Russia negotiates double taxation agreements with Cyprus, Luxembourg, Malta and the Netherlands. On 11 September, Russia and Cyprus signed a protocol amending the treaty. It is also holding discussions on renegotiating contracts with Hong Kong and Switzerland. Russia insists that most dividends and interest paid to residents of these countries be subject to a 15% withholding tax rate. This will have an impact on holding and financing structures with Russian assets. In Russia, under the renegotiated contract, royalties are not subject to tax (the general tax rate in Russia is 20%). Residents and most non-residents are entitled to the exemption from double taxation through unilateral discharge provisions or tax treaties. Below is a list of the countries with which the Netherlands has double taxation agreements. As is the case in tax treaties on the basis of the OECD contract model, the DBA contains a clause relating to associated companies. If these companies do not carry out their operations under the terms of their duration, both countries are allowed to make profit adjustments that can be taxed accordingly. Contrary to the OECD standard, the DBA appears to contain a relaxation of the aforementioned arm length principle; Cost-sharing agreements or general service agreements, for or on the basis of the allocation of administrative, administrative, technical and commercial expenses, research and development and other expenditures, do not in themselves trigger the right to adjust profits.
When a company is established in both states under the provisions of the DBA, the authorities of both states agree to settle the issue of place of residence for contractual purposes. In the absence of such an agreement, the company is not entitled to contractual benefits (with the exception of the non-discrimination clauses and reciprocal agreements of the DBA)1. De Jager: “I am very pleased that we signed this agreement today. This is an important step in bilateral relations between Hong Kong and the Netherlands and a springboard for a further increase in reciprocal investment. The country with which the Netherlands is negotiating double taxation agreements: the outcome of the discussions with the Netherlands is not yet known, but it is worth preparing for, so we should expect the treaty with the Netherlands to be amended in the same way. As we understand it, Russia has also had discussions with the Netherlands in previous years on clarifying other tax issues related to the double taxation convention. The outcome of these discussions is not known, even if the Dutch internal market is taken into account in relation to other jurisdictions. It is possible that Russia and the Netherlands will agree that the amendments will come into force in 2021. The new requirements introduced by the multilateral instrument (for example. B the main audit, the minimum participation period of 365 days for dividends, etc.) should be included in the renegotiated contract. The DBA applies to income taxes and is designed to avoid double taxation and prevent tax evasion.
For Hong Kong, this DBA is the first tax agreement it has reached with an OECD member country that adopts the latest international standards for information exchange. The Netherlands applies the progression exemption method to avoid double taxation (Article 28, paragraph 1). In addition, the exemption method applies to income from real estate, PE income, labour income that is not taxable only in the source state and income from work resulting from employment on board a ship or aircraft operated in international traffic (Article 21, paragraphs 2 and 3). The credit method applies to dividends, royalties, capital gains, directors` fees, artists` and sportsmen`s income, as well as pensions, public pensions and other income (Article 21, paragraph 4).