The Russian Ministry of Finance (MoF) has clarified the corporate income tax treatment for two scenarios in Guidance Letter No. 03-03-06/2/18948, issued on 17 March 2025.
The first scenario involves share redemption in a foreign entity, while the second concerns receiving funds from a company or partnership.
Firstly, the MoF outlined that Russian resident legal entities are exempt from corporate income tax on income received from the full or partial redemption of shares in a foreign legal entity, if certain conditions are met. These include the redemption amount exceeding the acquisition cost of the shares, continuous ownership of at least 50% of the foreign entity’s capital for a minimum of 365 days, and the application of foreign restrictive measures (such as financial transaction bans) introduced after 2022. The exemption applies to income received in 2024 and 2025.
Secondly, the MoF specified that income received by a legal entity from a company or partnership in which it holds shares is exempt from tax, provided the amount does not exceed the entity’s previous cash contributions to the company. This exemption does not apply to returns on investments in the authorized capital of the company.
Earlier, the Russian Ministry of Finance released Guidance Letter No. 03-03-06/1/108990 on 25 November 2024, providing clarity on amendments to the loss restriction rules introduced by Federal Law No. 259-FZ.
