Russia: Withdrawal from tax treaty with the Netherlands

In brief

On 19 May 2021, the upper chamber of the Russian parliament approved the corresponding law. If Russia notifies the Netherlands of the denunciation by 30 June 2021, the Treaty1 will be terminated as early as 1 January 2022.

The denunciation of the Treaty will sharply increase the tax burden on payments of certain kinds of income to the Netherlands and lead to their double taxation.


Practical recommendations

Companies and individuals whose tax structures rely on the Treaty are advised to:

  • analyze the implications of the Treaty's termination for entities that make income payments from Russian sources (dividends, interest, royalties, income from the lease or sale of property, etc.);
  • consider making the maximum allowed amount of income payments from Russia before the end of 2021;
  • look into the possibility of transferring Dutch companies to other jurisdictions (taking into account Russian and European anti-avoidance rules and rules on the disclosure of information on cross-border transactions2) or to the Russian special purpose regions (Kaliningrad oblast, etc);
  • identify and review corporate and contractual structures that the Russian or foreign tax authorities may view as aggressive tax planning schemes;
  • consider whether a “look-through” approach may be applied for payments to Dutch companies, including in cases where the beneficial owner of the income is a Russian tax resident;
  • assess the implications of the potential inclusion of the Netherlands on the Russian Finance Ministry’s “blacklist”3 after the termination of the Treaty.

If your company decides to change its business structure, review its contractual relationships, or make payments from Russia before the end of 2021, we recommend taking the necessary steps as quickly as possible. That said, we also underscore the importance of complying with Russian law when considering a restructuring, as the Russian tax authorities are likely to regard such changes with increased scrutiny.

Click here to access the Russian Version.


1. Agreement between the Government of the Russian Federation and the Government of the Kingdom of the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on property, signed 16 December 1996 (the “Treaty”).

2. Including the EU Anti-Tax Avoidance Directive (ATAD) and the amended EU Directive on Administrative Cooperation in the Field of Taxation (DAC6).

3. “List of states and territories providing a preferential tax regime and/or not disclosing information when carrying out financial transactions (offshore zones)” established by Order of the Russian Finance Ministry No. 108n dated 13 November 2007.

© 2021 Baker & McKenzie. Ownership: This site (Site) is a proprietary resource owned exclusively by Baker McKenzie (meaning Baker & McKenzie International and its member firms, including Baker & McKenzie LLP). Use of this site does not of itself create a contractual relationship, nor any attorney/client relationship, between Baker McKenzie and any person. Non-reliance and exclusion: All information on this Site is of general comment and for informational purposes only and may not reflect the most current legal and regulatory developments. All summaries of the laws, regulation and practice are subject to change. The information on this Site is not offered as legal or any other advice on any particular matter, whether it be legal, procedural or otherwise. It is not intended to be a substitute for reference to (and compliance with) the detailed provisions of applicable laws, rules, regulations or forms. Legal advice should always be sought before taking any action or refraining from taking any action based on any information provided in this Site. Baker McKenzie, the editors and the contributing authors do not guarantee the accuracy of the contents and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the contents of this Site. Attorney Advertising: This Site may qualify as “Attorney Advertising” requiring notice in some jurisdictions. To the extent that this Site may qualify as Attorney Advertising, PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME. All rights reserved. The content of the this Site is protected under international copyright conventions. Reproduction of the content of this Site without express written authorization is strictly prohibited.