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Changes in Russian thin capitalisation rules


An amendment* to Russian thin capitalisation rules is now in force.

In accordance with a change to Article 269 of the Russian Tax Code, new grounds whereby a debt is not deemed controlled under Russian thin capitalisation rules have been introduced. For this amendment to apply, all of the following conditions must be met:

  • The funds received as debt are to be used exclusively to finance the Russian taxpayer-debtor’s investment project in Russia.

An investment project is defined as the creation in Russia of manufacturing facilities for the production of goods and/or for the rendering of services commissioned for the first time after 1 January 2019.

  • The debt is long-term and will be repaid over more than five years.
  • The share of direct and indirect foreign participation in the Russian taxpayer-debtor’s entity does not exceed 35%.
  • The foreign creditor is registered in, or is a tax resident of, a state that has a Double Tax Treaty with Russia.


It is recommended that companies planning to implement investment projects in Russia through intra-group financing pay attention to these changes when structuring their future financial schemes.

For companies interested in applying the new rules to their financial flows, the vagueness of the wording of the relevant Federal Law should be noted. In our view, the concept of investment project, in particular, is widely and unclearly defined. It is, therefore, advisable to await further clarifications and official comments of the Ministry of Finance of the Russian Federation on the practical implementation of the new exemption.

* In Russian

CMS Client Alert | Tax | August 2018
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Safaryan Hayk
Hayk Safaryan