Russia-Switzerland tax treaty suspended

On August 8, 2023, Russia partially suspended double tax treaties with states is considers “hostile”. These are 38 countries that imposed sanctions to varying degrees. In addition to Switzerland, the EU, the US, Australia, New Zealand, Japan and Singapore are affected. The decree came into force from the moment of publication.
It is worth recalling that Russia currently has 84 double taxation treaties. This means that the decree affects almost half of the agreements.

Who is affected and may be affected?

Generally speaking, the decree can negatively affect anyone who has a connection with both Switzerland and Russia.
The most transparent example relates to dividends: according to a tax treaty, tax on dividends of Swiss companies derived from Russia cannot exceed 5% under qualified circumstances in the country of origin. Without the treaty, a higher rate of 15% applies in russia

What to do?

It is possible to transfer debts from a company in a “hostile country” to a company in Serbia, which is “friendly” and thus bypass the suspension of the tax treaty. This is a very new possibility, which is important for a large number of foreign companies with Russian capital that have been doing business with Russia.

If you would like to get advice on this topic, please contact our international experts.
online@welcometoserbia.org; +381 60 1849 443