Russia Denounces Tax Agreement With Netherlands

Federal Law 139-FZ came into force on 26 May 2021, thereby denouncing the agreement between Russia and the Netherlands on double taxation avoidance and tax evasion provisions relating to income and property tax.

Russia's Ministry of Finance made the denouncement after many attempts to amend the agreement since initiating it with the Netherlands at the end of 2019. During this period, Russia took the same action in its negotiations with Malta, Cyprus and Luxembourg, whose companies were traditionally used to structure ownership schemes concerning Russian assets. Russia proposed to significantly amend the terms of the double taxation avoidance agreements, demanding that the taxation rate on passive income (such as interest, dividends and royalties) for those countries' residents rise to 15% from the existing very low or zero rate.