Tag Archives: Russia CFC

Russia’s new CFC rules: All #offshore profits (are deemed to) run to and through Russia

The article referenced in the above tweet from Norton Rose, provides an introduction to Russia’s CFC (“Controlled Foreign Corporation”) rules. The Russian CFC rules include both:

  • an attribution of income for purposes of taxation; and
  • penalty laden reporting requirements.

 

There are presently huge incentives for Russian high net worth individuals to to break “tax residence” with Russia and find more favorable jurisdictions. It is a “perfect storm”. These incentives include:

• The “De-offshorisation” initiative of the Russian government, including introductions of CFC rules that came into force on January 2015

• The enforcement of pre-existing rules established by Russian Federal Law Nr. 173-FZ “On Currency Regulations and Currency Control” (CCL) by amending RF Administrative Offence Code (AOC) in February 2013 (Russian FBAR coupled with “Russian citizenship reporting“)

• The adoption of the OECD’s Common Reporting Standard (CRS) in May 2016 and what that means for those with “tax residency in Russia