+3188 2055 000
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Termination of tax treaty between the Netherlands and Russia

The Russian Federation has terminated the tax treaty between the Netherlands and Russia unilaterally. This means that as per 1 January 2022  the aforementioned tax treaty will be no longer effective. The termination of the tax treaty can have various negative consequences and might lead to double taxation.

Because the tax treaty will be no longer effective, tax treaty benefits, such as reduced withholding tax rates, are no longer applicable.

As a result of this, one of the most important consequences of the treaty’s termination is that Russia will be able to levy higher withholding taxes on outbound dividend, interest and royalty payments from Russia to Dutch companies. Subsequently, these higher withholding taxes will also no longer be eligible for a tax credit in the Netherlands once the treaty is no longer be effective, which can lead to double taxation.

Another example from a Dutch perspective will be the fact that the Dutch dividend withholding tax exemption will be no longer applicable for dividend distributions from a Dutch company to its Russian parent company, as the presence of a treaty is a requirement for the dividend withholding tax exemption.

Restructuring of cross-border business and financing might be necessary in order to mitigate the consequences of the termination of the tax treaty between the Netherlands and Russia. In most cases these restructurings can best be done while the treaty is still in place.

Want to know more?

If you have any questions about the termination of the tax treaty between Russia and the Netherlands, feel free to contact our specialist.

Crowe Peak
Olympisch Stadion 24-28 1076 DE Amsterdam, The Netherlands
+3188 2055 000 contact@crowe-peak.nl