The Letter of the Ministry of Finance #03-08-05/32158 from August 8, 2013 offers explanation on the issue of the taxation of dividends paid to a Swedish company.
According to Article 10 of the Convention between the Russian Federation and the Kingdom of Sweden for the avoidance of double taxation from June 15, 1993, dividends paid by a company – a permanent resident of one of the party countries – to an entity of the other party country may be taxed in the country of residence of the recipient (Sweden).
However, the dividends may also be taxed in the country of residence of the company originating the payment (Russia) in accordance to its laws and regulations. The tax must not exceed:
a) 5% from the total sum of the dividends if the recipient owns 100% of the corporate capital, or, for joint-venture companies, at least 30% of the shares. In any of these cases foreign investment must equal at least 100,000 USD at the time of the distribution of dividends;
b) 15% from the total sum of the dividends in all other cases.
Therefore, a Russian company may apply 5% tax to the dividends paid if other points of the Article 10 of the Convention have been fulfilled (foreign investment equals or exceeds 100,000 USD at the time of the distribution of dividends). Moreover, the dividend recipient must provide the Russian company as tax agent proof of the company’s permanent residence in Sweden (Article 312 paragraph 1 of the Tax Code).
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