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Putin signs law to denounce double tax treaty with the Netherlands

Earlier in May, the lower house of the Russian parliament voted for denouncing the double taxation treaty with the Netherlands

MOSCOW, May 26. /TASS/. Russian President Vladimir Putin signed a law denouncing the double taxation treaty with the Netherlands. The document was published on the official portal of legal information on Wednesday.

Earlier this month, the State Duma, the lower house of the Russian parliament, voted for denouncing the double taxation treaty with the Netherlands.

In late March 2020, President Vladimir Putin suggested that the tax rate for dividends brought abroad to offshore jurisdictions be increased from 2% to 15%. The measure required revision of double taxation evasion agreements with several countries, as these documents provided for the withdrawal of profits from Russia, paying tax at an effective rate of 2-3%. Putin also cautioned that Russia would withdraw from agreements unilaterally in case foreign partners do not accept new conditions.

The Russian Finance Ministry announced the start of drafting a bill for denouncing of the double taxation treaty with the Netherlands in December 2020. Previously the ministry held several rounds of talks with the country’s finance ministry and offered terms similar to those that were agreed earlier with Cyprus, Luxemburg and Malta, however, the talks were unfruitful. The Kingdom of the Netherlands did not agree with the proposal of the Russian Federation and insisted on expanding the list of incomes taxed at reduced rates.

In turn, the Russian government said that the proposals of the Dutch Finance Ministry essentially dilute and make unattainable the effect of the measures taken by the Russian side to support the national economy and social programs, and also hamper the implementation of the President's instructions. As it was not possible to reach a compromise in the negotiations with the Netherlands, the double taxation treaty is subject to denunciation, the government concluded.

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