List of Countries with Double Taxation Avoidance Agreements with Russia and Their Application Rules

The Essence of Double Taxation Avoidance Agreements (DTAA)

A Double Taxation Avoidance Agreement (DTAA) is an international treaty between two countries designed to prevent the situation where the same income is taxed simultaneously in both jurisdictions. These agreements regulate which country has the priority right to tax certain types of income, such as dividends, interest, profits from the sale of real estate, and income from employment.

The primary goal of a DTAA is to eliminate double taxation and create predictable tax conditions for international businesses and individuals. Agreements are also aimed at preventing tax evasion, promoting trade, attracting investments, and protecting the rights of taxpayers.

Most DTAAs are based on the OECD Model Convention, first published in 1963 and regularly updated. The UN Model is also used, focusing on the interests of developing countries. These documents define standard provisions for DTAAs, including the distribution of taxing rights across different types of income.

Additionally, since 2017, the OECD's Multilateral Instrument (MLI) has been implemented to rapidly update previously concluded agreements in line with measures to combat base erosion and profit shifting (BEPS).

Russia began concluding DTAAs in the early 1990s, after the dissolution of the USSR. One of the first agreements was the DTAA with France, signed in 1996. Since then, Russia has signed over 80 agreements, covering most of its key trade and economic partners.

Agreements signed by Russia take precedence over the provisions of the Tax Code (based on Paragraph 3 of Article 3 of the Russian Tax Code) if the international treaty provides for different rules.

Since 2020, in response to geopolitical changes, several agreements have been revised or suspended. In 2023–2024, Russia officially suspended the DTAA with several "unfriendly" countries, including the USA, EU countries, and Japan.

Types of Income Covered by DTAAs and Mechanisms for Eliminating Double Taxation

DTAAs regulate how various types of income earned by residents of one country from sources in another country are taxed. The goal is to prevent a situation where income is taxed twice: in the country of source and the country of tax residence.

Types of Income Covered by DTAAs

Agreements signed by Russia typically cover the following types of income:

• Dividends – reduced tax rates are often applied at the source or the income is exempt from taxation in one of the countries.

• Interest on loans and credits – usually taxed at a reduced rate, often ranging from 0% to 10%.

• Royalties – payments for the use of copyrights, licenses, and technologies are also subject to reduced taxation.

• Income from the sale of property – including real estate, shares, stakes, and businesses.

• Profit from business activity – if there is no permanent establishment in the other country, income is generally taxed only in the country of residence.

• Income from rent, sale of real estate abroad – generally taxed in the location of the property, but tax can be credited in Russia.

• Income from employment, independent activities, pensions, and social benefits – these are regulated based on the circumstances of income receipt and the source country.

Methods for Eliminating Double Taxation in International Practice

In global practice, including Russian practice, two main methods are applied:

1. Exemption Method
   Income earned abroad is fully exempt from taxation in the country of residence if it has already been taxed in the source country.

2. Tax Credit Method
   The tax paid in a foreign country is credited against the tax liability in the country of residence. This method is applied in Russia.

Example: A Russian resident receives dividends from a company in Germany, and tax is withheld according to German law. If there is an applicable agreement and the necessary supporting documents are provided, this tax can be credited when calculating personal income tax (PIT) in Russia.

Conditions for Applying Agreements in Russia

To apply benefits under a DTA (Double Taxation Agreement), the taxpayer must:

• Confirm their tax residency (provide a certificate in the form approved by the Federal Tax Service (FTS));

• Prove they are the actual beneficiary (recipient) of the income;

• Provide documents on taxes withheld abroad;

• Follow the procedure set forth by the Tax Code of the Russian Federation (NК РФ) and the specific agreement.

Obligations of the Tax Agent in Applying Double Taxation Agreements

According to the Russian Tax Code, a tax agent is an organization or individual entrepreneur who is required to calculate, withhold, and remit taxes on behalf of another party—the income recipient.

Who is a Tax Agent?

In cases of international payments, the tax agents are usually:

• Russian companies paying dividends, interest, royalties, rental or other income to foreign organizations or individuals;

• Banks and financial institutions remitting income under foreign trade contracts;

• Employers hiring foreign specialists.

The tax agent is responsible for determining the recipient's tax status (resident/non-resident), the type of income, eligibility for reduced tax rates or exemptions under the DTA, and collecting necessary documents from the recipient.

Main Duties of the Tax Agent

1. Verification of the Right to Apply the Agreement
   Ensure that there is a valid DTA between Russia and the recipient's country of tax residency. In some cases, suspended or denounced agreements need to be considered.

2. Request and Verify Documents
   The income recipient must provide:

• A certificate of tax residency (certified by the relevant tax authority of the country of residence);

• A statement for the application of the agreement;

• Proof of beneficial ownership (if applicable).

3. Application of the Tax Rate
   If the conditions are met, the tax agent may apply a reduced tax rate or completely exempt income from tax based on the provisions of the agreement.

4. Withholding and Remitting Taxes
   If applying a reduced rate is not possible, the tax is withheld according to the general rules of the Russian Tax Code and remitted to the budget.

5. Notification to the Federal Tax Service (FTS)
   In some cases, the tax agent must notify the tax authority of the application of the DTA and provide the relevant documents.

Liability of the Tax Agent

If the tax agent incorrectly applies tax rates, lacks the proper documents, or fails to remit taxes on time, they may be held liable with:

• Additional tax assessments;

• Penalties for delay;

• A fine under Article 123 of the Russian Tax Code (20% of the unpaid amount).

To minimize risks, tax agents are recommended to use standardized forms, maintain up-to-date lists of valid agreements, and seek assistance from international tax law experts in complex cases.

Elimination of Double Taxation in Russia and the Process of Credit for Foreign Taxes

Russian tax legislation provides for the possibility of crediting foreign taxes when calculating profit tax and personal income tax (PIT) if the income is sourced from outside Russia and taxed in a foreign jurisdiction. This is one of the fundamental mechanisms for implementing Double Taxation Agreements (DTA).

Legal Basis

The credit mechanism is regulated by:

• Paragraph 2 of Article 232 of the Russian Tax Code (for PIT);
  

• Article 311 of the Russian Tax Code (for corporate profit tax);
  

• The provisions of the specific international agreement (DTA) signed between Russia and the respective country.

If the agreement provides for the credit method, the amount of tax paid abroad may be credited against the tax due in Russia, but no more than the amount calculated under Russian tax rates.

Conditions for Applying the Credit Mechanism

To use the foreign tax credit, the taxpayer must:

• Be a tax resident of Russia—i.e., the individual must stay in Russia for at least 183 calendar days in the last 12 months, and the company must be registered in Russia and managed from there.
  

• Provide supporting documents, including:
  

• A certificate from the foreign tax authority confirming the payment of taxes abroad;
  

• Documents confirming income received from foreign sources;
  

• Translations of documents into Russian;
  

• A certificate of tax residency in Russia.
  

• Correctly fill out the tax declaration (3-NDFL for individuals or corporate profit tax declaration), specifying the relevant information about income and taxes.

Example of Application

A Russian resident receives income from renting an apartment in Italy. Income tax is withheld in Italy. Based on the active DTA between Russia and Italy, the taxpayer can credit the tax paid in Italy when calculating PIT in Russia. To do this, they must provide a certificate from the Italian tax authority and a declaration confirming the income.

If the tax in Italy exceeds the Russian PIT rate (13% or 15%), the difference is not refunded. If the tax is lower, the taxpayer must make up the difference in Russia.

Limitations

• The tax paid without a corresponding agreement (if the DTA is not concluded or is suspended) cannot be credited.
  

• Credit is not possible without official supporting documents.
  

• The submission of documents is limited to the tax period: for the previous year, documents must be submitted by April 30 of the following year (for individuals).

List of countries that have concluded international agreements to avoid double taxation with Russia and their status:

Trends and Risks in the Application of Double Taxation Agreements

The application of double taxation agreements is associated with legal and fiscal limitations related to both international politics and tax control measures.

Suspension and Review of Agreements

Since 2020, Russia has initiated the revision of a number of agreements, primarily with jurisdictions where Russian taxpayers enjoyed reduced rates on dividends and royalties. In 2023, the application of certain provisions of the DTA with 38 countries was officially suspended, including all EU member states, the UK, Canada, the USA, Japan, and others.

Suspension means that the provisions of these agreements—such as exemptions from taxation, reduced rates, and tax credit procedures—are temporarily not in effect. However, the tax obligations of Russian residents remain in full force.

Automatic Exchange of Information and Control over Cross-Border Structures

Russia participates in the automatic exchange of tax information system (CRS), which allows the Federal Tax Service (FTS) to receive data on foreign accounts and incomes of taxpayers. An agreement within the FATCA framework also applies to US residents.

These measures, along with the rules on controlled foreign companies (CFC) and the concept of the beneficial owner of income, significantly limit the possibilities of using formal tax optimization schemes through foreign jurisdictions.

BEPS and the Multilateral Instrument (MLI)

Russia has signed and ratified the OECD Multilateral Convention (MLI), which applies to some existing DTAs. This means:

• Introduction of the Principal Purpose Test (PPT);

• Refusal of benefits in cases of formal ownership of assets;

• Strengthening requirements for substantiating the economic purpose of transactions.

In practice, the application of a DTA requires not only the existence of an agreement but also the confirmation of the business purpose and economic content of the international structure.

Procedure for Applying Double Taxation Agreements

To take advantage of the benefits of a DTA, the following steps need to be taken:

1. Check the relevance of the agreement
Before submitting documents, ensure that there is an active DTA between Russia and the state from which income is received or to which income is directed.

2. Confirm tax residency
A Russian resident will need a tax residency certificate issued by the Russian tax authority. A foreign taxpayer needs a certificate from the competent authority of their country. The document must be translated into Russian and, if necessary, legalized or apostilled.

3. Prepare the required documents
To apply the DTA provisions, a request must be made, and documents confirming the right to use the benefits need to be collected. Usually, proof of beneficial ownership of income is required, as well as certificates confirming the fact and amount of tax paid abroad, if tax credit is planned.

4. Submit documents to the tax authority or tax agent
Depending on the situation, documents should be submitted either to the Federal Tax Service (FTS) or directly to the organization paying the income.

Legal Support for Applying Double Taxation Agreements

The application of DTAs requires not only the formal existence of an agreement between the countries but also legal compliance with procedures set forth in both international and Russian tax legislation. Accurate income classification, correct determination of tax status, timely document preparation, and, importantly, understanding how and to what extent the provisions of the agreement are applied in the current context are essential.
KDpartners specialists provide professional support at all stages of applying DTAs. We analyze the situation, identify potential tax risks, and offer solutions that align with both the law and the business goals of the client.

Our services include:

• Legal expertise on the applicability of agreements and their current status;

• Preparation of a complete package of documents for the Federal Tax Service of Russia or tax agents;

• Building a substantiated position in case of disputes with tax authorities;

• Legal support for international payments, including dividends, interest, royalties, and rental income;

• Consulting on the taxation of foreign income of individuals.

In addition, KDpartners specialists develop international tax planning strategies based on business structure, asset location, and current international restrictions. This helps our clients build transparent and sustainable international structures, reduce tax burdens through legal means, and avoid claims from tax authorities.

FAQ

Can a DTA be applied if the income is received from a country with which the agreement has been suspended?
No. Suspension of the agreement means that provisions on reduced rates, exemptions from taxes, or tax credit procedures are temporarily not applicable. In such cases, income is taxed according to the general rules of Russian legislation.

Is it necessary to confirm residency annually for applying to the DTA?
Yes. A tax residency certificate is required for each calendar year in which the agreement is applied. The document must be issued by the competent authority of the respective country and translated into Russian.

Can I simply indicate in the tax return that I am applying for the agreement?
No. To apply the benefits of the DTA, supporting documents must be provided: the residency certificate, a request, and if necessary, documents proving beneficial ownership and tax payment abroad. The absence of documents can lead to additional tax assessments.

Can foreign tax paid on the sale of real estate be credited?
Yes, if there is an agreement with the relevant country that provides for the credit method. In this case, a certificate of tax payment abroad and confirmation that the income was derived from the sale of real estate will be required.

Can the DTA be applied when income is paid through an offshore company?
The agreement can only be applied if the requirements for actual entitlement to the income are met. If the offshore company is not the beneficial owner, the benefits will be limited or excluded.

Can the DTA be applied if income was received in the previous year and the documents are being submitted now?
For individuals, documents for applying the DTA must be submitted no later than April 30 of the year following the reporting year. If submitted later, the tax authority may deny the application of the benefits.

Can I get a refund of tax in Russia if it has already been withheld abroad?
No, a refund from the Russian budget is not provided. Under the credit method, the Russian tax payable is reduced by the amount of foreign tax paid, but not more than the tax that would have been payable in Russia.

Does the DTA apply to self-employed individuals and income under the NPD?
No. The DTA mechanism does not apply to the tax on professional income (NPD), as this regime does not provide for the possibility of foreign tax credit or the application of international agreements.

If there is no agreement between Russia and another country, can double taxation be avoided?
In this case, only the domestic legislation of both countries applies. A credit for foreign tax paid is possible, but only under the rules of Article 232 of the Russian Tax Code and only with documentary confirmation. Exemptions from taxation or reduced rates are not available.