De-Offshorization and Taxation of Foreign Trusts in RussiaDe-Offshorization and Taxation of Foreign Trusts in Russia

Several recent high profile court and arbitration disputes reveal that common law trusts remain a popular tool for organizing domestic and international assets of Russian clients.¹ Thus, we may expect that the major changes in the taxation of foreign trusts in Russia, which occurred in 2015, will directly affect many existing and future wealth planning structures involving its citizens. 

These changes resulted from the introduction into the Tax Code (the Code) of the concept of “controlled foreign companies” and the attribution of their undistributed profits to the Russian tax residents, who could be recognized as their “controlling persons.”² (A “controlling person” can be an individual or a corporation.) As I discussed in my August 2015...