Good news for Russia-Luxembourg business - the Grand Duchy and the Russian Federation have agreed an addendum to the 1993 tax convention between the two countries. The Ministry of Finance confirmed that the conventional withholding tax rate on dividends and interest will be raised to 15%, with some exceptions.
The addendum was signed on 6 November in Moscow by Luxembourg's ambassador to Russia, Georges Faber, and the Russian Deputy Minister of Finance,. Alexeï Sazanov.
This amendment will likely enter into force from 1 January 2021, once both countries have fulfilled the legislative procedures required.
To offer some background to the amendment, which was requested by the Russian Federation, the 15% tax rate is three times the existing tax rate from the 1993 convention between Luxembourg and Russia. Certain exemptions to the new rule will pay the current rate of 5%.
The increase in taxation will apply to Russian investments in Luxembourg, and vice versa, in accordance with Vladimir Putin's wishes - in March, the Russian president expressed the desire to update unfair taxation on foreign businesses.
