The Finance Ministry (MoF) has issued Letter No. 03-03-06/1/885 on 19th January 2015 for describing the application of the participation exemption by a tax agent giving dividends to a Russian company. In accordance with article 284 (3) of the Tax Code, the MoF noticed that the parent company has to satisfy following requirements to qualify for the participation exemption:
- Minimum 365 days holding period from decision date to distribute dividends is approved
- Not less than 50% capital share of the company paying dividends equal to at least 50% of the whole amount of the paid dividends.
The Ministry of Finance also described that a tax agent can apply the participation exemption to dividends paid to a Russian resident parent company, given that all the above-mentioned conditions are satisfied.
