Debt securities - rates, eligibility, availability of relief etc. - Russia

30.12.2020

Withholding Tax

Standard rate of withholding tax

0% / 15% / 20% / 30%

Holding restriction

Yes

The standard rates of withholding tax on interest from Russian debt securities are as follows:

  • 0% until 31 December 2020 for OFZ and municipal bonds;
  • 0/15% Russian legal entities with TIN provided/without TIN provided for OFZ and municipal bonds;
  • 15%1 for Russian individuals as from 1 January 2021;
  • 15% for mortgage-backed bonds on disclosed positions;
  • 20% for corporate bonds on disclosed positions;
  • 30% for corporate bonds and mortgage-backed bonds on undisclosed positions or for individual beneficial owners that are not DTT residents.

Legal background

On 3 November 2013, Law 306-FZ was signed by the President of Russia and officially published on the State Legal Internet Portal. This law establishes, among other things, that the information required by the tax agent must be presented to the Russian custodian, in all details, in the correct format and on a voluntary basis, before payment date and that failure to do so will result in income entitlements under Russian securities being subject to a tax rate of 30%.2

At the same time, disclosure of information is not required with respect to holdings in tax-exempt Russian securities that currently comprise state federal, state sub-federal and municipal bonds.

The authorised Russian bodies (the Russian Tax Authorities, the issuer, the securities market regulator etc.) are entitled by Russian law to request, after the payment of income, disclosure of the name, holdings and other data linked to the final beneficial owner of the securities (the “ad-hoc tax disclosure”).

Ad-hoc tax disclosure (Audit)

When submitting the per-country of residence information to CBL, the customer must make sure that the final beneficial owner holds documents certifying his tax residency status as at the income payment date, as, pursuant to the Russian Tax Code, the tax residency status of a beneficiary of income must be specified in summary information on the basis of documents certifying such tax residency status.

Customers are responsible to comply with the obligations of articles 214.8 and 310.2 of the Russian Tax Code and provide the documentation as described below.

In accordance with article 214.8 of the Russian Tax Code, in the course of an office audit and/or field audit conducted to ensure the accuracy of tax calculation and payment by a Withholding Agent with respect to foreign nominee securities accounts in accordance with article 214.6 of the Russian Tax Code, tax authorities may request the following documents:

  • A copy of identification documents of the individual who, as at the date determined by the Russian organisation’s decision to pay income on the securities, was authorised to exercise the rights attached to the securities issued by such Russian organisation;
  • A copy of identification documents of the individual on whose behalf the trustee, as at the date determined by the Russian organisation’s decision to pay income on the securities, was authorised to exercise the rights attached to the securities issued by such Russian organisation;
  • A copy of documents and original documents certifying that the individual, as at the date determined by the Russian organisation’s decision to pay income on the securities, was authorised to exercise the rights attached to the securities issued by such Russian organisation, and documents certifying the tax residency of such individual; and
  • Other documents proving the accuracy of tax calculation and payment, including documents proving the accuracy of information disclosed by the foreign nominee.

Where a DTT provides for any limitation of tax privilege, the Russian Tax Authorities may request that the taxpayer provide (at the time of filing documents certifying the taxpayer’s tax residency status) an additional certificate issued (in any form) by a competent authority to certify that the taxpayer claiming tax privilege under the DTT is eligible to make such claim.

In accordance with article 310.2 of the Russian Tax Code, in the course of an office audit and/or field audit conducted to ensure the accuracy of tax calculation and payment by a Withholding Agent with respect to foreign nominee securities accounts in accordance with article 310.1 of the Russian Tax Code, the tax authorities may request the following documents in the manner stipulated by the Russian Tax Code:

  • A copy of documents evidencing the state registration and full name of the organisation that, as at the date determined by the Russian organisation’s decision to pay income on the securities, was authorised to exercise the rights attached to the securities issued by such Russian organisation;
  • A copy of documents evidencing the state registration and full name of the organisation on whose behalf the trustee, as at the date determined by the Russian organisation’s decision to pay income on the securities, was authorised to exercise the rights attached to the securities issued by such Russian organisation;
  • A copy of documents and original documents certifying that the organisation, as at the date determined by the Russian organisation’s decision to pay income on the securities, was authorised to exercise the rights attached to the securities issued by such Russian organisation, and documents certifying the tax residency of such organisation; and
  • Other documents proving the accuracy of tax calculation and payment, including documents proving the accuracy of information disclosed by the foreign organisation acting on behalf of third parties.

Eligible beneficial owners

Eligible beneficial owners

Relief at source

Quick refund

Standard refund

DTT residents

Yes

Yes

No

Non-resident legal entities

Yes

Yes

No

Tax exempt entities recognised by Russian law

Yes

Yes

No

Russian residents

Yes

Yes

No

Relief at source of withholding tax is available for eligible beneficial owners only if the appropriate documentation is submitted to Clearstream Banking by the prescribed deadlines.

A quick reclaim of withholding tax is available if relief at source has not been obtained by an eligible beneficial owner.

No standard refund is currently available via Clearstream Banking for Russian debt securities.

Availability of tax relief

Click on the image for a larger view of the diagram showing the availability of relief at source and/or reclaim on withholding tax on income from Russian debt securities.

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1. 13% until 31 December 2020. 

2. The Federal Law 366-FZ dated 24 November 2014 on “changes to part two of the Tax Code of the Russian Federation and other federal laws of the Russian Federation” and Federal Law 376-FZ dated 24 November 2014 on “changes to the Tax Code of the Russian Federation” abolished the 30% tax rate applicable only on dividends paid on undisclosed holdings of Russian shares.