On 27 November 2017, the Russian President signed bill No. 231414-7 (in Russian) effectively enabling the implementation of automatic exchange of information of the Russian Federation with other participating jurisdictions under the Common Reporting Standard (CRS) regime. The first exchange of information will occur in 2018 with respect to 2017 accounts.
CRS Key Outcome
Russian tax authorities will now be able to receive automatically on an annual basis certain information on financial accounts held by Russian tax resident individuals and legal entities from other jurisdictions which have also signed up to the CRS. You can find the list of other jurisdictions signed up to the CRS here.
Information to be reported
The information to be reported automatically in an annual basis under CRS includes:
- balances of financial accounts held in foreign jurisdictions by Russian tax residents and passive non-financial entities whose controlling persons are Russian tax residents; and
- the types of income credited to those accounts, including interest income, dividends, income from certain insurance products and sales proceeds from financial assets.
Such information will be used by Russian tax authorities, among other, in assessing the tax obligations of Russian tax residents.
Implications on private structures
As a result of the above, Russian tax residents who own or control foreign companies and other vehicles (such as trusts, foundations, funds) may be reported to the Russian tax authorities depending on the CRS classification of such companies and vehicles.
The implementation of the CRS in the Russian Federation is not something new or unexpected as the Russian government announced joining the automatic exchange of information back in 2016.
How we can help
We can review your existing or planned structure in light of the Common Reporting Standard (CRS) regulations. This way you can gain an understanding of the flow of information and any potential tax risks or solutions.
Head of Tax Services