Estonian Resident: Taxation of Income Received from Transfer of Exclusive Rights

Letter of MinFin #03-08-05/37377 from September 11, 2013, explains that for foreign companies without a permanent representation in Russia, profit tax applies to profits received from sources in Russia determined by Article 309 of the Tax Code.

Russia’s Tax Code provides an exhaustive list of profits received by a foreign company from sources in The Russian Federation which are subject to profit tax at the source of payment. Profits received from transfer of exclusive rights are not included in this list.

Thus, if an Estonian company does not have a permanent representation in Russia, profit received from the sale of the exclusive rights according to an agreement for website development is taxable only in Estonia.