Russia’s tax system is relatively straightforward, featuring a 20% corporate tax rate and a progressive personal income tax of 13-15%. Unlike many other countries, Russia does not impose a wealth, gift, or inheritance tax, making it attractive for individuals and businesses alike. The country enforces strong anti-avoidance measures, including Transfer Pricing and Controlled Foreign Corporation (CFC) rules, to ensure tax compliance. With a broad network of Double Tax Treaties (DTTs) and participation in global tax exchange agreements, Russia maintains a structured and internationally engaged tax framework.
Russia’s Tax System overview
| Corporate Income Tax: | 20% |
| Personal Income Tax: | 13-15%, progr. |
| Inheritance Tax: | None |
| Gift Tax: | None |
| Wealth Tax: | None |
Legal System
The Russian legal system is based on civil law.
Personal Income Taxation
Russian resident individuals are taxed on their worldwide income at progressive rates 13% or 15%. There is no tax on gifts between close relatives. There is no separate inheritance tax or wealth tax.
Corporate Income Tax
Corporations incorporated in Russia, and foreign corporations with an effective place of management in Russia, are subject to tax on worldwide income at a rate of 20%.
Anti-Avoidance Rules
Russia has multiple anti-avoidance rules, including Transfer Pricing rules, Thin Capitalization rules, and Controlled Foreign Corporation rules.
Controlled Foreign Corporations (CFCs)
A CFC is a foreign corporation, trust, foundation, partnership, etc., with one or more Controlling Persons that are Russian tax residents with an equity interest (or control) of 25% or more (10% or more if more than 50% is held by Russian residents). The CFC rules result in the imputation of undistributed profits to the Controlling Persons, pro rata, at their respective tax rate.
Controlling Persons can avoid income imputation if the CFC is resident in a jurisdiction with a DTT that exchanges of information, and the effective tax rate is 75% or more of the Russian rate or the passive income of the CFC does not exceed 20%. Special 5 million Ruble lump-sum arrangement, if elected, exempts from CFC reporting and reporting.
Foreign Trusts
Russian has not ratified the Hague Convection on Trusts, but recognizes foreign trusts under conflicts principles. Russian CFC rules apply to foreign trusts. Settlors of foreign trusts are presumed Controlling Persons under the CFC rules, and taxed on undistributed income at their applicable rates. However, if the trust is irrevocable, the settlor is excluded from benefit, has no powers to direct income distributions, does not exercise control over the trust, CFC rules will not apply. Other persons exercising control, including, Protectors and beneficiaries, may be deemed Controlling Persons.
Double Tax Treaties (DTTs)
Russia has a wide network of DTTs.
Foreign Investment Protection
Russia has agreements with a number of countries which provide for international arbitration in the event of nationalization or expropriation, including Luxembourg, Netherlands, Switzerland, and UK
OECD Multilateral Convention
Russia is a signatory to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which requires exchange information “on request,” and authorizes spontaneous and automatic exchange.
Common Reporting Standard (CRS)
Russia has adopted CRs for the automatic exchange of account information, and is a party to the Multilateral Competent Authority Agreement.
FATCA
Russia has not signed a FATCA IGA with the United States and there is no “agreement in substance.” However, Russian legislation authorizes Russian FIs to undertake FATCA reporting under Model 2 IGA.
