Russia and Luxembourg Double Taxation Agreement

January 04th 2021

Double Taxation Agreements (DTA) are a means of reducing the tax burden on cross-investments which otherwise might be susceptible to being taxed twice on the same transaction and therefore possibly decreasing the appetite for cross border transactions and therefore hindering expanse of business.

In the absence of a DTA Russia has a 15% withholding tax on dividends and 20% on interest and royalties.  There may also be tax obligations in the country of origin or destination of funds that would also have to be taken into account.

The previous agreement with Luxembourg was very beneficial tax wise in order to promote cross border investment, however on the 11th August 2020 president Putin announced that Russia was in the process of reviewing its DTA’s.

Whilst an agreement is still in place between the countries this was amended on the 6th November 2020 and the conventional withholding rate expected to come into place on the 1st January 2021 will be now be increased to 15% although there are certain exceptions to this whereby it is possible to reduce to 0%-5% providing it meets the special conditions laid down.