New CFC rules in Russia
The latest developments and issues with foundations of a legal character
- Author Anna Zeitlinger, attorney at law (admitted in Russia) & Head of Russia and CIS at LGP, Managing Partner LGP Kazakhstan
The new legislation on controlled foreign companies (CFC) and ‘de-offshorization’, which came into effect in Russia on 1 January 2015, significantly affected international payments, the conducting of business through foreign holdings, and the participation of foreign companies in the management of Russian subsidiaries. In spite of the stated goal of fighting ‘puppet’ structures in low-tax jurisdictions, the new legislation has impacted on companies created for real, economic, and non-tax reasons, such as for asset protection. Given this it is worth mentioning that the applicability of the Russian CFC rules can probably be avoided by using an Austrian or Liechtenstein foundation.
About the author
Anna Zeitlinger, attorney at law (admitted in Russia), heads the Russian and CIS Desk at LGP and is Managing Partner of LGP Kazakhstan. Her practice lies in advising individuals, holdings and groups of companies in the fields of M&A, deal structuring, financing, collateral, corporate governance, and includes international investment projects, cross-border transactions and international contracts with the CIS countries.