Dopady vypovezeni smlouvy o zamezeni dvojiho zdaneni s Ruskem

Impact of the termination of the double taxation treaty with Russia

On 11 August 2023, the Russian Federation announced that it was unilaterally suspending the implementation of the Double Taxation Treaty with the Czech Republic (the "Treaty"), specifically Articles 5 to 22 and 24 of the Treaty.

Last week, the Ministry of Finance of the Czech Republic published a communication (Financial Bulletin No. 10/2023 | Ministry of Finance of the Czech Republic (mfcr.cz)) confirming the suspension of the implementation of the provisions of the Treaty with national effects as of 29 September 2023. It furthermore implies that in the absence of implementation of the aforementioned Articles of the Treaty, it is no longer possible to implement Articles 23 and 25, i.e. the application of the exclusion of double taxation.

In practice, the income of taxpayers who are tax residents of the Czech Republic or Russia and whose income is sourced in the other country may ultimately be taxed twice. At the same time, taxpayers will not be able to claim the limitation of the tax rate in the source state of income (e.g. in the case of dividend or royalty payments) provided for by the Treaty.

If you have any questions, please contact the authors of the article or the advisory team you are working with.

Authors:
Michaela Felcmanová
Adam Linek