International agreements on the elimination of double taxation. Avoidance of double taxation in Germany

16.05.2016

Most countries enter into double tax treaties with other countries to facilitate the exchange of information and prevent double taxation of the income of their residents, who may either receive income from another country or be de facto residents of both countries. Most of the agreements are based on the conventions of the Organization economic cooperation and Development (OECD)

UK and Russia

The UK and Russia are no exception, and such an agreement was signed by Douglas Hurd and Andrey Kozyrev in 1994. The agreement is quite complex and consultation should be sought to determine exactly where each source of income will be taxed. Some types of income, such as dividends or interest, may be taxed in both countries. In this case, the tax fully paid in one country is granted tax relief from taxable amounts in another country. The agreement between the UK and Russia is generally in line with the OECD convention, as are most such agreements. However, some items have their own characteristics.

This agreement covers the taxation of income received in the UK, capital gains taxes for individuals and corporation tax for companies. At the same time, like many other agreements, it does not deal with inheritance tax at all. The agreement is legal document, and is difficult to summarize, but it covers most of the taxation matters of a resident of any country who derives income or capital gains in another country.

Examples of income covered by the agreement

Income from employment (wage) is taxed in only one country in which the employee is resident. An exception is the case when an employee, being a resident of one country, performs most of his work duties in another country.

Business profit taxable only in the country in which the business has a permanent establishment. However, if the company is located in the UK and has a permanent establishment in Russia, then Russia may also tax the company's profits, but only in the amount that is received from the activities of the permanent establishment in Russia. The definition of a permanent establishment is given in the agreement.

Dividends paid by a company located in one country to a resident of another country are taxed in both countries. The company or institution paying the dividend withholds tax on the full amount of the payment. In accordance with the OECD convention, these deductions cannot exceed 15%. The recipient of the dividends is then taxed in his country of residence, and the tax already paid in another country is credited to him in the total amount of tax that should be taxed on the full amount of dividends.

Interest is taxed in the same way as dividends, but maximum amount The tax here is limited to 10%.

capital gain is also a complex topic, and depends on the types of assets to be disposed of, which are listed in the agreement. In general, capital gains in respect of real estate received by a resident of one of the countries will be taxed in the country where the property is located. On the other hand, capital gains movable property will be taxed in the country of residence individual(for example, an increase in the value of shares).

In the table below you will find a list of countries with which Russia has a double tax treaty. Let's say your organization pays income to a company whose permanent location is located in another state. If Russia has a double tax treaty with this country, your company as a tax agent will be able to either not withhold tax on the income paid, or withhold it at a reduced rate (depending on the terms of the agreement between the countries).

List of valid bilateral international treaties for the avoidance of double taxation

16.05.2016

Double tax treaty, concluded between the countries, allows to reduce the tax burden on taxpayers. To date, Russia has concluded more than 80double tax treatieswith various states.

Double taxation in Russia

To avoid double taxation, the Russian government enters into agreements with the governments of other countries that help develop relations between residents of these two countries when making transactions. Such double taxation treaties help relieve businesses from the exorbitant tax burden that can result from paying income from a resident of one country to a resident of another country.

AT these agreements on the avoidance of double taxation by agreement at the international level, some types of transactions are exempted by one of the countries from paying tax, or some preferential terms for this type of income tax. After all, the tax on these incomes, for example, has already been paid in the country in which the taxpayer (tax agent) is located, paying remuneration to his foreign partner.

In Russia, paragraph 1 of Art. 7 tax code established the priority of an international agreement over a domestic tax legislation. This means that if, in accordance with the norms of the Tax Code, the tax rate is set at 10%, and in an international agreement - 5%, then the taxpayer has the right to apply the rate established by the international agreement. However, in this case, it is mandatory to comply with all the conditions prescribed in the international treaty.

Conditions for obtaining tax benefits in international transactions

Among the conditions established by Russian tax legislation for the application preferential taxation in accordance with the terms of international agreements on the avoidance of double taxation, the main thing is to confirm the fact that the counterparty is located abroad. It's about about a foreign partner of a Russian taxpayer to whom the latter pays income. This is indicated in sub. 4 p. 2 art. 310 NK. Also, the taxpayer will need to prove that his partner is the actual recipient of the profit, and not an intermediary.

In paragraph 1 of Art. 312 of the Tax Code states that a foreign partner is obliged to provide the Russian tax agent with proof that he is the actual beneficiary and that he is located on the territory of the state with which Russia has concluded an agreement on the avoidance of double taxation.

If the supporting documents are in a foreign language, then you will need to worry about their translation into Russian. Also, fiscal authorities in most cases require that documents have an apostille. In order for the withholding agent not to withhold tax on the income of a foreigner (or to apply a preferential tax regime), it is necessary that all the supporting documents listed above be provided before the income is paid.

If they are provided later, income tax will be withheld in accordance with Russian tax legislation. But later, upon submission of documents, the paid tax can be returned and additional income paid to a foreign partner.

So, what documents should a foreign partner provide in order to avoid double taxation? In paragraph 1 of Art. 312 of the Tax Code contains an exhaustive list of such documents:

• certified by a competent foreign authority (these include financial and fiscal departments of foreign states) confirmation of the permanent residence of a resident in this foreign state (+ translation into Russian);
• documentary evidence that the foreign recipient of income has the actual right to it.

However, neither in this paragraph, nor anywhere else in the Tax Code, there is a clear indication of what requirements are imposed on the form of documents. Usually such supporting documents are referred to as "Certificates of Tax Residence".

Previously, the requirements for the form of documents and other issues that should have been paid attention to regarding the specifics of providing supporting documents to the fiscal service were collected in a "manual" compiled by the Federal Tax Service and set out in the order of the Ministry of Taxes and Duties dated March 28, 2003 No. BG-3- 23/150. But data guidelines lost their effect on the basis of the order of the Federal Tax Service of December 19, 2012 No. ММВ-7-3 / [email protected]

On the this moment The Federal Tax Service has not issued new clarifications on this issue, so it became more difficult for taxpayers to work through each specific situation. So, today taxpayers are forced not only to study all the available explanations of the financial and fiscal departments on the issue of interest, but also to study the established judicial practice.

Judicial practice on avoidance of double taxation

Let us analyze some situations in which there is already an established judicial practice:

1. About which authority is considered competent when certifying confirmation of the permanent location of a foreign company.

By the decision of the Supreme Arbitration Court No. VAC-15167/13 dated November 7, 2013, it was established that registration certificates issued by the German fiscal service foreign company as a payer of value added tax and tax exemption are not necessary confirmation of the permanent location of the company in Germany. However, the courts considering these documents have previously found these documents to be sufficient for exemption from income tax in Russia in accordance with an international agreement. The Supreme Court found no violation in these findings.

In the ruling of the Supreme Arbitration Court dated March 26, 2014 No. VAC-716/13, the judges did not find violations in the arguments of the FAS DO (decree dated November 14, 2013 No. Ф03-5168/13), which concluded that the company registration certificates provided by Korean taxpayers, signed by the heads of the fiscal services of 2 districts of Korea are reliable confirmation of the permanent location of foreign counterparties.

For more information on how companies can verify their permanent location, read our article. .

1. On the provision of confirmation before the date of receipt of income.

The decision of the FAS MO dated February 15, 2013 No. F05-15470 / 12 states that the withholding of tax from the income of a foreign partner must be carried out by a tax agent from Russia, since supporting documents were provided after the moment the income was paid.

Even more information about judicial practice on this issue, you will find in our article .

On the procedure for calculating penalties IFTS for late provision supporting documents read in our article .

And one more case about the provision of documents later than the deadline for payment of income by the source is considered in our article. .

1. On the annual provision of confirmations.

The resolution of the Federal Antimonopoly Service of the Ministry of Defense dated January 17, 2014 No. F-05-16745 / 13 indicates that if the supporting document does not indicate the validity period for other tax periods, then it cannot be accepted as a justification in other tax periods. At the same time, in the letter of the Ministry of Finance dated April 14, 2014 No. 03-08-P3-016905, it is indicated that Art. 312 of the Tax Code there are no provisions on limiting the validity of the confirmations provided.

1. About Apostille.

In their decisions, the courts adhere to the position chosen by the Presidium of the Supreme Arbitration Court and set out by it in the decision of June 28, 2005 No. 990/05 (at that time methodological recommendations were still in force) on the mandatory affixing of an apostille. The decision was dictated by the requirement to comply with the 1961 Convention. In recent decisions arbitration courts it is also stated that the presence of an apostille is mandatory (Resolution of the FAS MO dated February 15, 2013 No. F05-15470 / 12).

Double tax treaties

Many countries need to conclude such an international agreement that would relieve taxpayers carrying out interstate financial transactions from double taxation. Such agreements usually define the conditions for the distribution of the order of taxation of various incomes between states.

The said agreements also define the procedure for imposing income tax at the source of its payment. Typically, income is fully exempted by withholding taxes, although options for lowering it are possible.

Each of the international agreements on avoidance of double taxation signed by Russia (there are 83 in total as of 2017) has its own unique content. But recently there has been a tendency around the world to unify such agreements. It is supposed to unify the texts of the agreement in accordance with the postulates set out in the Model Convention developed by the Organization for Economic Cooperation and Development.

International agreements for the avoidance of double taxation (Cyprus and other countries)

An international agreement on the avoidance of double taxation (hereinafter in the table - DTT) is signed by the Government of Russia with the government of another foreign state. At the same time, the date of conclusion of a bilateral international treaty usually does not coincide with the date of entry into force, as well as the date of application in one and the other country.

To make sense of all these important nuances, we suggest that you familiarize yourself with the list of all prisoners Russian government bilateral agreements aimed at eliminating double taxation of income in two cooperating countries.

There are no fundamental differences in the name of an international document - a convention, an agreement or a treaty. All these names indicate the establishment of certain obligations by the parties. In fact, they are all synonyms.

Results

To reduce tax burden Russian merchants, the government of the Russian Federation enters into agreements on the avoidance of double taxation with the leadership of other countries. These agreements take precedence over the tax legislation of the Russian Federation. But in order to apply them, the Russian taxpayer and his counterparty must comply with all the conditions of the international agreement and provide the documents accompanying the transaction to the Federal Tax Service.