Profit Repatriation and Tax Compliance in Russia for EU Firms

Chukavin Pavel · 2025-05-04

Repatriating profits from Russia while complying with tax and currency regulations is a complex task for European businesses. With sanctions and currency controls in place, expert legal guidance is essential. This article explains how Turkish International Law & Consulting Firm helps EU firms navigate profit repatriation, double taxation treaties, and compliance in 2025.

Challenges of Profit Repatriation

• Currency Restrictions: Central Bank of Russia controls (Federal Law No. 173-FZ).
• Sanctions: Limited SWIFT access for some Russian banks.
• Tax Liabilities: Corporate tax (20%) and withholding taxes.

Methods of Profit Repatriation

1. Dividends: Distributed to EU shareholders, subject to withholding tax (15% or lower per treaties).
2. Royalties: Payments for IP or licensing, often tax-exempt under treaties.
3. Loans: Repayment of intercompany loans to avoid dividend taxes.

Double Taxation Treaties

• Withholding Tax: From 15% to 0–10% on dividends, interest, royalties.
• Tax Credits: Offset taxes paid in Russia against EU tax liabilities.

Currency Regulations

• Federal Law No. 173-FZ: Requires repatriation of foreign currency earnings.
• Bank Accounts: Funds must flow through authorized Russian banks.
• SPFS: Alternative to SWIFT for sanctioned transactions.

Tax Compliance

• Corporate Tax: 20% on profits, with incentives in special economic zones.
• VAT: 20% on most goods/services, with exemptions for exports.
• Reporting: Quarterly filings with the Federal Tax Service.

Why Use Lawyers?

• Optimize tax structures under double taxation treaties.
• Ensure compliance with currency controls.
• Mitigate sanctions risks in payment flows.