Russia Clarifies Consequences Related to Tax Residence Change

April 29, 2014 - PRLog -- (Bristol, UK) - The Russian Ministry of Finance (MoF) recently issued a clarification highlighting the mandatory requirements that a foreign entity must fulfil to authenticate its tax residence in order to benefit from tax treaties, especially when there is a change in residence, reports Nair & Co.’s international tax team.

If a foreign entity wants to benefit from tax treaty provisions, it is required to submit a Tax Residence Certificate (TRC) verifying the state where the company is a tax resident. This confirmation has to be duly certified by the concerned state’s respective authority; in case the certificate is executed in a foreign language, it has to be translated into Russian.

In order to apply to claim tax treaty benefits, the foreign entity must submit their TRC before the payment date of income. The relevant provisions of law do not include provisions related to a TRC validity period, as the income of a foreign entity is not connected with any specific tax period.

Lastly, if the place of residence of a foreign entity changes after filing the certificate with a Russian tax agent, it is the responsibility of the tax agent to calculate and withhold outstanding corporate income taxes on subsequent payments.

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