Regulations on the Peculiarities of Tax Accounting for Foreign Organizations establish a period after which the activities of a foreign organization are considered to constitute a permanent establishment. In this case, these norms have different legal meanings. If a period of 30 days is set as a criterion for the period of regularity, we can simply assume that these periods coincide. Moreover, if the period is longer, for example 6 months, then the organization must register after 30 days, and a permanent representative office is formed 6 months from the start of its activities. This is the difference in the legal meaning of establishing these deadlines.

It can also be added that tax accounting is a type of mandatory state registration and the fact of such registration is linked by tax legislation to the assignment of responsibilities to a foreign organization for the independent calculation and payment of taxes and control over their implementation. In the event that a foreign organization has not registered and has not received a TIN, tax-registered organizations have the obligation to withhold tax from the amounts of money paid to it. Thus, the fact of registration does not affect the obligation to pay tax, the obligation arises regardless of the organization’s tax registration, the fact of registration only affects which entity will transfer a certain tax, but the obligation remains unchanged.

Certain doubts regarding the position of the Russian tax department are also raised by the fact that the regularity criterion is tied exclusively to the duration of the activity.

For some transactions, a more appropriate measure would be to quantify them over a specified period. For example, transactions for the sale of property by a branch of a foreign organization or the activities of a dependent agent are more logically characterized by the number of transactions performed during the reporting or tax period than by their duration. In this case, the position of the Methodological Recommendations of the Ministry of Taxes of Russia makes sense<5>, establishing that isolated facts of any business transactions in Russia cannot be considered as “regular activity”.

<5>On approval of Methodological recommendations to tax authorities on the application of certain provisions of Chapter 25 of the Tax Code of the Russian Federation concerning the peculiarities of taxation of profits (income) of foreign organizations: Order of the Ministry of Taxes of Russia of March 28, 2003 N BG-3-23/150 // Financial newspaper. 2003. N N 15 - 16.

Taking into account the fact that the criterion of regularity is decisive for establishing the subject of taxation, and also that a uniform approach in this matter has not been developed either by the legislator or by judicial practice, a clear explanation of this concept should be included in the Tax Code. In this case, you can take advantage of foreign experience and fix a specific period, exceeding which leads to the formation of a permanent representative office.

Taxation of dividends. A number of difficulties arise in practice when applying the provisions of international agreements governing the taxation of income from sources, in particular dividends and interest.

In accordance with paragraph 1 of Art. 43 of the Tax Code of the Russian Federation, a dividend is any income received by a shareholder (participant) from an organization during the distribution of profits remaining after taxation (including in the form of interest on preferred shares) on shares (stakes) owned by the shareholder (participant) in proportion to the shares of shareholders (participants) in the authorized (share) capital of this organization. Unlike civil legislation, Russian tax law classifies as dividends not only income from shares in joint-stock companies, but also income from equity participation in other companies and partnerships, including general partnerships, limited liability companies, etc.

Double tax treaties may give the term “dividends” a different, broader meaning compared to national legislation.

Thus, for example, the Double Taxation Convention between the Government of the USSR and the Government of Japan provides that the term "dividends" means income from shares or other rights, not being debt claims, giving the right to participate in profits, as well as income from other corporate rights, which is subject to the same tax regime as income from shares under the tax legislation of the state in which the legal entity distributing the profits is a resident.

In accordance with Art. 10 of the Agreement between the Russian Federation and the Federal Republic of Germany of May 29, 1996, the term “dividends” means income from shares, rights or certificates for participation in profits, founder's shares or other rights to participate in profits, as well as other income that, according to state law , the resident of which is the company distributing the profit, are treated in tax terms as income on shares.

Generally, for international tax purposes, dividends refer to distributions of profits to shareholders of companies, partnerships, limited liability companies or other share capital entities.

The question arises whether these Agreements, as well as the provisions of the Tax Code of the Russian Federation regarding the taxation of dividends, apply to partnerships.

The domestic legislation of different states regulates the legal and tax status of partnerships differently. Russia, as well as some other countries, in particular many CIS countries, consider partnerships as corporate tax entities on a par with joint stock companies or limited liability companies.

Other countries, such as the UK, only tax individual partners on their shares of income in such partnerships.

These factors influence the application of agreements to partnerships in situations where one of the partners is a non-resident in relation to the state in which the partnership is registered.

It should be noted that in cases where a partnership is treated for tax purposes as a company and is a resident of a Contracting State on the basis of the article defining the concept of “resident” of the relevant agreement, the partnership is subject to the scope of such agreement with the right to enjoy the benefits established therein. Russia is a typical example in this case, based on Art. 11 of the Tax Code of the Russian Federation, in connection with which it is fair to apply agreements on the avoidance of double taxation to partnerships.

Based on the above, taxation of the profits of a partnership, the participants of which, along with Russian ones, are also foreign organizations, is decided as follows. In accordance with paragraph 6 of Art. 306 of the Tax Code of the Russian Federation, the fact of a foreign organization concluding a simple partnership agreement or another agreement involving joint activities of its parties (participants), carried out in whole or in part on the territory of the Russian Federation, cannot in itself be considered for this organization as leading to the formation of a permanent representative office in the Russian Federation . Taking into account Letter of the Ministry of Finance dated 07.07.2005 N 03-08-05, this provision of the Tax Code of the Russian Federation does not yet mean that no activity within the framework of such an agreement can lead to its emergence.

Thus, if a foreign organization, within the framework of an agreement on joint activities, is not engaged in carrying out independent business activities in the Russian Federation, leading to the formation of a permanent representative office in the Russian Federation, but only receives income in the form of distribution of profits from joint activities, then such income is classified as income from sources in the Russian Federation and are subject to taxation at the source of payment in accordance with paragraph 1 of Art. 309 of the Tax Code of the Russian Federation. That is, when paying income to a foreign company, a Russian organization must act as a tax agent and withhold tax from it in accordance with the procedure established by law.

In the case of the formation of a permanent representative office, a foreign organization must pay tax on profits received from carrying out activities in the Russian Federation in the manner prescribed by Art. Art. 286 and 287 of the Tax Code of the Russian Federation.

If a foreign organization is a resident of a state with which an agreement on the avoidance of double taxation has been concluded, then the principles of such an agreement are applied.

It should be noted that the provisions of many agreements provide for the non-application of dividend rules to the distribution of profits to partnerships (for example, such a rule is contained in Article 10 of the Agreement between the Government of the Russian Federation and the Government of the Kingdom of the Netherlands of December 16, 1996).

Dividend tax rates are established by international agreements and may vary depending on the foreign organization’s share in the authorized capital of a Russian organization, the amount of the foreign organization’s contribution to the authorized capital or other conditions provided for by the agreement. Some agreements establish a maximum level of possible taxation of dividends in the state - the source of taxes, expressed as a percentage of the gross amount of dividends paid, which in the terminology of the Tax Code of the Russian Federation is not entirely correctly called a “reduced tax rate”.

For example, Art. 10 of the Convention between the Government of the Russian Federation and the Government of the United Kingdom of Great Britain and Northern Ireland for the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and capital gains of February 15, 1994, it is established that when paying dividends to an English company, the tax levied in the Russian Federation the tax should not exceed 10% of the gross amount of dividends.

Some agreements establish the level of possible taxation of dividends in the source state depending on the degree of participation of the organization receiving the dividends in the authorized capital of the organization paying the dividends.

A similar provision is contained in the Agreement between the Government of the Russian Federation and the Government of the Republic of Cyprus for the avoidance of double taxation with respect to taxes on income and capital of December 5, 1998, which provides that dividends paid by a company that is a resident of one State to a resident of the other Contracting State may be taxed in the first-mentioned State, but the tax so charged may not exceed:

(a) 5% of the total amount of dividends if the beneficial owner has directly contributed to the capital of the company an amount equivalent to at least US$100,000;

(b) 10% of the total amount of dividends in all other cases.

It is agreed by the Contracting States that this condition must be satisfied at the time of initial investment and shall not be subject to annual recalculation at the time of payment of dividends.

When applying the provisions of this Agreement, one should be guided by Letter of the Ministry of Taxation of Russia dated February 12, 2004 N 23-1-10/4-497 “On the application of the Agreement between the Government of the Russian Federation and the Government of the Republic of Cyprus on the avoidance of double taxation in relation to taxes on income and capital 05.12 .1998" and Letter of the Ministry of Finance of Russia dated June 26, 2003 N 04-06-06.

The size of the investment is determined by the amount actually paid on the date of acquisition of shares or other rights to participate in profits, subject to the principle of using arm's length market prices. It is also agreed that “direct investment” includes both the acquisition of shares during an initial or subsequent issue, and the purchase of shares on the securities market or directly from their previous owner. However, the $100,000 criterion is applied directly to each individual company without taking into account the relationship between the parent and subsidiary companies.

However, it appears that the application of these provisions may cause a number of difficulties in practice. In particular, the tax agent has the obligation to assess the situation and apply the principle of using market prices between independent parties to the transaction.

Another question that may arise when applying agreements: at what rate should the size of the foreign participant’s share in the authorized capital of a Russian enterprise be recalculated in the case when this share in the agreement is expressed in US dollars, euros or ecus, but in fact the contribution was made to another currency, for example in Russian rubles?

It seems that for the purposes of applying the agreements, the share of a foreign participant - the recipient of dividends in the authorized capital of a Russian company should be valued at the exchange rate of the Central Bank of the Russian Federation at the time of the actual investment. The assessment of the ratio of different currencies should also be made on the date of actual contribution of money to the authorized capital of the company.

When converting national currencies of European countries and ECUs into euros, one should be guided by Letter of the Ministry of Taxes and Taxes of Russia dated June 16, 2003 N RD-6-23/664, which is based on information from the Ministry of Finance of Russia. The exchange rate of currencies in relation to the national currencies of the EU countries is given in the Information message of the Bank of Russia N 15/01 “Description and technical characteristics of euro banknotes and coins”, it is fixed and is the only official rate both when exchanging the euro for national banknotes and and when exchanging one national currency for another. With the introduction of the single European currency, the conversion factor of the previously existing unit of account ECU was 1:1, and therefore, by Decree of the Government of the Russian Federation of December 17, 1999 N 1399, the word “ECU” in the texts of agreements of the Government of the Russian Federation was replaced by the word “euro”.

Some treaties also establish a period during which the specified requirement must be met in order for the right to apply a lower tax rate to arise. The absence of such a period may lead to abuses on the part of taxpayers, who will be able to acquire shares in the authorized capital of a company for the sole purpose of avoiding taxation.

Such an explanation from the tax or other competent authorities of the Contracting States is not contained in every agreement, which significantly complicates their application.

So, in accordance with Art. 10 of the Double Taxation Treaty with the Kingdom of the Netherlands, dividends may be taxed in the Contracting State in which the company paying the dividends is a resident and, if the recipient is beneficially entitled to the dividends, the tax charged shall not exceed:

• 5% of the total amount of dividends, if the beneficial owner of the dividends is a company (other than a partnership) whose direct participation in the capital of the company paying the dividends is at least 25% and which has invested in it at least 75 thousand ECU or the equivalent amount in national currency Contracting States;
• 15% of the total amount of dividends in all other cases.

The conditions for applying a lower tax rate are not defined either by the Agreement or the Protocol to this Agreement. There is also no established period of time for which the company receiving dividends should have received 25% of the authorized capital.

Russian legislation also does not require a parent company to hold a stake in a subsidiary for a certain period of time before distributing profits.

In such a situation, it is possible that the parent company increases its share shortly before paying dividends in order to obtain a lower tax rate.

Moreover, in the case of, for example, a Russian company, when the authorized capital is paid in rubles, it is not clear on what date the exchange rate should be taken into account to determine the share of participation in the company paying dividends: on the date of the decision to create the company, in which it is determined authorized capital; on the date of its transfer by the foreign founder or on the date of its actual crediting to an account in a Russian bank?

It seems that in order to resolve this issue, tax authorities should adopt uniform clarifications, rather than separate recommendations for each individual agreement. Otherwise, the lack of clear rules entails abuses both on the part of taxpayers and on the part of tax authorities.

International treaties for the avoidance of double taxation, as a rule, establish marginal tax rates on income in the form of dividends, above which the specified income cannot be subject to income tax in Russia. Most agreements set a maximum tax rate of 15% (Agreements with Japan, the Netherlands, France, Germany) or 10% (Republic of Korea, Great Britain, Czech Republic, etc.).

Many agreements also establish a lower rate (5%) specifically for dividends paid by a subsidiary to its parent company. For example, such a rate is provided for in the Agreement with the Netherlands that we reviewed.

The specified rates apply to income in the form of dividends received by foreign organizations that do not have a permanent establishment in the Russian Federation.

In the same case, if dividends are taxed as part of the profits of a permanent establishment, then the rules established by the article “Profits from business activities” apply, which provides that the profits of a permanent establishment are taxed in the state in which this permanent establishment is located, and in accordance with established in the legislation of this state.

Thus, in relation to the amounts of dividends received from Russian sources relating to the permanent establishment of a foreign organization - a resident of a state with which the Russian Federation has an agreement on the avoidance of double taxation, a tax rate of 9% is applied, established by paragraphs. 1 clause 3 art. 284 Tax Code of the Russian Federation.

This is due to the fact that all existing international agreements on the avoidance of double taxation contain an article “Non-discrimination”, which excludes the taxation of income in the form of dividends at rates different from the similar tax rate applied in relations with Russian organizations. Thus, if the special rates for taxation of dividends enshrined in international treaties of Russia are greater than the rate of 9%, then the income of a foreign organization from sources in the Russian Federation in the form of dividends, if classified as a permanent establishment, is subject to income tax at a rate of 9%. In the absence of a tax agreement, income in the form of dividends received by foreign organizations from Russian organizations is subject to taxation as provided for in paragraph 3 of Art. 284 of the Tax Code of the Russian Federation at a rate of 15%.

Practice shows that the problems of dividend taxation in Russia do not end there.

Article 42 of the Law of the Russian Federation “On Joint-Stock Companies” provides for the possibility of paying interim dividends based on the results of the first quarter, six months, nine months of the financial year. When paying interim dividends, it is necessary to keep in mind that the company may incur a loss based on the results of the financial year. In this case, there is a risk that the tax authorities will not apply the provisions of the agreements on the elimination of double taxation and Ch. 25 of the Tax Code of the Russian Federation regarding the taxation of dividends to the amounts of interim dividends paid. Such amounts will be subject to taxation on the basis of clause 10, part 1, art. 309 of the Tax Code of the Russian Federation, that is, at a rate of 20%, and relate to “other similar income”.

The excess of interim dividends paid over the amount of profit received is subject to taxation in the same manner.

In order to achieve uniformity in the process of applying tax rules, in our opinion, an explanation on this issue should also be prepared by the tax authorities.

With regard to the distribution of dividends to individuals, it should be noted that, in contrast to the concept of legal double taxation, which usually has a more precise meaning, the concept of economic double taxation has not been adequately reflected. Some states do not accept this concept at all, others, including the Russian Federation, consider it necessary to mitigate economic double taxation within the country.

It should be noted that there are states that mitigate economic double taxation and apply a variable tax rate on company income. These states tax a company at different rates depending on what the company does with its profits. A higher rate is charged on retained earnings and a lower rate on distributed earnings.

Some states also provide incentives to shareholders. In such states, a company is taxed on its total profits, whether distributed or not, and dividends are taxed once they are in the hands of the individual shareholder. The latter is entitled to relief, usually in the form of a tax credit against his personal tax, on the basis that the dividends were taxed to the company as part of profits. This provision is contained, for example, in the domestic legislation of Malta<6>.

<6>Petrykin A.A. Practical commentary on international double taxation agreements. M., Vershina. 2005.

Regardless of the chosen method, it seems that it is necessary to take into account economic double taxation in Russian legislation. The consolidation of such principles in the domestic legislation of states will allow them to be further disseminated at the international level of cooperation and will contribute to the development of international capital movements.

Interest. Just like dividends, international agreements may assign a different meaning to interest than that established by the Tax Code of the Russian Federation. The definition of "interest" used in most tax treaties is similar to that used in domestic law and provides that "interest" means income from debt claims of any kind, regardless of mortgage security or profit-sharing rights.

The Organization for Economic Assistance and Development's commentary on the OECD Model Convention suggests that the definition of interest in international treaties does not generally apply to payments made under certain types of non-traditional financial instruments based on a non-debt obligation, but it is possible for such payments to qualify as interest within the national doctrines of “predominance of substance over form”, “abuse of rights” and others.

In Russia, in relation to tax relations, there are elements of similar doctrines, but so far there is no reason to talk about their clear formation, directly affecting the application of an international treaty. Although the Tax Code of the Russian Federation provides the opportunity to classify certain “other similar income” as income from sources in Russia, the tax authorities, as indicated, have not yet used this provision.

If an international treaty does not contain a definition of interest, then according to the rules of interpretation of the terms of international treaties, when deciding on the taxation of income in the country of payment, the definition of interest used by the tax legislation of the country of payment of income must be applied. Such agreements include, for example, the agreement with Austria.

In accordance with paragraphs. 3 p. 1 art. 309 of the Tax Code of the Russian Federation, the income of a foreign organization from sources also includes interest income from debt obligations of any type, including bonds with the right to participate in profits and convertible bonds, including income received on state and municipal issue-grade securities, the terms of issue and circulation of which provided in the form of interest; income from other debt obligations of Russian organizations.

The concept of interest is also established in paragraph 3 of Art. 43 of the Tax Code of the Russian Federation, according to which interest is recognized as any pre-declared (established) income, including in the form of a discount, received on a debt obligation of any type (regardless of the method of its execution). In this case, interest is recognized, in particular, as income received from cash deposits and debt obligations. Under debentures for the purposes of Sec. 25 of the Tax Code of the Russian Federation in accordance with paragraph 1 of Art. 269 ​​of the Tax Code of the Russian Federation refers to credits, commodity and commercial loans, loans, bank deposits, bank accounts or other borrowings, regardless of the form of their execution.

Previously, in accordance with Instruction of the State Tax Service of Russia No. 34 of June 16, 1995, interest also included fines and penalties for violation of contractual obligations. At present, the Tax Code of the Russian Federation has allocated this income to a separate category, thereby eliminating the contradictions in Art. 43 of the Tax Code of the Russian Federation, as well as inconsistencies with most international treaties that allocate fines and penalties to a separate article.

In practice, the taxation of interest can present a number of difficulties. When paying interest income by Russian organizations that have an outstanding debt under a debt obligation to a foreign organization that directly or indirectly owns more than 20% of the authorized (share) capital of this Russian organization, questions may arise about the need to apply Art. 269 ​​of the Tax Code of the Russian Federation. This article establishes a thin capitalization ratio and a rule according to which interest paid in excess of the maximum level calculated on the basis of the capitalization ratio and the foreign parent company's share of participation in the Russian organization will be considered as a payment of dividends and taxed at the appropriate tax rate. In addition, such interest will be taken into account to reduce the taxable profit of a Russian organization as part of tax deductions, also taking into account the capitalization rule.

For example, if the taxpayer - a Russian organization has an outstanding debt under a debt obligation to a foreign organization that directly or indirectly owns more than 20 percent of the authorized (share) capital of this Russian organization, and if the amount of debt obligations outstanding by the Russian organization provided by the foreign organization is more than three times the difference between the amount of its assets and the amount of liabilities on the last day of the reporting period, when determining the maximum amount of interest to be included in expenses, taking into account clause 1 of Art. 269 ​​of the Tax Code of the Russian Federation, special rules established by the Code apply.

Clause 4 of Art. 269 ​​of the Tax Code of the Russian Federation provides that the positive difference between accrued interest calculated in accordance with the rules established by clause 2 of Art. 269 ​​of the Tax Code of the Russian Federation, is equated for tax purposes to dividends and is taxed in accordance with clause 3 of Art. 284 Tax Code of the Russian Federation.

Speaking about the mechanisms provided for by the Tax Code of the Russian Federation for the implementation of the provisions established therein, it should be noted that Art. 269 ​​of the Tax Code of the Russian Federation regulates in detail the mechanism that allows you to adjust the amount accepted to reduce taxable profit. However, as regards the mechanism allowing the application of the provisions of Art. 269 ​​of the Tax Code of the Russian Federation for the purpose of withholding tax on the income of a foreign organization at the source of payment, such a mechanism is not clearly established by law.

Tax on the income of a foreign organization is withheld by the tax agent at the time the income is transferred to it, while the capitalization ratio must be determined as of the last reporting date of the corresponding reporting (tax) period in order to calculate the maximum amount of interest recognized as expense on controlled debt.

The entire mechanism of Art. 269 ​​of the Tax Code of the Russian Federation is focused on the purposes of calculating interest recognized as an expense when forming the Russian tax base for income tax. Neither the Tax Code of the Russian Federation nor international agreements contain rules for the implementation of these norms, which makes it difficult to apply this provision in practice. It seems that it would be more correct to use the value of the coefficient as of the last reporting date of the previous reporting or tax period, however, for this, such a rule must be enshrined in law.

The stated provisions of the Tax Code of the Russian Federation are consistent with many international agreements, which provide that if the amount of interest relating to the debt claim in respect of which they are paid exceeds the amount that would be agreed upon between the payer and the person actually entitled to them, in the absence of special terms of the transaction, the excess portion of the payment is still subject to tax in accordance with the laws of each state.

This provision, for example, is contained in Art. 11 Agreement with the Republic of Finland on the avoidance of double taxation. It should be noted that the formulation of this provision is not entirely successful, because there is no mechanism for its application. The Agreement does not clarify what should be understood by “special relations between persons” and “absence of special relations”, despite the fact that responsibility for the application of such relations, as will be shown below, automatically rests with the tax agent.

When applying the relevant provisions of international agreements, one should take into account all the rules of such agreements in their entirety, including those that set out the definitions of the terms “dividends” and “interest”.

So, in accordance with Part 3 of Art. 10 of the Agreement for the Elimination of Double Taxation concluded between the Government of the Russian Federation and the Government of the Republic of Armenia, the term “dividends” means income from any shares or other rights, not being debt claims, giving the right to participate in profits, as well as income from other rights that is subject to the same tax regulation as income from shares in accordance with the legislation of the state of which the enterprise distributing the profits is a resident.

Similar provisions are also included in Agreements with Belgium, Germany, Canada and some others.

Thus, in accordance with the provisions of a number of agreements, interest may not include those interests that, by virtue of the agreements, qualify as dividends. However, this procedure is not generally accepted.

It appears that if an international agreement provides a precise definition of interest, thin capitalization rules should not apply to the taxation of such interest unless the specific agreement specifically provides otherwise.

It should be noted that although the income tax rate is reduced to 15% compared to the 20% tax rate withheld from interest income, in general, for both the payer and recipient of such interest, this regime is less attractive than the interest tax regime. The fact is that interest reclassified as dividends does not reduce the taxable profit of the debtor and, as a rule, is not subject to complete exemption from taxation in Russia on the basis of international treaties.

When comparing the procedure for taxing interest and accounting for it for income tax purposes established by domestic legislation and agreements, we can conclude that international treaties may provide for a different procedure for attributing interest on debt obligations to expenses.

Thus, clause 3 of the Protocol to the Agreement between the Russian Federation and the Government of Germany on the avoidance of double taxation with respect to taxes on income and property dated May 29, 1996, provides that the amount of interest paid by a company that is a resident of one Contracting State and in which a resident of another participates of a Contracting State shall be subject to an unlimited deduction in computing the taxable profits of that company in the first-mentioned State, regardless of whether such amounts of interest are paid to the bank or to another person and regardless of the term of the loan.

Such deduction, however, cannot exceed amounts “that would be agreed upon by independent enterprises under comparable conditions.”

It is possible to compare the specified provision of an international treaty and domestic legislation in two aspects:

• according to the procedure for accounting for interest tax purposes, depending on the type of loan;
• according to the procedure for accounting for tax purposes of interest, depending on their value.

Having compared the provisions of the Agreement and the norms of the Tax Code of the Russian Federation, we can conclude that, depending on the type of loan, national legislation does not establish a procedure for accounting for interest amounts for tax purposes that differs from that provided for by the Protocol. Because expenses are recognized as interest accrued on a debt obligation of any type, in contrast to the previously effective legislation on taxation of profits, Russian organizations accept as expenses any interest, provided that they are paid on borrowed obligations used to conduct activities aimed at generating income ( Clause 1 of Article 252 of the Tax Code of the Russian Federation), including those paid to non-banking organizations, as well as for loans used for foreign purposes. At the same time, it seems that it is still necessary to take into account that, in contrast to the provisions of the Protocol, according to the norms of domestic legislation, if the loan is used for purposes not related to commercial activities, such expenses cannot be taken as a decrease in income.

As for the legislative norms establishing the procedure for accounting for interest for income taxes depending on their size, some differences are found. As stated earlier, the Protocol establishes that the amounts of interest accepted for tax purposes should not exceed the amounts that would be agreed upon by independent enterprises under comparable conditions.

The purpose of these provisions is the same - to eliminate the possible influence on the taxpayer’s tax obligations of the factor of his dependence on the person in whose favor he pays interest, or other factors influencing the amount of interest. Moreover, if the Tax Code of the Russian Federation establishes a detailed procedure for determining the amount of interest (Article 269 of the Tax Code of the Russian Federation), then the agreement does not regulate the mechanism for comparing the actual amount of interest paid with the amount that can be accepted for tax purposes, which significantly complicates its application.

A detailed study of the norms of the Tax Code of the Russian Federation allows us to conclude that the provision in question of the Tax Code is inapplicable to determining the maximum amount of interest and its contradiction to the general principles of Russian tax legislation. Yes, Art. 269 ​​of the Tax Code of the Russian Federation establishes a general and special procedure for controlling the amount of interest attributed to expenses. As a general rule, expenses are recognized as interest accrued on a debt obligation of any type, provided that the amount of interest accrued by the taxpayer on the debt obligation does not significantly deviate from the average level of interest charged on debt obligations issued in the same quarter on comparable terms. Debt obligations issued on comparable terms mean debt obligations issued in the same currency for the same terms, in comparable amounts, against similar collateral. In this case, a significant deviation in the amount of accrued interest is considered to be a deviation of more than 20% upward or downward from the average level of interest accrued on similar debt obligations.

In the absence of debt obligations issued in the same quarter on comparable terms, and also at the choice of the taxpayer, the maximum amount of interest recognized as an expense is taken equal to the refinancing rate of the Central Bank of the Russian Federation, increased by 1.1 times - when issuing a debt obligation in rubles and equal to 15 % - on debt obligations in foreign currency.

In accordance with the special procedure, that is, if the taxpayer - a Russian organization has an outstanding debt under a debt obligation to a foreign organization that owns more than 20% of the authorized capital of this Russian organization, where the amount of the outstanding debt is more than three times the difference between the amount of assets and The amount of obligations and expenses may be interest, the amount of which does not exceed the amount of the maximum interest calculated on the basis of clause 2 of Art. 269 ​​of the Tax Code of the Russian Federation.

As studies of the established procedure for calculating maximum interest show, the actual accrued amounts of interest can be accepted for tax purposes if the capitalization ratio is equal to or less than one. This condition is met if the amount of the relevant outstanding debt is equal to or less than the amount of equity capital, the corresponding share of the foreign investor in the authorized capital of the taxpayer organization<7>.

<7>Taxation of foreign companies in Russia: Collection of materials from law enforcement practice. Issue 1. / Comp. E.V. Ovcharova. - M.: Statute, 2004. P. 47.

Thus, it turns out that the mechanisms for determining maximum interest rates do not depend on economic factors affecting the market value of borrowed funds.

The procedure for calculating maximum interest established by the article under study contradicts paragraph 1 of Art. 252 of the Tax Code of the Russian Federation, according to which reasonable and economically justified expenses are recognized as expenses.

Comparable conditions that independent parties to the transaction would have taken into account when entering into the transaction are not taken into account when determining the amount of maximum interest. Moreover, the established procedure for controlling the amount of interest contradicts paragraphs 2 and 3 of Art. 3 of the Tax Code of the Russian Federation, according to which taxes cannot be discriminatory and arbitrary and must have an economic justification.

From the above, it follows that the special procedure established by Russian legislation for accounting for expenses for tax purposes contradicts the rules established by the Protocol to the Double Taxation Agreement and should not be applied. Moreover, this procedure also contradicts the general principles of taxation established by Russian legislation and complicates the activities of taxpayers. It turns out that, since the special procedure for calculating maximum interest established by clause 2 of Art. 269 ​​of the Tax Code of the Russian Federation is not applicable in the case under consideration; there is no re-qualification of the positive difference between accrued and marginal expenses, and taxation of the income of a German resident, including excess amounts, must be carried out according to the rules of paragraph 1 of Art. 11 Agreements - "Interest".

The Double Taxation Convention between the Government of the Russian Federation and the Government of the United Kingdom of Great Britain and Northern Ireland also contains some specifics regarding the taxation of interest income. So, in accordance with Part 6 of Art. 11 of the Treaty, the rules regarding the taxation of interest contained in this contract do not apply if the main purpose or one of the main purposes of any person engaged in the creation or transfer of a debt claim in respect of which interest is paid is the desire to take advantage of such contract through such creation or transfer . This type of clause is not found in other treaties and would also appear to cause difficulties in applying the interest tax clause as a whole. It turns out that the tax agent, obligated to withhold the amount of tax and essentially responsible for the application of the tax agreement, in addition to checking the documents provided for by the Tax Code of the Russian Federation, is charged with assessing the role of the tax element among the goals of the person creating or transferring the debt obligation.

Tax legislation does not contain criteria for determining the main purpose or one of the main purposes of a person. Consequently, such criteria must be developed by practice and can lead to abuse by tax authorities. The purpose of such provisions is obvious, but their formulation seems very unfortunate, since it assumes the extension of the competence of tax authorities to determine and identify the purposes of commercial activity, which opens the way to arbitrariness.

In conclusion, it should be noted that, despite the fact that the collection of double taxes is certainly unfair, the question of the advisability of concluding tax treaties is also raised in the works of modern lawyers<8>. A tax treaty may provide additional benefits to foreigners on its territory, who as a result become more competitive compared to local producers. In addition, the agreement can be used to ease the tax burden, which also may not always have a favorable effect.

<8>Trofimov V.N. Double tax treaties: problems of ratification. // Legislation. 1998. N 6.

Before concluding a tax treaty, each state assesses what activities and to what extent its citizens or organizations are carrying out or intend to carry out on the territory of another state, as well as what activities are carried out by citizens of another state on its own territory. As a result, it becomes clear how much tax can be collected. Only in this case the agreement becomes economically balanced and mutually beneficial. Of course, during negotiations, each party strives to achieve such provisions in order to better protect its interests, but this leads to the fact that the agreement becomes more beneficial for one party and less beneficial for the other. That is why, in order to avoid such mistakes, a complete, comprehensive and detailed study of the economic basis of the upcoming signing of the agreement is necessary. An example of such work when concluding an agreement is the agreement with Turkey. Experts who worked on the double tax treaty submitted for ratification with Turkey drew attention to the fact that it provided for significant tax benefits for construction work. Of course, this applies more to the numerous Turkish workers in Russia than to Russian workers in Turkey. As a result, ratification of the treaty was refused<9>.

<9>Trofimov V.N. Right there.

It is quite possible that, due to existing agreements, the amount of uncollected taxes from foreigners on our territory, as well as from Russians abroad, exceeds the positive economic effect for Russia from the activities of our companies in other countries and foreign ones in our country. It is likely that a more accurate assessment of this situation will be made over time. In the meantime, the Government of the Russian Federation is moving towards concluding such agreements.

Another major problem that arises when ratifying such treaties is related to the language in which they are concluded. There are usually three such languages: Russian, the language of the counterparty, and the third is English. According to the terms of the contract, if a contradiction arises, the standard is the English text. This raises questions related to the ratification process. It would be easier if all agreements had the same legal force, and in case of a dispute it would be possible to defend a favorable interpretation. However, when there is a third language that takes precedence, this ratification technique is not possible.

For example, upon careful study of the treaty with Israel, experts discovered that in the Russian text there is no mention of one of the taxes that is in the English version<10>.

<10>Trofimov V.N. Right there.

For the above reasons, it is proposed to submit for ratification, in addition to the Russian, the English text. On the one hand, this can be considered a solution to the problem, on the other hand, the list of requirements that a deputy of the State Duma of the Russian Federation must meet does not include knowledge of English.

To eliminate the existing contradiction, the only way seems to be to include in the agreements a provision that no one language has primacy. In this case, the Russian side will interpret the agreement in the sense that is given to it in the Russian language.

It should be noted that the Decree of the Government of the Russian Federation of May 28, 1992 N 352 “On the conclusion of intergovernmental agreements on the avoidance of double taxation of income and property” provides for the possibility of concluding agreements only in two languages ​​that have equal validity.

Of course, when applying treaties, the problem of using a huge number of terms unknown to Russian legislation arises. For example, the previously mentioned terms “resident”, “permanent residence”, new meaning in comparison with Russian legislation is often given to such concepts as “real estate”, “dividends”, “royalties”, concepts such as “professional services”, “annuity”, “place of effective management”, etc. However, we must not forget that agreements are some kind of compromise between the laws of two states and provide an alternative concept to those contained in the legislation of each of them. Thus, we should not talk about the shortcomings of international treaties, but rather about the gaps and inability of the domestic tax law to accommodate them. From the above it follows that in national legislation the conceptual apparatus and procedures for the application of double taxation agreements are not sufficiently developed.

S.E. Neustadt

Applicant

International Institute of Management MGIMO(U)

LIST INTERNATIONAL? ONE CONTRACT? OV ABOUT AVOIDING DOUBLE TAXATION BETWEEN? OSSIAN FEDA? ATSIEY AND D? UGIMIGOSCOURT? STVAM No. StateName of agreementDate of signingDate of entry into forceApplies toTexts of agreements1.AustraliaAgreement between the Government? Russian Federation and the Government of Australia on the avoidance of double taxation and the prevention of tax evasion in relation to income taxes09/07/200012/17/200301/01/2004? Russian/English2.AustriaConvention between Government? Russian Federation and the Government of Austria? of the Republic on the avoidance of double taxation in relation to taxes on income and capital13.04.200030.12.200201.01.2003? Russian/English/German 3.Azerbaijan Agreement between the Government? Russian Federation and the Government of Azerbaijan? of the Republic on the avoidance of double taxation in relation to taxes on income and property07/03/199707/03/199801/01/1999? Russian/Azerbaijani4.AlbaniaConvention between the Government? Russian Federation and the Government? of the Republic of Albania on the avoidance of double taxation in relation to taxes on income and property11.04.199509.12.199701.01.1998? Russian/English5.AlgeriaConvention between the Government? Russian Federation and the Government of the Algerian People's Democratic? of the Republic on the avoidance of double taxation in relation to taxes on income and property10.03.200618.12.200801.01.2009? Russian/French6.ArgentinaConvention between Government? Russian Federation and the Government of Argentina? of the Republic on the avoidance of double taxation in relation to taxes on income and capital10.10.200116.10.201201.01.2013? Russian/English/Spanish7.ArmeniaAgreement between the Government? Russian Federation and the Government? of the Republic of Armenia on the elimination of double taxation on income and property 12/28/199603/17/199801/01/1999? Russian/ArmenianProtocol to the Agreement24.10.201115.04.201301.01.2014? Russian/Armenian8.BelarusAgreement between the Government? Russian Federation and the Government? of the Republic of Belarus on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and property21.04.199520.01.199701.01.1998? RussianProtocol to the Agreement24.01.200631.05.200701.01.2008? English9.BelgiumConvention between the Government? Russian Federation and the Government of the Kingdom of Belgium on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and property16. 06.199526.06.200001.01.2001? Russian/English 9.1BelgiumConvention between? Russian Federation and the Kingdom of Belgium on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital 05/19/2015Not in force? Russian/English/FrenchProtocol to the Convention01/30/2018Not entered into force? Russian/English10.BulgariaAgreement between the Government? Russian Federation and the Government? of the Republic of Bulgaria on the avoidance of double taxation in relation to taxes on income and property06/08/199308/12/199501/01/1996? English11.BotswanaConvention between the Government? Russian Federation and the Government? of the Republic of Botswana on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income08.04.200323.12.200901.01.2010? Russian/English12.BrazilConvention between Government? Russian Federation and the Federal Government? of the Republic of Brazil on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income11/22/200406/19/201701/01/2018? Russian/English/Spanish13.Great BritainConvention between Government? F and the Government of the United Kingdom of Great Britain and Northern Ireland on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital gains 02/15/199418.04.199701.01.1998? Russian/English14.HungaryConvention between the Government? Russian Federation and the Hungarian Government? of the Republic on the avoidance of double taxation in relation to taxes on income and property01.04.199403.11.199701.01.1998? English15.VenezuelaConvention between the Government? Russian Federation and the Bolivarian Government? of the Republic of Venezuela on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital22.12.200319.01.200901.01.2010? Russian/English/Spanish16.Vietnam Agreement between the Government? Russian Federation and the Socialist Government? of the Republic of Vietnam on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income 27.05.199321.03.199601.01.1997? Russian/English17.GermanyAgreement between? Russian Federation and Federative? by the Republic of Germany on the avoidance of double taxation in relation to taxes on income and property29.05.199630.12.199601.01.1997? Russian / German Protocol to the Agreement 15. 10.200715.05.200901.01.2010? Russian/German18.GreeceConvention between Government? Russian Federation and the Greek Government? of the Republic on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital26.06.200013.12.200701.01.2008? Russian/English/Greek19.DenmarkConvention between Government? Russian Federation and the Government of the Kingdom of Denmark on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and property02/08/199604/27/199701/01/1998? Russian/English20.EgyptAgreement between the Government? Russian Federation and the Arab Government? of the Republic of Egypt on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital23.09.199706.12.200001.01.2001? Russian/English21.IsraelConvention between Government? Russian Federation and the Government of the State of Israel on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income25.04.199407.12.200001.01.2001? Russian/English22.IndiaAgreement between the Government? Russian Federation and the Government? of the Republic of India on the avoidance of double taxation in relation to taxes on income25.03.199711.04.199801.01.1999? Russian/English23.IndonesiaAgreement between the Government? Russian Federation and the Government? of the Republic of Indonesia on the avoidance of double taxation and the prevention of income tax evasion12.03.199917.12.200201.01.2003? Russian/English24.IranAgreement between the Government? Russian Federation and the Government of the Islamic? of the Republic of Iran on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital03/6/199804/5/200201/01/2003? Russian/English/Persian25.IrelandAgreement between the Government? Russian Federation and the Government of Ireland on the avoidance of double taxation in relation to taxes on income29.04.199407.07.199501.01.1996? Russian/English26.IcelandConvention between Government? Russian Federation and the Government? of the Republic of Iceland on the avoidance of double taxation and the prevention of income tax evasion11/26/199907/21/200301/01/2004? Russian/English27.SpainConvention between Government? Russian Federation and the Government of the Kingdom of Spain on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital16. 12.199813.06.200001.01.2001? Russian/English/Spanish28.ItalyConvention between Government? Russian Federation and the Italian Government? of the Republic on the avoidance of double taxation in relation to taxes on income and capital and the prevention of tax evasion04/09/199630/11/199801/01/1999? Russian/English/Protocol to the Convention06/13/200906/1/201206/13/2012? Russian/English/Italian29.KazakhstanConvention between the Government? Russian Federation and the Government? of the Republic of Kazakhstan on eliminating double taxation and preventing evasion of taxes on income and capital10/18/199607/29/199701/01/1998? Russian30.CanadaAgreement between the Government? Russian Federation and the Government of Canada on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and property05.10.199505.05.199701.01.1998? Russian/English/French31.QatarAgreement between the Government? Russian Federation and the Government of the State of Qatar on the avoidance of double taxation in relation to taxes on income20.04.199805.09.200001.01.2001? Russian/English32.CyprusAgreement between the Government? Russian Federation and the Government? of the Republic of Cyprus on the avoidance of double taxation in relation to taxes on income and capital05.12.199817.08.199901.01.2000? Russian/English/GreekProtocol to the Agreement07.10.201002.04.201201.01.2013 ? Russian/English/Greek33.KyrgyzstanAgreement between the Government? Russian Federation and the Government of the Kyrgyz Republic? of the Republic on the avoidance of double taxation and the prevention of income tax evasion13.01.199906.09.200001.01.2001? Russian34.ChinaAgreement between the Government? Russian Federation and the Government of the People's China? of the Republic on the avoidance of double taxation and on the prevention of tax evasion in relation to taxes on income13.10.201409.04.201601.01.2017? Russian/English/ChineseProtocol to the Agreement05/08/201504/9/201601/01/2017? Russian/English/Chinese35CA? Hong Kong KN? Agreement between the Government? Russian Federation and the Government of the Hong Kong Special Administrative Region of the People's Republic of China? of the Republic on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income18.01.201629.07.201601.01.2017? Russian/English/Chinese36.KND? Agreement between the Government? Russian Federation and the Government of the Democratic People's Republic of Korea? of the Republic on the avoidance of double taxation in relation to taxes on income and capital26.09.199730.05.200001.01.2001? Russian/English37.KoreaConvention between Government? Russian Federation and the Government? of the Republic of Korea on the avoidance of double taxation with respect to taxes on income11/19/199224.08.199501.01.1996? Russian38.CubaAgreement between the Government? Russian Federation and the Government? of the Republic of Cuba on the avoidance of double taxation and the prevention of tax evasion on income and capital12/14/200011/15/2010001/01/2011? Russian/Spanish39.KuwaitAgreement between? Russian Federation and the State of Kuwait on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital02/09/199903/01/200301/01/2004? Russian/English40.LatviaAgreement between the Government? Russian Federation and the Government of Latvia? of the Republic on the avoidance of double taxation and on the prevention of tax evasion in relation to taxes on income and capital12/20/201006.11.201201.01.2013? Russian/English41.LebanonConvention between the Government? Russian Federation and the Lebanese Government? of the Republic on the avoidance of double taxation and the prevention of tax evasion in relation to income taxes04/07/199704/16/2000001/01/2001? Russian/English42.LithuaniaAgreement between the Government? Russian Federation and the Government of Lithuania? of the Republic on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital29.06.199905.05.200501.01.2006? Russian/English43.Luxembourg Agreement between? Russian Federation and the Grand Duchy of Luxembourg on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and property 28.06.199307.05.199701.01.1998? Russian/FrenchProtocol to the Agreement21.11.201130.07.201301.01.2014? Russian/French44.MacedoniaAgreement between the Government? Russian Federation and the Government? of the Republic of Macedonia on the avoidance of double taxation in relation to taxes on income and property 10/21/199707/14/2000001/01/2001? Russian/English/Macedonian45.Malaysia Agreement between the Government of the USSR? and the Government of Malaysia on the avoidance of double taxation in relation to taxes on income31.07.198704.07.198801.01.1989? English46.MaliConvention between the Government? Russian Federation and the Government? of the Republic of Mali on the avoidance of double taxation and the establishment of rules for mutual assistance in relation to taxes on income and property25. 06.199613.09.199901.01.2000? Russian/French47.MaltaConvention between the Government? Russian Federation and the Government of Malta on the avoidance of double taxation and the prevention of tax evasion in relation to income taxes 04/24/201322/05/201401/01/2015? Russian/English48.MoroccoAgreement between the Government? Russian Federation and the Government of the Kingdom of Morocco on the avoidance of double taxation in relation to taxes on income and property09/04/199731/08/199901/01/2000? Russian/French/Arabic49.MexicoGovernment-to-Government Agreement? Russian Federation and the Government of the United Mexican States on the avoidance of double taxation with respect to taxes on income06/07/200404/2/200801/01/2009? Russian/English/Spanish50.MoldovaAgreement between the Government? Russian Federation and the Government? of the Republic of Moldova on the avoidance of double taxation of income and property and the prevention of tax evasion12.04.199606.06.199701.01.1998? Russian51.MongoliaAgreement between the Government? Russian Federation and the Government of Mongolia on the avoidance of double taxation in relation to taxes on income and property04/05/19955/22/199701/01/1998? Russian/English52.NamibiaConvention between Government? Russian Federation and the Government? of the Republic of Namibia on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income 03/31/199806/23/2000001/01/2001? Russian/English53.NetherlandsAgreement between the Government? Russian Federation and the Government of the Kingdom of the Netherlands on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and property12/16/199608/27/199801/01/1999? Russian54.New ZealandAgreement between the Government? Russian Federation and the Government of New Zealand on the avoidance of double taxation and the prevention of tax evasion in relation to income taxes09/05/2000004/07/200301/01/2004? Russian/English55.NorwayConvention between Government? Russian Federation and the Government of the Kingdom of Norway on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital26.03.199620.12.200201.01.2003? Russian/English56.UAE Agreement between the Government? Russian Federation and the Government of the United Arab Emirates on the taxation of investment income of Contracting States and their financial and investment institutions07. 12.201123.06.201301.01.2014? Russian/English/Arabic57.PolandAgreement between the Government? Russian Federation and the Government? of the Republic of Poland on the avoidance of double taxation of income and property22.05.199222.02.199301.01.1994? Russian58.PortugalConvention between the Government? Russian Federation and the Portuguese Government? of the Republic on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income29.05.200011.12.200201.01.2003? Russian/English/Portuguese59.? RomaniaConvention between the Government? Russian Federation and the Government? intentions to avoid double taxation in relation to taxes on income and property27.09.199311.08.199501.01.1996? English60.Saudi ArabiaConvention between the Government? Russian Federation and the Government of the Kingdom of Saudi Arabia on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital11.02.200701.02.201001.01.2011? Russian/English61.Serbia MontenegroConvention between the Government? Russian Federation and the Union Government of the Union? of the Republic of Yugoslavia on the avoidance of double taxation in relation to taxes on income and property10/12/199507/09/199701/01/1998? Russian/English62.SingaporeAgreement between the Government? Russian Federation and the Government? of the Republic of Singapore on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income09.09.200216.01.200901.01.2010? Russian/EnglishProtocol to the Agreement11/17/201511/25/201601/01/2017? Russian/English63.SyriaAgreement between the Government? Russian Federation and the Syrian Arab Government? of the Republic on the avoidance of double taxation in relation to income taxes 09/17/2000 07/31/200301/01/2004? Russian/English64.Slovakia Agreement between the Government? Russian Federation and the Slovak Government? of the Republic on the avoidance of double taxation of income and property24.06.199401.05.199701.01.1998? Russian65.SloveniaConvention between the Government? Russian Federation and the Government? of the Republic of Slovenia on the avoidance of double taxation in relation to taxes on income and property29.09.199520.04.199701.01.1998? Russian/English66.USAgreement between? Russian Federation and the United States of America on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital 06/17/199216.12. 199301.01.1994? Russian/English67.TajikistanAgreement between the Government? Russian Federation and the Government? of the Republic of Tajikistan on the avoidance of double taxation and the prevention of tax evasion on income and capital 03/31/199704/26/200301/01/2004? Russian68.ThailandConvention between the Government? Russian Federation and the Government of the Kingdom of Thailand on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income23.09.199915.01.200901.01.2010? Russian/English/Thai69.TurkmenistanAgreement between the Government? Russian Federation and the Government of Turkmenistan on the elimination of double taxation in relation to taxes on income and property14.01.199810.02.199901.01.2000? Russian70.TurkeyAgreement between the Government? Russian Federation and the Turkish Government? of the Republic on the avoidance of double taxation in relation to taxes on income12/15/199731/12/199901/01/2000? Russian/English71.UzbekistanAgreement between the Government? Russian Federation and the Government? of the Republic of Uzbekistan on the avoidance of double taxation of income and property02.03.199427.07.199501.01.1996? Russian72.UkraineAgreement between the Government? Russian Federation and the Government of Ukraine on the avoidance of double taxation of income and property and the prevention of tax evasion 08.02.199503.08.199901.01.2000? Russian73.PhilippinesConvention between the Government? Russian Federation and the Government? Republic of the Philippines on the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income26.04.199512.09.199701.01.1998? Russian/English74.FinlandAgreement between the Government? Russian Federation and the Government of Finland? of the Republic on the avoidance of double taxation in relation to taxes on income04.05.199614.12.200201.01.2003? Russian/EnglishProtocol to the Agreement14.04.200029.12.200201.01.2003? Russian/English75.FranceConvention between Government? Russian Federation and the French Government? of the Republic on the avoidance of double taxation and the prevention of tax evasion and violation of tax legislation in relation to taxes on income and property26.11.199609.02.199901.01.2000? Russian/French76.CroatiaAgreement between the Government? Russian Federation and the Government? of the Republic of Croatia on the avoidance of double taxation in relation to taxes on income and property02.10.199519.04.199701. 01.1998? Russian77.Czech RepublicConvention between the Government? Russian Federation and the Czech Government? of the Republic on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital11/17/199507/18/199701/01/1998? Russian/EnglishProtocol to the Convention04/27/200704/17/200901/01/2010? Russian/English/Czech78.ChileConvention between Government? Russian Federation and the Government? of the Republic of Chile on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital11/19/200403/23/201201/01/2013? Russian/English/Spanish79.SwitzerlandAgreement between? Russian Federation and Swiss Confederation on the avoidance of double taxation in relation to taxes on income and capital11/15/19954/18/199701/01/1998? Russian/English/GermanProtocol to the Agreement25.09.201109.11.201201.01.2013 ? Russian/English/German80.SwedenConvention between Government? Russian Federation and the Government of the Kingdom of Sweden on the avoidance of double taxation in relation to taxes on income14.06.199303.08.199501.01.1996? Russian/English/SwedishProtocol to the Convention? Russian/English/Swedish81.Sri LankaAgreement between the Government? Russian Federation and the Democratic Socialist Government? of the Republic of Sri Lanka on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income03/2/199912/29/200201/01/2003? Russian/English82.EcuadorConvention between the Government? Russian Federation and the Government? of the Republic of Ecuador on the avoidance of double taxation and on the prevention of tax evasion in relation to taxes on income11/14/2016Not in force? Russian/English/Spanish83.UA? Agreement between the Government? Russian Federation and the Government of South Africa? of the Republic on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income27.11.199526.06.200001.01.2001? Russian84.JapanConvention between the Government of the USSR? and the Government of Japan on the avoidance of double taxation with respect to taxes on income18.01.198627.11.198601.01.1987? Russian/English 84.1JapanConvention between Government? Russian Federation and the Government of Japan on the elimination of double taxation in relation to income taxes and on the prevention of tax avoidance and evasion09/07/2017 08/03/201801/01/2019? Russian/English

Russian citizens working abroad are interested in the issue of double taxation, due to which foreign employment on a legal basis loses its meaning. This aspect of economic relations with Germany was resolved back in the last century.

The realities of our time are such that a huge percentage of the population works not in their own state, but abroad. , consider not only the prospects for receiving decent remuneration for their work, but also factors such as the tax system and the attitude of the state in general towards labor immigrants and foreign firms.

or getting a job, our citizens expect to receive good incomes. A double tax could dash these hopes. Despite the fact that the country is one of the most promising states for both businessmen and labor immigrants.

In simple terms, double taxation is a situation where the same type of activity in two different countries is subject to the same taxes. This is possible when a citizen of one country gets a job in another. At home, he pays taxes, since according to the law of his country he is obliged to pay, no matter where he is, and when visiting he pays the same thing again.

There is only one conclusion: a person has no choice but to violate the laws of both states and not show his income at all.

Otherwise, he will work not for himself and his family, but for two systems.

The problem arose due to the fact that different countries around the world use different approaches to resolving the issue. Some tax everything their citizens earn, others collect their legal interest on a territorial basis, that is, where human activity that generates income takes place.

Many states use both principles, forcing their citizens to either eke out a miserable existence, living on pennies and giving away 60-80% instead of 30-40%, or to live well, but at the same time take risks by breaking the law.

1. The issue can be resolved in two ways:
2. Countries share tax jurisdiction and agree on who will collect their interest on what.

A person receives credit for taxes paid in another state.

A modern solution to the issue is the agreement on the avoidance of double taxation, adopted by many countries.

Treaties concluded by countries on double taxation

Countries are interested in economic interaction, so their leaders have to look for a way out of the current situation. Treaties on the suppression of double taxation became such a solution.

It is important to understand that these types of contracts do not apply to all people and not all companies.

The concluded agreement relates to certain types of taxes and determines where and to what extent they will be paid. It applies not only to income, but also to property.

• Russia has concluded similar agreements with many countries:
• Netherlands,
• Germany,

Great Britain.

The agreements clearly define which individuals will not be subject to double taxation and which taxes will not be levied twice.

Of particular interest to Russians is the double tax treaty with Germany. This is due to the fact that the country offers both its citizens and labor emigrants profitable employment and a transparent, very convenient and understandable taxation system.

What Russia agreed with Germany

The agreement determines which taxes fall within its scope. All of them, both on the Russian and German sides, are related to income and alienated or profit-generating real estate. Residents-people and resident-enterprises are considered. On the German side, solidarity taxes, a tax surcharge and a trade tax are also included.

A large place in the agreement is occupied by explanations of what and how it will be called. Concepts are considered in this aspect.

Double taxation in Russia is regulated by the provisions of the Tax Code, as well as international agreements signed with certain countries. If there is such an agreement, the tax levy on income paid by a resident of the Russian Federation in another state is counted when calculating tax in the home country. Lack of agreement means paying the fee twice. Simply put, a mechanism for eliminating double taxation does exist, however, the possibility of its application may not be realized in every case.

Double taxation: the essence of the formulation

The concept of double taxation (DT) involves the process of collecting levies on the assets of a person or company in different countries for the same period of time and in a simultaneous manner. For example, a certain company acting as a resident of the Russian Federation receives income in another foreign country. Accordingly, she needs to pay tax on this profit both abroad and at home.

In addition to income, the following may be taxed:

1. property, most often real estate;
2. capital.

In a situation where assets are available both within the home country and abroad, there is a certain difficulty in establishing the tax base. Therefore, taxpayers are divided into residents of the Russian Federation and those who are not. The former means persons living in Russia for at least 183 days a year. Residents are required to pay tax on any assets, including those located abroad.

The following are recognized as tax non-residents:

• foreign citizens living outside the Russian Federation on a permanent basis;
• Russian citizens who left the country for permanent residence abroad;
• former subjects of the Russian Federation who changed their last name and are now foreign citizens.

These persons also pay tax on income they receive within the borders of the Russian Federation. They also pay a similar fee in their country of residence.

Moreover, residents of the Russian Federation are assigned an amount of 13% personal income tax required for repayment in Russia. Non-residents - 30% of the acquired profit, which also includes funds received from the sale of real estate.

On top of that, in the Russian Federation there are 2 types of double taxation:

1. International economic. Involves collecting taxes simultaneously from several taxable entities related to one transaction. Simply put, the profit of these individuals is considered common. A fee is charged in relation to it.
2. International legal. In this case, the income of one entity is taxed by more than one state.

One more example can be given. A citizen of the Russian Federation owns real estate in another country and receives money for renting it out for use. In this case, he must pay tax both in the country where the object is located and in the place of citizenship. In other words, in Russia. This is how double taxation of income, property or other assets arises.

However, this phenomenon is considered extremely unfavorable. In this case, the taxpayer is forced to pay a double fee, which may interfere with the productive conduct of activities and provoke a decline in his standard of living in general.

The relevance of the problem of regulating double taxation is very great. In general, the very fact of the existence of situations that allow tax to be paid twice is due to the fact that different countries have their own fee system. Somewhere, tax is levied on any profit received by a resident of the state, including income acquired outside its borders (residence principle). And in some cases, the collection of fees applies only to transactions carried out within a specific country (the principle of territoriality). In Russia, it is the first option that is used.

The formation of a taxation scheme depends on the level of development of the state, on the parameters by which the source of incoming profit is determined and on other factors. Therefore, it is extremely difficult to come to a unified system for collecting fees. And this moment significantly complicates life for both the tax authorities themselves and taxpayers.

However, a mechanism to eliminate such a problem still exists. In the Russian Federation, the elimination of double taxation is provided for at the legislative level. The Tax Code in Article 232 describes in detail in which cases the collection of fees from residents of the Russian Federation is allowed twice, and in which cases the amount paid abroad is counted by the Federal Tax Service of Russia.

According to paragraph 1 of this paragraph, payment by citizens of the Russian Federation of tax on profits received outside the borders of their native country does not entail a recalculation of the fee required for repayment in Russia. In fact, the amount is paid twice. Moreover, tax in a foreign country is paid in accordance with the rules and laws that apply on its territory.

This state of affairs can only be changed by the existence of a business connection between the country in which the payer receives income and the state of which he is a subject. In this case, a special set of rules is formed regarding the monetary transactions carried out. Moreover, the final agreement is documented by introducing the established regulations into the agreement on the avoidance of double taxation (DTA), which is signed by the heads of specific states.

Such agreements are designed to regulate taxation issues, preventing unlimited collection of fees on the same income. In addition, such written agreements greatly encourage economic cooperation between different countries.

Typically, the ITN agreement specifies the conditions for the following items:

1. the rules of operation of the tax services of both countries, including tax collection standards;
2. entities that are required to pay contributions - individuals and organizations;
3. explanations regarding assets located outside the resident’s home state;
4. types of taxes.

The agreement must indicate the period of its validity, as well as the rules for its termination.

Moreover, according to Article 15 of the Constitution of the Russian Federation, agreements concluded between countries have clear priority over the laws and regulations of the state. Therefore, if the actions of the tax service contradict the provisions of such a document, then the disagreeing taxpayer has the right to file a complaint with the Ministry of Finance within 3 years after the incident.

List of countries with which the Russian Federation has signed an agreement on ITN

Russia has signed conventions and agreements on the avoidance of double taxation with a number of countries, which as of 2020 includes 80 states. Such a list may well help you get your bearings and understand in which case a scheme for avoiding traffic accidents is available for implementation, and in which it is not.

The list includes the following countries:

	State	International treaty	Information about the contract
	Australia	Agreement between the Government of the Russian Federation and the Government of Australia dated 09/07/2000 "On the avoidance of double taxation and the prevention of tax evasion in relation to income taxes"	Date of conclusion: 09/07/2000 Effective date: 12/17/2003 07/01/2004 (Australia)
		Convention between the Government of the Russian Federation and the Government of the Republic of Austria of April 13, 2000 “On the avoidance of double taxation with respect to taxes on income and capital”	Date of conclusion: 04/13/2000 Effective date: 12/30/2002 Applicable from: 01/01/2003
	Azerbaijan	Agreement between the Government of the Russian Federation and the Government of the Azerbaijan Republic dated 07/03/1997 "On the avoidance of double taxation in relation to taxes on income and property"	Date of conclusion: 07/03/1997 Effective date: 07/03/1998 Applicable from: 01/01/1999
		Convention between the Government of the Russian Federation and the Government of the Republic of Albania of April 11, 1995 "On the avoidance of double taxation with respect to taxes on income and property"	Date of conclusion: 04/11/1995 Effective date: 12/09/1997 Applicable from: 01/01/1998
		Convention between the Government of the Russian Federation and the Government of the Algerian People's Democratic Republic of March 10, 2006 "On the avoidance of double taxation with respect to taxes on income and property"	Date of conclusion: 03/10/2006 Effective date: 12/18/2008 Applicable from: 01/01/2009
	Argentina	Convention between the Government of the Russian Federation and the Government of the Argentine Republic for the avoidance of double taxation with respect to taxes on income and capital	Date of conclusion: 10.10.2001 Effective date: 10/15/2012 Applicable from: 01/01/2013
		Agreement between the Government of the Russian Federation and the Government of the Republic of Armenia dated December 28, 1996 “On the elimination of double taxation on income and property”	Date of conclusion: 12/28/1996 Effective date: 03/17/1998 Applicable from: 01/01/1999
	Belarus	Agreement between the Government of the Russian Federation and the Government of the Republic of Belarus dated April 21, 1995 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and property." An integral part of the Agreement is the Protocol dated January 24, 2006	Date of conclusion: 04/21/1995 Effective date: 01/21/1997 Applicable from: 01/01/1998
		Convention between the Government of the Russian Federation and the Government of the Kingdom of Belgium of June 16, 1995 "On the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and property"	Date of conclusion: 06/16/1995 Effective date: 01/26/2000 Applicable from: 01/01/2001
	Bulgaria	Agreement between the Government of the Russian Federation and the Government of the Republic of Bulgaria dated 06/08/1993 "On the avoidance of double taxation in relation to taxes on income and property"	Date of conclusion: 06/08/1993 Effective date: 04/24/1995 Applicable from: 01/01/1996
	Botswana	Convention of 8 April 2003 between the Government of the Russian Federation and the Government of the Republic of Botswana for the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income	Date of conclusion: 04/08/2003 Effective date: 12/23/2009 Applies from: 01/01/2010 (Russia) 07/01/2010 (Botswana)
	Great Britain	Convention between the Government of the Russian Federation and the Government of the United Kingdom of Great Britain and Northern Ireland of 02/15/1994 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital gains"	Date of conclusion: 02/15/1994 Applicable from: 01/01/1998 (Russia) 01/06.04.1998 (UK)
		Convention between the Government of the Russian Federation and the Government of the Hungarian Republic of April 1, 1994 “On the avoidance of double taxation with respect to taxes on income and property”	Date of conclusion: 04/01/1994 Effective date: 11/03/1997 Applicable from: 01/01/1998
	Venezuela	Convention between the Government of the Russian Federation and the Government of the Bolivarian Republic of Venezuela of December 22, 2003 “On the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and capital”	Date of conclusion: 12/22/2003 Effective date: 01/19/2009 Applicable from: 01/01/2010
		Agreement between the Government of the Russian Federation and the Government of the Socialist Republic of Vietnam dated May 27, 1993 "On the avoidance of double taxation and the prevention of tax evasion in relation to income taxes"	Date of conclusion: 05/27/1993 Effective date: 03/21/1996 Applicable from: 01/01/1997
	Germany	Agreement between the Russian Federation and the Federal Republic of Germany dated May 29, 1996 “On the avoidance of double taxation with respect to taxes on income and property.”	Date of conclusion: 05/29/1996 Effective date: 12/30/1996 Applicable from: 01/01/1997
		Convention between the Government of the Russian Federation and the Government of the Hellenic Republic of June 26, 2000 "On the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and capital"	Date of conclusion: 06/26/2000 Effective date: 12/20/2007 Applicable from: 01/01/2008
		Convention between the Government of the Russian Federation and the Government of the Kingdom of Denmark of 02/08/1996 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and property"	Date of conclusion: 02/08/1996 Effective date: 04/27/1997 Applicable from: 01/01/1998
		Agreement between the Government of the Russian Federation and the Government of the Arab Republic of Egypt dated September 23, 1997 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital"	Date of conclusion: 09/23/1997 Effective date: 12/06/2000 Applicable from: 01/01/2001
		Convention between the Government of the Russian Federation and the Government of the State of Israel of April 25, 1994 “On the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income”	Date of conclusion: 04/25/1994 Effective date: 12/07/2000 Applicable from: 01/01/2001
		Agreement between the Government of the Russian Federation and the Government of the Republic of India dated March 25, 1997 “On the avoidance of double taxation with respect to income taxes”	Date of conclusion: 03/25/1997 Effective date: 04/11/1998 Applies from: 01/01/1999 (Russia) 04/01/1999 (India)
	Indonesia	Agreement between the Government of the Russian Federation and the Government of the Republic of Indonesia dated March 12, 1999 "On the avoidance of double taxation and the prevention of income tax evasion"	Date of conclusion: 03/12/1999 Effective date: 12/17/2002 Applicable from: 01/01/2003
		Agreement between the Government of the Russian Federation and the Government of the Islamic Republic of Iran dated 03/06/1998 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital"	Date of conclusion: 03/06/1998 Effective date: 04/05/2002 Applicable from: 01/01/2003
	Ireland	Agreement between the Government of the Russian Federation and the Government of Ireland dated April 29, 1994 “On the avoidance of double taxation in relation to income taxes”	Date of conclusion: 04/29/1994 Effective date: 07/07/1995 Applies from: 01/06/04/1996 (Ireland) 01/01/1996 (Russia)
	Iceland	Convention between the Government of the Russian Federation and the Government of the Republic of Iceland of November 26, 1999 "On the avoidance of double taxation and the prevention of income tax evasion"	Date of conclusion: 11/26/1999 Effective date: 07/21/2003 Applicable from: 01/01/2004
		Convention between the Government of the Russian Federation and the Government of the Kingdom of Spain of December 16, 1998 "On the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and capital"	Date of conclusion: 12/16/1998 Effective date: 06/13/2000 Applicable from: 01/01/2001
		Convention between the Government of the Russian Federation and the Government of the Italian Republic of 04/09/1996 "On the avoidance of double taxation with respect to taxes on income and capital and the prevention of tax evasion"	Date of conclusion: 04/09/1996 Effective date: 11/30/1998 Applicable from: 01/01/1999
	Kazakhstan	Convention between the Government of the Russian Federation and the Government of the Republic of Kazakhstan of October 18, 1996 "On the elimination of double taxation and the prevention of tax evasion on income and capital"	Date of conclusion: 10/18/1996 Effective date: 07/29/1997 Applicable from: 01/01/1998
		Agreement between the Government of the Russian Federation and the Government of Canada dated October 5, 1995 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and property"	Date of conclusion: 10/05/1995 Effective date: 05/05/1997 Applicable from: 01/01/1998
		Agreement between the Government of the Russian Federation and the Government of the State of Qatar dated April 20, 1998 “On the avoidance of double taxation with respect to income taxes”	Date of conclusion: 04/20/1998 Effective date: 09/05/2000 Applicable from: 01/01/2001
		Agreement between the Government of the Russian Federation and the Government of the Republic of Cyprus dated 05.12.1998 "On the avoidance of double taxation in relation to taxes on income and capital"	Conclusion date: 12/05/2008 Effective date: 08/17/1999 Applicable from: 01/01/2000
	Kyrgyzstan	Agreement between the Government of the Russian Federation and the Government of the Kyrgyz Republic dated January 13, 1999 "On the avoidance of double taxation and the prevention of income tax evasion"	Date of conclusion: 01/13/1999 Effective date: 07/05/2000 Applicable from: 01/01/2001
		Agreement between the Government of the Russian Federation and the Government of the People's Republic of China dated May 27, 1994 "On the avoidance of double taxation and the prevention of tax evasion in relation to income taxes"	Date of conclusion: 05/27/1994 Effective date: 04/10/1997 Applicable from: 01/01/1998
		Agreement between the Government of the Russian Federation and the Government of the Democratic People's Republic of Korea dated September 26, 1997 "On the avoidance of double taxation with respect to taxes on income and capital"	Date of conclusion: 09.26.1997 Effective date: 05/30/2000 Applicable from: 01/01/2001
		Convention between the Government of the Russian Federation and the Government of the Republic of Korea of ​​November 19, 1992 “On the avoidance of double taxation with respect to taxes on income”	Date of conclusion: 11/19/1992 Effective date: 08/24/1995 Applicable from: 01/01/1996
		Agreement of December 14, 2000 between the Government of the Russian Federation and the Government of the Republic of Cuba on the avoidance of double taxation and the prevention of tax evasion on income and capital	Date of conclusion: 12/14/2000 Effective date: 11/15/2010 Applicable from: 01/01/2011
		Agreement between the Russian Federation and the State of Kuwait dated 02/09/1999 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital"	Date of conclusion: 02/09/1999 Effective date: 01/03/2003 Applicable from: 01/01/2004
		Agreement between the Government of the Russian Federation and the Government of the Republic of Latvia on the avoidance of double taxation and on the prevention of tax evasion in relation to taxes on income and capital	Conclusion date: 12/20/2010 Effective date: 06.11.2012 Applicable from: 01/01/2013
		Convention between the Government of the Russian Federation and the Government of the Lebanese Republic of 04/08/1997 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income"	Date of conclusion: 04/07/1997 Effective date: 06/16/2000 Applicable from: 01/01/2001
		Agreement between the Government of the Russian Federation and the Government of the Republic of Lithuania dated June 29, 1999 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital"	Date of conclusion: 06/29/1999 Effective date: 05/05/2005 Applicable from: 01/01/2006
	Luxembourg	Agreement between the Russian Federation and the Grand Duchy of Luxembourg dated June 28, 1993 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and property"	Date of conclusion: 06/28/1993 Effective date: 05/07/1997 Applicable from: 01/01/1998
	Macedonia	Agreement between the Government of the Russian Federation and the Government of the Republic of Macedonia dated October 21, 1997 "On the avoidance of double taxation in relation to taxes on income and property"	Date of conclusion: 10/21/1997 Effective date: 07/14/2000 Applicable from: 01/01/2001
	Malaysia	Agreement between the Government of the USSR and the Government of Malaysia dated 07/31/1987 "On the avoidance of double taxation in relation to income taxes"	Date of conclusion: 07/31/1987 Effective date: unknown Applicable from: 01/01/1989
		Convention between the Government of the Russian Federation and the Government of the Republic of Mali of June 25, 1996 "On the avoidance of double taxation and the establishment of rules for mutual assistance in relation to taxes on income and property"	Date of conclusion: 06.25.1996 Effective date: 09/13/1999 Applicable from: 01/01/2000
		Convention between the Government of the Russian Federation and the Government of Malta for the avoidance of double taxation and for the prevention of tax evasion with respect to taxes on income	Conclusion date: 04/24/2013 Effective date: 05/22/2014 Applies from: 01/01/2015
		Agreement between the Government of the Russian Federation and the Government of the Kingdom of Morocco dated 09/04/1997 "On the avoidance of double taxation in relation to taxes on income and property"	Date of conclusion: 09/04/1997 Effective date: 08/31/1999 Applicable from: 01/01/2000
		Agreement between the Government of the Russian Federation and the Government of the United Mexican States dated 06/07/2004 “On the avoidance of double taxation with respect to income taxes”	Date of conclusion: 07/07/2004 Effective date: 04/02/2008 Applicable from: 01/01/2009
		Agreement between the Government of the Russian Federation and the Government of the Republic of Moldova dated April 12, 1996 "On the avoidance of double taxation of income and property and the prevention of tax evasion"	Date of conclusion: 04/12/1996 Effective date: 06/06/1997 Applicable from: 01/01/1998
	Mongolia	Agreement between the Government of the Russian Federation and the Government of Mongolia dated 04/05/1995 "On the avoidance of double taxation in relation to taxes on income and property"	Date of conclusion: 04/05/1995 Effective date: 05/22/1997 Applicable from: 01/01/1998
		Convention between the Government of the Russian Federation and the Government of the Republic of Namibia of March 31, 1998 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income"	Date of conclusion: 03/30/1998 Effective date: 06/23/2000 Applicable from: 01/01/2001
	Netherlands	Agreement between the Government of the Russian Federation and the Government of the Kingdom of the Netherlands dated December 16, 1996 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and property"	Date of conclusion: 12/16/1996 Effective date: 08/27/1998 Applicable from: 01/01/1999
	New Zealand	Agreement between the Government of the Russian Federation and the Government of New Zealand dated 09/05/2000 "On the avoidance of double taxation and the prevention of tax evasion in relation to income taxes"	Date of conclusion: 09/05/2000 Effective date: 07/04/2003 Applicable from: 01/01/2004 (Russia) 04/01/2004 (New Zealand)
	Norway	Convention between the Government of the Russian Federation and the Government of the Kingdom of Norway of March 26, 1996 "On the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and capital"	Date of conclusion: 03/26/1996 Effective date: 12/20/2002 Applicable from: 01/01/2003
		Agreement between the Government of the Russian Federation and the Government of the Republic of Poland dated May 22, 1992 “On the avoidance of double taxation of income and property”	Date of conclusion: 05/22/1992 Effective date: 02/22/1993 Applicable from: 01/01/1994
	Portugal	Convention between the Government of the Russian Federation and the Government of the Portuguese Republic of May 29, 2000 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income"	Date of conclusion: 05.29.2000 Effective date: 12/11/2002 Applicable from: 01/01/2003
		Convention between the Government of the Russian Federation and the Government of Romania of September 27, 1993 “On the avoidance of double taxation with respect to taxes on income and property”	Date of conclusion: 09/27/1993 Effective date: 08/11/1995 Applicable from: 01/01/1996
	Saudi Arabia	Convention of 11 February 2007 between the Government of the Russian Federation and the Government of the Kingdom of Saudi Arabia for the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and capital	Date of conclusion: 02/11/2007 Effective date: 02/01/2010 Applicable from: 01/01/2011
	Serbia; Montenegro	Convention between the Government of the Russian Federation and the Federal Government of the Federal Republic of Yugoslavia of October 12, 1995 "On the avoidance of double taxation with respect to taxes on income and property"	Date of conclusion: 10/12/1995 Effective date: 07/09/1997 Applicable from: 01/01/1998
	Singapore	Agreement between the Government of the Russian Federation and the Government of the Republic of Singapore dated 09.09.2002 "On the avoidance of double taxation and the prevention of tax evasion in relation to income taxes"	Date of conclusion: 09.09.2002 Effective date: 01/16/2009 Applicable from: 01/01/2010
		Agreement between the Government of the Russian Federation and the Government of the Syrian Arab Republic dated September 17, 2000 “On the avoidance of double taxation in relation to income taxes”	Date of conclusion: 09.17.2000 Effective date: 07/31/2003 Applicable from: 01/01/2004
	Slovakia	Agreement between the Government of the Russian Federation and the Government of the Slovak Republic dated June 24, 1994 “On the avoidance of double taxation of income and property”	Date of conclusion: 06/24/1994 Effective date: 05/01/1997 Applicable from: 01/01/1998
	Slovenia	Convention between the Government of the Russian Federation and the Government of the Republic of Slovenia of September 29, 1995 “On the avoidance of double taxation with respect to taxes on income and property”	Date of conclusion: 09/29/1995 Effective date: 04/20/1997 Applicable from: 01/01/1998
		Treaty between the Russian Federation and the United States of June 17, 1992 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and capital"	Date of conclusion: 06/17/1992 Effective date: 12/16/1993 Applicable from: 01/01/1994
	Tajikistan	Agreement between the Government of the Russian Federation and the Government of the Republic of Tajikistan dated March 31, 1997 "On the avoidance of double taxation and the prevention of tax evasion on income and capital"	Date of conclusion: 03/31/1997 Effective date: 04/26/2003 Applicable from: 01/01/2004
		Convention between the Government of the Russian Federation and the Government of the Kingdom of Thailand of September 23, 1999 "On the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income"	Date of conclusion: 09/23/1999 Effective date: 01/15/2009 Applicable from: 01/01/2010
	Turkmenistan	Agreement between the Government of the Russian Federation and the Government of Turkmenistan dated January 14, 1998 "On the elimination of double taxation in relation to taxes on income and property"	Date of conclusion: 01/14/1998 Effective date: 02/10/1999 Applicable from: 01/01/2000
		Agreement between the Government of the Russian Federation and the Government of the Republic of Turkey dated December 15, 1997 "On the avoidance of double taxation in relation to income taxes"	Date of conclusion: 12/15/1997 Effective date: 12/31/1999 Applicable from: 01/01/2000
	Uzbekistan	Agreement between the Government of the Russian Federation and the Government of the Republic of Uzbekistan dated March 2, 1994 “On the avoidance of double taxation of income and property”	Date of conclusion: 03/02/1994 Effective date: 07/27/1995 Applicable from: 01/01/1996
		Agreement between the Government of the Russian Federation and the Government of Ukraine dated 02/08/1995 "On the avoidance of double taxation of income and property and the prevention of tax evasion"	Date of conclusion: 02/08/1995 Effective date: 08/03/1999 Applicable from: 01/01/2000
	Philippines	Convention between the Government of the Russian Federation and the Government of the Republic of the Philippines of April 26, 1995 "On the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income"	Date of conclusion: 04/26/1995 Effective date: 12/12/1997 Applicable from: 01/01/1998
	Finland	Agreement between the Government of the Russian Federation and the Government of the Republic of Finland dated 05/04/1996 (as amended on 04/14/2000) “On the avoidance of double taxation in relation to income taxes.”	Date of conclusion: 05/04/1996 Effective date: 12/14/2002 Applicable from: 01/01/2003
		Convention between the Government of the Russian Federation and the Government of the French Republic of November 26, 1996 "On the avoidance of double taxation and the prevention of tax evasion and violation of tax legislation in relation to taxes on income and property"	Date of conclusion: 11/26/1996 Effective date: 02/09/1999 Applicable from: 01/01/2000
	Croatia	Agreement between the Government of the Russian Federation and the Government of the Republic of Croatia dated 02.10.1995 "On the avoidance of double taxation in relation to taxes on income and property"	Date of conclusion: 10/02/1995 Effective date: 04/19/1997 Applicable from: 01/01/1998
		Convention between the Government of the Russian Federation and the Government of the Czech Republic of November 17, 1995 "On the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and capital."	Date of conclusion: 11/17/1995 Effective date: 07/18/1997 Applicable from: 01/01/1998
		Convention between the Government of the Russian Federation and the Government of the Republic of Chile for the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and capital	Date of conclusion: 11/19/2004 Effective date: 03/23/2012 Applicable from: 01/01/2013
	Switzerland	Agreement between the Russian Federation and the Swiss Confederation of November 15, 1995 "On the avoidance of double taxation with respect to taxes on income and capital"	Date of conclusion: 11/15/1995 Effective date: 04/18/1997 Applicable from: 01/01/1998
		Convention between the Government of the Russian Federation and the Government of the Kingdom of Sweden of June 15, 1993 “On the avoidance of double taxation with respect to taxes on income”	Date of conclusion: 06/14/1993 Effective date: 08/03/1995 Applicable from: 01/01/1996
	Sri Lanka	Agreement between the Government of the Russian Federation and the Government of the Democratic Socialist Republic of Sri Lanka dated 03/02/1999 "On the avoidance of double taxation and the prevention of tax evasion in relation to income taxes"	Date of conclusion: 03/02/1999 Effective date: 12/29/2002 Applicable from: 01/01/2003 (Russia) 04/01/2003 (Sri Lanka)
		Agreement between the Government of the Russian Federation and the Government of the Republic of South Africa dated November 27, 1995 “On the avoidance of double taxation and the prevention of tax evasion in relation to income taxes”	Date of conclusion: 11/27/1995 Effective date: 06/26/2000 Applicable from: 09/01/2000 (South Africa) 01/01/2001 (Russia)
		Convention between the Government of the USSR and the Government of Japan of January 18, 1986 “On the avoidance of double taxation with respect to taxes on income”	Date of conclusion: 01/18/1986 Effective date: 11/27/1986 Applicable from: 01/01/1987

Taxation mechanism in the presence of an international treaty

If an international agreement exists, then the tax on income received by a Russian in another state and paid by him on its territory is taken into account in Russia. The procedure is regulated by paragraphs 2-4 of Article 232 of the Tax Code.

The procedure is carried out according to the following rules:

1. offset of income tax paid by a resident of the Russian Federation in another country is carried out at the end of the tax period;
2. to account for the contribution made, the taxpayer is required to submit a declaration to the Federal Tax Service, which should indicate the amount paid in a foreign country;
3. It is allowed to file a declaration within 3 years after the end of the period in which the taxable profit was acquired.

The declaration must be accompanied by documents certifying the amount of available income and the fact of payment of the tax fee. The papers need to be translated into Russian and this point must be certified by a notary.

The supporting documents must record the following information:

• type of income;
• profit margin;
• the year in which the income was acquired;
• the amount of the tax contribution;
• date of repayment of the fee in a foreign country.

For example, a declaration submitted to the tax service of another country and a payment receipt for the transfer of the tax contribution may be presented as identification documents. The papers must also be translated into Russian with mandatory notarization.

Features of taxation of real estate and income from it

Separately, it is worth mentioning the double taxation protection scheme developed in relation to real estate and income received from it. For example, rent.

4 points are important:

1. real estate is taxed as an asset;
2. profit from the object is subject to an income tax established in the country of its location;
3. the state in which the property owner resides either exempts him from tax or offsets the amount paid in another country;
4. A detailed description of the specified conditions must be included in the agreement to avoid traffic accidents.

Let's say a citizen of the Russian Federation owns real estate located in the United States. In this case, the amount of the fee paid in another state will be deducted from the amount of tax due in Russia. The latter is calculated at a standard rate of 13% of income and requires the reverse action - deduction of this percentage from the amount of foreign tax. At the same time, the foreign contribution cannot be less than the Russian one. If this happens, then the missing part will have to be paid, but in the Russian Federation.

Business activities based on any agreement are carried out according to uniform requirements. The rules state that the tax levy is payable in the country of origin of the profit.

But under the following conditions:

• the person who received the income is not a resident of another country;
• profit acquired through a permanent establishment.

Income received on the basis of the last paragraph is subject to taxation. At the same time, representation assumes that business activity is localized in a specific place. In other words, it has a permanent site, premises.

Another important point is that most of the activities should be carried out through this location. Moreover, if the work is of an auxiliary nature, then we cannot talk about representation.

For example, if the premises are used for the purchase, storage, display, delivery of goods, then the obligation to pay tax to only one state in this case does not arise. Even if the site looks like a well-appointed office. The profits of such an organization will not be subject to foreign taxation.

Maximum credit amount

The maximum offset amount is determined as follows:

1. it is determined whether the tax fee paid in a foreign country is subject to offset when repaying the tax within the resident’s country;
2. the maximum amount of offset is calculated with the calculation of its limitation;
3. Find the smallest amount of the amount of contributions paid in another country and the maximum credit amount.

If a firm pays a tax charge in excess of the maximum amount, then that contribution is not eligible for foreign credit.

The need to pay double taxes can be avoided only if there is an international agreement with the country where the assets of a resident of the Russian Federation are located. In this case, the amount paid within the borders of another country will be taken into account by the Federal Tax Service of Russia. But the absence of an agreement to avoid DV means that a citizen of the Russian Federation will need to pay the tax fee 2 times - in the country of residence and on the territory of the state where he received any income.