Russia fulfilled internal procedures for denunciation of the DTT with the Netherlands. If the denunciation notification is served to the Dutch authorities before June 30, 2021, the treaty will cease its application from January 01, 2022. Therefore, Russia-sourced income paid out to the Dutch resident companies will be assessed to withholding tax at the rate of 15% on dividends and 20% on interest and royalty.

As opposed to the case with the Netherlands, Russia managed to reach an agreement on the amendment of the DTTs with Cyprus, Malta and Luxembourg, increasing basic withholding tax rate to 15% on dividends and interest, except for a very limited number of cases. Next stage will include re-negotiation of the DTTs with Switzerland, Hong-Kong and Singapore.

Considering the foregoing, it is time to re-think and re-evaluate cross-border tax planning and corporate structuring for many of the Turkish companies having a presence on the Russian market.

This document provides general information on the subject and does not constitute a legal opinion or recommendation. Consulting a specialist is recommended before taking an action. No claim arising from the content of or relating to this document can be asserted against NAZALI.