Russia Germany DTA Clarifications

A clarification letter published by the Russian Ministry of Finance clarifies the manner in which the double tax treaty with Germany applies to the deduction of advertising expenses by a Russian company held by a German resident company.

Our team of German lawyers can help foreign investors from Russia with adequate information about the Russian Ministry clarifications.

The deduction of advertising expenses under the Russia-Germany DTA

A clarification letter issued by the Russian Ministry of Finance offers a set of clarifications on the types of advertising that are deductible under the double tax treaty between Russia and Germany. The conditions for the deduction are listed below:

• - ownership: the deduction applies when a Russian company is 28% held by a German resident;
• - deduction: according to the Russian Tax Code, these types of expenses are deductible 100% when they derive from advertising made via large media and telecommunications networks, those that appear in outdoor advertising as well as those that are on display in showrooms, expositions, store windows, etc.;
• - limitation: in all other cases, the deduction of advertising expenses is limited so as they cannot exceed one percent of the gross revenue from the sale of goods and the provision of services;
• - exemption: a 2007 protocol to the treaty also includes a situation that applies for this type of deduction: the deducted expense is not limited when paid by a resident company in one of the signatory states in which a resident company of the other state participates, as long as the deducted amount does not exceed an amount agreed upon by the companies.

Our team of attorneys in Germany can help Russian investors with further information about the manner in which the treaty allows for deductions. 

The Germany – Russia double tax agreement

The Convention for the Avoidance of Double Taxation on taxes on income and capital between Germany and Russia applies to the personal income tax, capital tax, business tax, solidarity surcharge in case of Germany and the capital, corporate, business, and income tax in case of Russia.

We can assist foreign investors from Russia who wishes to open a company in Germany. Contact our German law firm for complete details about tax law counseling as well as specialized assistance for company formation.