16.05.2016

Application of agreements on avoidance of double taxation concluded by the Russian Federation.

At present, double taxation avoidance agreements have been signed by Russia with more than 80 countries. Among them are many EU countries, including Cyprus, Great Britain, Denmark, the Netherlands; Switzerland; USA; China; CIS countries, incl. Ukraine, Belarus, Kazakhstan; the Baltic countries - Latvia, Lithuania and a number of others (see the List of valid double taxation agreements).

IMPORTANT: If an international tax agreement provides for a different tax rate than that provided for by the Tax Code of the Russian Federation, then the rate specified in the double taxation agreement is applied!

Let us dwell on some of the most significant aspects of the application of international tax treaties in Russia.

Duties of a tax agent

Responsibility for the correct calculation and withholding of tax at source (including the correct application of benefits (reduced rates and exemptions) provided for by international international tax agreements lies with the tax agent.

According to the Tax Code of the Russian Federation, tax on income received by a foreign organization from sources in the Russian Federation, calculated and withheld by a Russian organization (tax agent), of the income-paying foreign organization, at each income payment, in the income payment currency. The exception is when:

• the income paid relates to the permanent establishment of the foreign organization receiving the income in the Russian Federation;
• in relation to income paid to a foreign organization, Article 284 of the Tax Code of the Russian Federation provides tax rate 0%;
• income, in accordance with international treaties of the Russian Federation, is not taxed in the Russian Federation (subject to the presentation by a foreign organization to the tax agent of the confirmation provided for in paragraph 1 of article 312 of the Tax Code of the Russian Federation);
• in some other cases, provided for in paragraph 2 of Art. 310 of the Tax Code of the Russian Federation.

It should be remembered that the unlawful non-withholding and (or) non-transfer (incomplete withholding and (or) transfer) within the period established by the Tax Code of the Russian Federation of tax amounts subject to withholding and transfer by a tax agent forms the composition tax offense and entails the collection of a fine in the amount of 20 percent of the amount to be withheld and (or) transferred (Article 123 of the Tax Code of the Russian Federation), as well as penalties (on the issue of collecting penalties from a tax agent, see Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation No. 4047/06 dated September 26 2006).

Confirmation of the permanent location of a foreign organization

Subparagraph 4 of paragraph 2 of Article 310 of the Tax Code of the Russian Federation provides that in the event that a Russian organization pays income to a foreign organization, for which, in accordance with international treaties (agreements), preferential treatment taxation in the Russian Federation, such income is exempt from withholding tax at the source of payment or withholding tax at the source of payment at reduced rates, provided that the foreign organization presents to the tax agent confirmation, provided for in paragraph 1 of Article 312 of the Tax Code of the Russian Federation.

In accordance with paragraph 1 of Art. 312 of the Tax Code of the Russian Federation, the specified confirmation must meet the following requirements:

• must be certified by the competent authority of the relevant foreign state,
• if this confirmation is drawn up in a foreign language, the tax agent is also provided with a translation into Russian,
• confirmation must be provided by the foreign entity prior to the income payment date.

Thus, if at the time of payment of income to a foreign organization, the Russian organization - the source of income payment does not have the specified confirmation, then it is obliged to withhold tax at the source of payment at the rate established by law.

At the same time, if the specified confirmation appears at the disposal of the tax agent later, it is possible to refund the previously withheld tax on income paid to foreign organizations in accordance with paragraph 2 of Art. 312 of the Tax Code of the Russian Federation. For this in tax authority the following documents must be submitted:

Application for refund of withheld tax in the prescribed form;

Confirmation that this foreign organization at the time of payment of income had a permanent location in the state with which the Russian Federation has an international treaty (agreement) governing taxation issues;

Copies of the agreement (or other document) in accordance with which income was paid to a foreign legal entity, and copies of payment documents confirming the transfer of the amount of tax to be refunded to the budget;

An application for the refund of taxes previously withheld in the Russian Federation, as well as other documents listed above, shall be submitted by the foreign recipient of income to the tax authority at the place of registration of the tax agent within three years from the end date in which the income was paid.

The status of “beneficial recipient of income” as a condition for the application of benefits under double taxation agreements

When applying agreements for the avoidance of double taxation in terms of granting the right to use benefits (reduced rates and exemptions) when taxing certain types of income from sources in the Russian Federation, it is necessary to assess whether the person applying for the use of benefits (reduced rates and exemptions) , “the actual recipient (beneficial owner)” of the relevant income.

International tax treaties are based on the Model Convention on Taxes on Income and Capital) and on the official commentaries to it, containing the interpretation of its provisions.

When applying the provisions of tax treaties, it must be assumed that the term "beneficial recipient (beneficial owner) of income" is not used in a narrow technical sense, but should be understood based on the goals and objectives of international tax treaties, such as the avoidance of double taxation and evasion from the payment of taxes, and taking into account such basic principles of contracts as the prevention of abuse of the provisions of the contract and the predominance of essence over form. At the same time, the direct recipient of income, although it can qualify as a resident, cannot, for this reason alone, by default be considered as the beneficial owner of the income received in the state of residence.

Provision in the source state of income paid to a foreign person tax incentives(reduced rates and exemptions) is also contrary to the goals and objectives of international agreements if the recipient of such income, without formally using such tools as agency or nominal holding, acts as an intermediate link in the interests of another person who actually benefits from the relevant income. Such an intermediate, for example, a conduit company, cannot be considered as a beneficial owner of the income received if, despite its formal status as the owner of income in a transaction with a person who is a tax resident of the country - the source of income, such a company has very narrow powers in relation to this income, which allows it to be considered as a trustee or manager acting on behalf of interested parties.

In order to recognize a person as the actual recipient of income (beneficial owner), it is necessary not only to have legal grounds for direct receipt of income, but this person must also be immediate that is, the person who actually benefits from the income received and determines its further economic fate. When determining the actual recipient (beneficial owner) of income, one should also take into account the functions performed and the risks assumed by a foreign organization claiming benefits in accordance with international tax treaties.

Provided by agreements on avoidance of double taxation benefits (reduced rates and exemptions) in relation to paid income from a source in the Russian Federation do not apply if they are paid as part of a transaction or a series of transactions carried out in such a way that foreign person applying for benefits in the form of a reduced rate of interest and royalties, pays directly or indirectly all or almost all income (at any time and in any form) to another person who would not have the benefits (reduced rates and exemptions) under the relevant tax treaty, if such income was paid directly to such person.

Thus, the position of the Ministry of Finance of Russia is that the benefits (reduced rates and exemptions) provided for by agreements on the avoidance of double taxation, when paying income in the form of dividends, interest and income from the use of copyright from sources in the Russian Federation, are applied only if a resident of a foreign state with which Russia has concluded a relevant agreement is the actual recipient of income.

Application of double tax treaties in other countries

"Classic" offshore zones rarely have concluded double taxation agreements, which can be used to optimize income payments to non-resident structures. Therefore, low-tax and onshore jurisdictions, such as Cyprus, Great Britain, Denmark, the Netherlands, other European states, etc., are suitable for the application of tax treaties.

Eg, Great Britain has the world's largest network of tax treaties (more than 100). However, the application of tax treaties is possible only if the company is not nominal, that is, it is not an agent of an offshore principal company, which owns the majority of the profit (income). Only if the income is recognized as the income of an English company can it claim to use the agreement. Of course, it is not possible for a tax treaty to be applied by a company filing "dormant reports" - dormant accounts. It is possible to use agreements in holding schemes.

One of the countries most suitable for the application of international tax treaties, as before, remains Republic of Cyprus(has more than 40 active agreements). Tax residence certificate, issued by the Ministry of Finance at any time after the registration of the company. An important condition for obtaining a certificate is the presence of local directors - residents of Cyprus.

Tax residency certificates are also issued in other jurisdictions. significant for tax planning (Denmark, the Netherlands, Luxembourg, Latvia, Malta and other countries). However, an important factor affecting the possibility of obtaining a tax certificate is the presence of a company's "real content" (substance) in the country of registration.

Criteria for such presence. which a company must meet in order to be considered a tax resident of its country, may be the following:

• the presence of a real office at a real address in the country of registration of the company;
• the presence of local directors (residents of the country of registration of the company) who manage the company in the territory of this country;
• having a bank account (main) in local bank;
• storage of financial documentation and reporting in an office in the country of registration of the company;
• availability of staff;
• implementation of real activities, etc.

The extent of such presence may vary depending on the objectives of the company (eg trading or holding activities).

Double taxation (DT) is a specific way of taxing assets. In this case, the payer has to pay taxes twice. This option is highly undesirable. Various international agreements have been adopted to avoid double taxation.

What is double taxation

Double taxation is the taxation of assets twice. The doubling arises from the fact that taxes are collected by two states at the same time. This situation happens, as a rule, if the company receives income both in one and in another state. In this case, it is very difficult to determine the taxable base. To avoid DV, organizations are divided into residents and legal entities that were not residents.

There is a Federal Law "On Taxation". According to its points, income acquired in other states is included in the taxable base in the home country. Foreign funds are counted in the amount that is used in the calculation of taxes. In this case, you need to follow some rules. In particular, the amounts that are taken into account for taxation should not exceed the amount of the mandatory tax transferred in the Russian Federation.

Why is DN so undesirable? In fact, it discriminates against the payer. Companies have to pay double the tax. This interferes with the normal conduct of business.

When does double taxation occur?

DN occurs in the following cases:

1. The company pays taxes in two states. The way out is either following the conventions, according to which the tax is levied only in one state, or following the national laws.
2. Companies have to pay tax in various places. The order in question is mixed.
3. Only a portion of the company's profits is taxed. In this case, double taxation also occurs: first, when tax is charged on income, and then when it is charged on dividends. In this case, as a rule, different rates are used for distributable and undistributed income.

Methods for avoiding double taxation are fixed in regulations.

Varieties of double taxation

There are two types of double taxation:

1. Internal. Assets are taxed domestically. Tax collection is carried out at various administrative levels. This form of taxation can be vertical. In this case, the collection is carried out at the local and state level. The vertical form is relevant for Sweden. There is also a horizontal form. In this case, the tax collection is carried out at the same level. This form is relevant for the United States. In some states, only income received in the same state is taxed, in others - income in other states.
2. External. External double taxation arises from the difficulty of establishing either the taxpayer or the tax base.

IMPORTANT! The external form involves taxation outside the state.

What are the reasons for double taxation?

Double taxation occurs in the following cases:

1. The company has dual residency. That is, she is recognized as a resident in two countries.
2. The same income is a taxable base in two states. For example, in one country, income is recognized as a taxable base due to the residence of the company, and in the second - on the basis of the rule on the source of income.
3. The company's expenses are counted differently in different states.
4. The source of income is located in several states.

The main reason for the formation of double taxation is various regulations in different states, different regulation of the taxable base. In addition, the normative act can be interpreted in several ways.

Consider an example. In the US, inaccuracies in the return can result in fines of $10,000. In Switzerland, incorrect information in the declaration, if the violations are minor, are treated more loyally. Inaccuracies will not be considered violations. In this case, an international agreement is needed. It is required to harmonize interpretations of regulations.

Tools to Eliminate Double Taxation

Two methods are used to eliminate DN:

1. Unilateral. Assumes measures from one state. This changes the tax regulations in one country. The first method of unilateral elimination of VAT is a tax credit. It involves offsetting taxes paid in another country against the payer's obligations within the state. The second method is a tax credit. It involves deducting from the amount of taxes within the state the amount of taxes paid in another country.
2. Multilateral. It involves the conclusion of international agreements and conventions. That is, to implement this method, the efforts of two states are needed. The most relevant method is distribution. At the same time, assets in one state are no longer taxed in favor of another country.

FOR YOUR INFORMATION! As a rule, both of these methods are used to eliminate double taxation.

Interstate agreements

The first interstate agreement was signed between France and Belgium in 1843. Currently, there are more than 400 such agreements. However, almost all of these regulations are based on the principles of the Pareto optimum. Main criterion: the best option is one that benefits one side but does not harm the other side. Based on this, we can say that interstate agreements should not worsen the position of the participating country. It is on the basis of the agreement that tax jurisdiction is established.

Based on various international conventions, these methods of eliminating double taxation are distinguished:

• Formation of precise concepts that are used in the framework of regulations. Interpretation of terms.
• Development of a scheme for the elimination of NV, in which each country chooses a separate tax base. The tax is levied on specific income.
• Formation of a mechanism for the elimination of NAM in cases where both states tax all income.
• Elimination of taxation that discriminates against the payer in another country.
• Sharing up-to-date information to prevent mandatory fee evasion or abuse of the law.
• Establishment best ways liquidation of VAT in relation to the income of residents.

States must assist each other in taxation.

Features of determining the maximum amount of payments

The maximum credit amount is calculated as follows:

1. It is determined whether taxes paid in another country are subject to offset when paying tax within the country.
2. The maximum amount is set. In this case, the offset limitation is calculated.
3. The smaller amount is found from the amount of taxes paid in another state and subject to offset, and from maximum amount offset. If a company pays tax in excess of the established maximum amount, it will not be accepted for foreign credit.

Double taxation - a big problem, however, it is solved by a number of tools. They can be used by a single country or two states. The interaction of states with each other is considered more effective.

Getting income from a source abroad is often associated with the need to pay "profit" tax under the rules of local tax laws. But the mere fact of paying a foreign tax does not exempt a resident of the Russian Federation from the need to pay off the budget of his native state. However, situations where the same income is subject to tax twice do not always arise. With a number of countries, the Russian Federation has agreements on the avoidance of double taxation. These documents provide for the collection of tax only once, and do not double the mandatory deductions from income received from foreign economic transactions.

Which countries have an agreement on avoidance of double taxation?

Any income taxes can potentially be “doubled” - personal income tax, income tax, simplified tax on the simplified tax system, if the source of income payment is a foreign payer, and the recipient is a resident of the Russian Federation. Each country has its own laws related to the procedure for calculating taxes. Accordingly, income abroad can be taxed at a variety of rates, regardless of what tax and at what rate the same income may be subject to in Russia.

But, focusing on the method of eliminating double taxation, based on work under the relevant agreement, a company, individual entrepreneur or individual will not pay a double amount of the budget allocation. Of course, if the deal is concluded with a representative of the state in which the Russian Federation has this agreement.

At the moment, the Russian Federation has agreements with such countries as, for example, Belarus, Kazakhstan, Tajikistan, USA, Canada, Germany, France, Israel, Egypt, Japan, China, Australia. In total, as of January 1, 2017, there are 82 such countries with which we have agreements on the elimination of double taxation, and all of them are listed in the relevant information letter of the Ministry of Finance.

Evidence of resident status

The issue of eliminating double taxation is especially relevant, perhaps, in relations with companies from neighboring countries, for example, Kazakhstan and Belarus, since it is with them that Russian business has recently developed the closest ties. How does it work in practice?

Suppose that a Russian company provides some services to an organization registered in Belarus, with which the Russian Federation has an appropriate agreement on the avoidance of double taxation.

When transferring payment in the described situation, the Belarusian side is obliged by default to withhold from the income of a foreign counterparty in relation to it the amount of tax at a rate of 15% - it is established by the Tax Code of the Republic of Belarus. As a result, the executing company receives income minus the amount of tax, and in this case it does not have to pay the repeated tax in Russia.

But there is another option - to provide the Belarusian counterparty with a certificate of residence in the Russian Federation. In this case, the contracting authority will have confirmation that the executing organization is indeed a Russian company and, therefore, is subject to the agreement. On the basis of such a certificate, the income is transferred in full, without any deductions, and the Russian company will pay the budget according to the Russian tax code. Moreover, if such a company operates within the framework of the STS-6%, then paying tax with us is obviously more profitable, and vice versa, if this is a company on a general taxation system with a rate of 20%, the amount of tax will be higher if it is paid to the budget of the Russian Federation .

One way or another, a residence certificate is a document on the basis of which a foreign partner does not tax the amount of income paid to a Russian organization in accordance with the taxes applicable in its territory.

Certificate of confirmation of residence of the Russian Federation

The procedure for confirming the status of a resident of the Russian Federation was approved in the Information Notice of the Federal Tax Service of Russia dated November 23, 2012. Since February 2008, the Interregional Inspectorate of the Federal Tax Service of Russia for Centralized Data Processing, abbreviated as the MI of the Federal Tax Service of Russia for the Data Center, has been processing documents confirming this status.

There is no request form for confirmation of resident status - its companies, individual entrepreneurs and individuals are drawn up in free form, but with the obligatory indication of the calendar year for which confirmation is required, the name of the foreign state with whose representative there is cooperation, as well as the name and details of the Russian taxpayer itself.

In most cases, a certificate of the established form is issued to confirm the status of a Russian resident. However, depending on which country the domestic company works with, this may also be a form of document approved by a foreign state. In such cases, the form is certified by the signature of the official and the seal of the Russian tax authority.

The procedure itself is quite lengthy. The term for consideration of applications for issuing a confirmation of the status of a resident is 30 calendar days from the date of submission to the MI of the Federal Tax Service of Russia for the data center of the request, as well as additional necessary documents.

A certificate confirming the status of a resident is usually issued for the current calendar year, but it can also be requested for past periods.

A tax resident of Russia, who is obliged to pay tax in the Russian Federation on income from assets worldwide, is one who lives in the country for more than 183 days a year. In particular, this definition includes many owners of overseas real estate, who may receive rental income or from the sale of housing. If they are Russian tax residents, then a situation arises in which they must pay taxes both abroad (at the location of the object) and in Russia (at the place of their tax residence). However, the tax cannot be levied twice: it is paid only abroad, and the difference is credited in Russia. This is provided for by double tax treaties.

Double tax treaty - what is it?

A double tax treaty is an agreement between two countries that establishes the rules by which taxes are levied on organizations and individuals in cases where the income-generating assets are not located in the country of residence of the recipient of the income.

The double taxation agreement specifies the types of taxes that fall under the document, as well as the circle of persons to whom its rules apply. Also in such an agreement are the terms of taxation, the validity period and the procedure for terminating the contract. Russia has concluded agreements on avoidance of double taxation with 82 countries.

Australia Austria Azerbaijan Albania Algeria Argentina Armenia Belarus Belgium Bulgaria Botswana Great Britain Hungary Venezuela Vietnam Germany Hong Kong (since 01/01/2017) Greece Denmark Egypt

Israel India Indonesia Iran Ireland Iceland Spain Italy Kazakhstan Canada Qatar Cyprus Kyrgyzstan China North Korea Korea Cuba Kuwait Latvia Lebanon

Lithuania Luxembourg Macedonia Malaysia Mali Malta Morocco Mexico Moldova Mongolia Namibia Netherlands New Zealand Norway Poland Portugal Romania Saudi Arabia Serbia Singapore Syria

Slovakia Slovenia USA Tajikistan Thailand Turkmenistan Türkiye Uzbekistan Ukraine Philippines Finland France Croatia Montenegro Czech Chile Switzerland Sweden Sri Lanka South Africa Japan

“As for, for example, income in Estonia or other countries with which Russia has not concluded an agreement on the avoidance of double taxation, residents of the Russian Federation pay taxes twice, in both countries. If the legislation of Estonia provides for the collection of tax from a non-resident, then the amount paid will not be taken into account in the Russian Federation, since the amounts of tax actually paid on income received in a foreign state are not counted when paying tax in Russia, unless otherwise provided by the relevant international treaty signed by the Russian Federation ”, says Tranio lawyer Ekaterina Shabalina.

For buyers and owners of foreign real estate, double taxation agreements are important primarily because they allow tax to be credited in Russia on rental income and on the sale of such property.

How tax is taken into account when receiving rental income

“If a Russian resident receives income from real estate located, for example, in Germany, the amount of tax paid in Germany will be deducted from the amount of tax payable in Russia. The amount of tax is calculated in Russian tax law(at the rate of 13% and the established rules) and is deducted from the amount of foreign tax paid. It should be remembered that the deduction cannot exceed the amount of tax calculated in Russia. Accordingly, if the amount of tax in the state of source of income was paid in smaller size than was calculated in Russia, then the missing part will have to be paid in addition in the Russian Federation, ”explains Ekaterina Shabalina.

If you receive rental income, you must declare it yourself in Russia by submitting to the tax authority at the place of residence a declaration in the form 3-NDFL (sheet "B", or income from sources outside Russian Federation).

Attached to the tax return:

• foreign tax documents issued confirming the amount of income received and tax paid from it, as well as their notarized translation into Russian. These documents must reflect the type of income, its amount, the calendar year in which the income was received, the amount of tax and the date of its payment.
• or a copy of the tax return filed abroad, with a copy payment document on tax payment (all this must also be translated into Russian and notarized).

“The amount of tax paid abroad is credited only after the filing of this declaration, at the end of tax period. You can claim income and receive a tax credit within three years after graduation. reporting year in which income was received,” says Ekaterina Shabalina.

For example, a Russian tax resident owns German real estate that generates €10,000 per year in rental income. Sum income tax in Germany it will be 2,324 euros (the rate is 23.24% of rental income, taking into account the surcharge in support of solidarity), in Russia - 1,300 euros (13%). Since the amount of 1,300 euros is less than 2,324, the property owner will not have to pay anything extra in the Russian Federation.

At the same time, deductions received abroad are not taken into account when calculating the taxable amount in Russia. Let's say a Russian rents out a house in France and receives 18,000 euros a year. According to French law, he has the right to deduct 50% of the taxable amount in connection with the cost of maintaining housing. Therefore, €9,000 is taxed on rental income. The minimum rate for non-residents is 20%. This means that a Russian citizen pays a tax in the amount of 1,800 euros per year. Since there is no such system of tax deductions in Russia, you would have to pay with full amount at 18 thousand euros at a rate of 13%, that is, 2,340 euros per year. But since there is an agreement between Russia and France on the avoidance of double taxation, a Russian citizen needs to pay tax in France, and in the Russian Federation only pay the difference - 540 euros.

It is also important to know that when paying tax in Russia under the simplified taxation scheme, you cannot get a credit for foreign tax, and taxation in this case will be double.

How tax is taken into account when selling overseas property

According to the letter of the Federal Tax Service No. ED-3-3/4062@ dated November 9, 2012, the legislation of the Russian Federation does not distinguish between the sale of real estate in Russia and abroad - the same rules apply in both cases.

According to Ekaterina Shabalina, the income received from the sale of foreign real estate is not subject to taxation, and the seller is not required to file tax return in Russia in two cases:

• for objects purchased before January 1, 2016: if a property is being sold that has been owned for more than three years;
• for objects purchased after January 1, 2016: if real estate is sold that has been owned for more than five years (general case) or three years (if the taxpayer received the object by inheritance or as a gift from a relative or family member, under a life maintenance agreement with a dependent) .

Exemption from tax can be obtained if the property is not used for business activities. The definition of entrepreneurial activity was given by the Federal Tax Service in letter No. ED-3-3/412@ dated February 8, 2013.

If the seller does not fall under the above conditions, then he needs to file a tax return in the form of 3-NDFL by April 30 of the year following the year of receipt of income, and pay tax by July 15.

Like tax on rental income, tax on sales income can be credited in Russia as part of the elimination of double taxation. For Russian residents, the rate is 13%.

For example, in 2010 a Russian resident decided to buy an apartment in Spain for 500 thousand euros, and in 2016 he sold it for 550 thousand euros. Capital gains - 50 thousand euros - are subject to Spanish tax at a rate of 24%. The amount of tax in this case is 12 thousand euros. Since more than three years have passed between the purchase and sale, according to Russian law, it is not necessary to file a declaration in the Russian Federation, it is enough to pay tax in Spain.

It is important to remember that tax evasion is a criminal offence. It is illegal to pay taxes abroad at a lower rate than in Russia, and not fill out a tax return at home.

Julia Kozhevnikova, Tranio

The problem of tax deduction by two states at once is a rather relevant topic, since, due to various fundamentals of tax legislation in countries around the world, many individuals those who receive income outside the territory of their homeland are subject to a double deduction from them, they have to pay at the place of receipt of income and at the place of citizenship.

This is the deduction of taxes from the income of persons in several countries of the world - at the place of residence and at the place of formation of these incomes.

There is a collection of taxes in two areas in which the fiscal service works:

• According to the territorial principle - in such countries, tax collection takes place in a more loyal context, since they claim only income received within the country;
• According to the principle of residence - here the fee is designed to receive the maximum injection into the budget, since the tax is withdrawn from the resident, regardless of the place of receipt of his income.

A feature of such taxation in Russia is its definition according to special divisions with the presence of certain classification features.

How to eliminate double taxation - see this video:

Main varieties

Classification by principles

Taxation depends on the scheme used and is of the following types:

• International double economic type- is withdrawn from all entities simultaneously that received income from one operation, that is, their income is common. This is an initiative option to receive fees from a resident whose income was received abroad;
• An international double legal type is income received from a transaction performed by one person; tax is deducted from such a turnover by several states at once. In relation to this type, a set of special rules has been formed, according to which the jurisdiction of 2 states is divided for the operation, which means that it is necessary to establish relations between the states related to the income and the person who received it.

Important: such methods of avoiding double taxation are very effective for which states sign specialized agreements.

Classification by level

The classification feature is also affected by the level of the operation, depending on it, the following types can be formed:

1. Internal - when the importance and level of the administrative-territorial unit within which the income was received matters, but at the same time it is carried out in any district.

In turn, this type is also subdivided according to the operations performed into channels:

• Vertical, according to which two types of tax must be paid - local and state;
• Horizontal - its peculiarity is in an individual approach to each operation, depending on the region of its execution, that is, it is possible to pay only taxes carried out on the territory of a given municipality, it is possible to pay all taxes related to the operation or nationwide.

1. External - outside the Russian Federation, in a similar situation, the codes of tax legislation of the two states collide, the taxpayer will have to satisfy the requirements of the fiscal services in both territories.

Negative aspects of taxation leading to controversy

Double taxation causes a lot of indignation on the part of citizens who are engaged in earning money abroad. Fiscal services, in turn, despite filling the state budget, seek to solve the problem, since the citizens of their state primarily suffer from such a position.

• The division of the profit of the taxpayer by two states at once in the same period, which as a result is a considerable amount for the subject;
• The allocation of residents and non-residents is extremely problematic, for this it is necessary to create a new classification of income;
• The need for a clear legislative framework, which strictly regulates the object of taxation for the possibility of collection.

Important: it is precisely this kind of interaction that will help resolve the issue and find a compromise between the interests of the two states.

What is double taxation?

Double Taxation Agreement

This is a pact between two states, which clearly indicates the rules for deducting taxes in cases where the object of profit is located in the territory of a country where the subject is not listed as a resident.

The need for it is the formation of a list of taxes that fall under the agreement, as well as a list of entities that are subjects of double tax deduction.

This agreement also contains all essential conditions- validity period, taxation conditions, procedure for breaking cooperation.

Important: Russia has 82 avoidance agreements double deduction tax with other states.

The advantages of such arrangements are clear:

• This is the prevention of double or burdensome tax deductions;
• An effective tool that provides for the use of only positive codes tax laws two countries;
• Opportunities for tax innovations, taking into account national tax laws;
• Minimization of rates;
• Fixation of residency and location of the income object.

In this case, it should be understood what relief is:

• Will not allow you to avoid making mandatory payments;
• It has several directions and options for collecting contributions, and with the wrong approach, you can not reduce, but rather increase them;
• To use the agreement with benefit, it is necessary to take into account all the nuances of the country where the business is supposed to be located and the presence of an agreement signed with it by the native state.

Application of the agreement on the creation of special economic zones:

• Income and capital taxes;
• Physical and legal entities, residents and non-residents.

The certificate must be accompanied by:

• Certificate of fee payment abroad, while it should be translated into the state language and certified by a notary;
• A document reflecting the type of income and its amount for the calendar year, it should also indicate the date of collection and its amount.

The declaration and tax receipt are also certified. Important: the application of the simplified taxation system provides for double payment of tax, since it is impossible to receive a credit from another country.

Taxation when selling foreign property

Before January 1, 2016 Russian legislation provided for the payment of tax on the sale of property abroad and within the country in the same amount, no exceptions were provided.

• The owner has owned the property for over 5 years;
• He received it according to a donation or looked after an incompetent family member who was the owner of the property, in such cases the property should have been owned for at least 3 years.
• At the same time, housing was not related to entrepreneurial activity.

Making profit from the sale of property

Making profit in this case occurs in the following steps:

• It should be determined whether former owner attitude to categories that are exempt from paying the fee;
• If not, it is necessary to draw up and submit a declaration by April 30 of the year following the receipt of income. You can read how to fill out a tax return in a general manner;
• Pay the fee by July 15 of the same year.

Important: in this case, the application of double taxation is also possible if the tax was calculated in the amount of 13% of the profit received.

Calculation of tax on the activities of an entrepreneur

According to existing rules, in the case of income in the territory of any country, the tax fee should be paid only to its treasury, but subject to the following points:

• Profit received through a permanent establishment;
• The person who received it is not a resident of another country.

At the same time, if the income is received through a representative office, then the tax is withdrawn from the part that is received by the representative office.

In this case, it is necessary to understand and comply with the terms of representation:

• Representation can only be carried out through a permanent location, which is of a permanent nature, it cannot be a portable tent;
• The representative office may take the form of a complete project, if it is envisaged to carry out work that requires relocation, for example, construction;
• Representation cannot be expressed in the person of an agent who has a residence in the country;

Important: at the same time, commerce must be carried out in full or in part through the specified location.

• If the premises are intended for the performance of auxiliary or temporary activities, then it cannot be considered a place of representation, in which case there can be no question of paying tax to the treasury of one state.

Important: if the management of auxiliary premises is carried out from the main office, then the foreign state where they are located does not have the right to levy taxes from the organization.

Conclusion

When receiving income from any activity abroad, one should take into account all the features of the tax laws of a given country, but at the same time remember that tax payments are mandatory in any case, and evasion of this procedure is a criminal offense. Paying tax abroad at a lower rate than at home and not reporting for it is unacceptable.

In what order the Convention for the avoidance of double taxation is applied, you can see here: