Intragroup Loans In Russia

ABSTRACT

Loans constitute a commonly used instrument of intragroup financing. They offer flexibility in terms of duration and remuneration that the parties are free to agree upon. As opposed to contributions into equity, the loan agreements do not require compliance with strict corporate regulation. Hence, implementation of the loan agreements is far less formalized and time-consuming.

However, when opting for intragroup loans, the parties should not disregard Russian specifics and restrictions in the fields of currency control and taxation. These elements are of importance when deciding on the structure of intragroup debt financing and its eventual implications.

Key words: Loan Agreement, Interest Taxation, Interest Deductibility, Currency Control Regulation, Repatriation Requirement, Debt to Equity Swap, Offset.