Russian Federation: Offshore Financial Centres

On 8 December 2010 the Moscow State Commercial Court decided that the collection of information by Bloomberg LP's representative office in Moscow resulted in the creation of a permanent establishment under Russian law and the double tax treaty between Russia and the United States.

Russia's Tax Code includes thin capitalisation rules which limit or disallow the deduction of interest paid by a Russian company which fails to meet the prescribed debt-to-equity ratio.

This special issue of our newsletter outlines two recent cases in the Russian courts which potentially affect clients doing business in Russia and which highlight the importance of thorough planning and careful, detailed practical implementation of tax-effective structures, so as to avoid unforeseen and unwelcome consequences.