Denunciation of the double taxation agreement with the Netherlands

15.04.2021

The Government has decided to denounce the double taxation agreement with the Netherlands.

The existing tax agreement with the Netherlands allows to pay tax at an effective rate of 2–3%. The corresponding rate in Russia is higher: for example, for legal entities — 15% on dividends and 20% on interest.

In December, the Ministry of Finance of the Russian Federation announced that they started the process of denouncing the agreement on the avoidance of double taxation with the Netherlands. Before that, the Russian Ministry of Finance held several negotiations with the Ministry of Finance of the Netherlands and offered conditions similar to those in agreements with Cyprus, Luxembourg, and Malta, but the negotiations were unsuccessful.

The approach to changing the agreement proposed by the Netherlands, in turn, was not supported by the Russian side, as it provided some channels for withdrawing funds from the country.

It should be noted that the initiation of the denunciation procedure does not indicate the Government’s goal to bring the matter to an end. For example, during the negotiations with Cyprus, there was a similar situation. After Russia launched the denunciation procedure, the Cypriot partners signed the proposed amendment to the agreement on the avoidance of double taxation.

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