Informace ke smlouvě o zamezení dvojího zdanění s Ruskem

Information on the Double Taxation Treaty with Russia

We would like to remind you that the suspension of the application of selected articles of the Double Taxation Treaty (DTT) with Russia still applies.

As we previously informed you HERE, the General Financial Directorate (GFŘ) has issued a detailed information on this matter, explaining the impacts of the suspension of selected articles of the DTT (the information can be found HERE).

For taxpayers who pay taxable income to a Russian tax resident, it still applies that despite the suspension of certain articles of the DTT, Russia can still be considered among the countries whose tax residents are not subject to a special tax rate of 35% when income is paid. This is partly because Russia has not yet withdrawn from the Convention on Mutual Administrative Assistance in Tax Matters.

A more complicated situation arises for certain incomes of Czech tax residents from sources in Russia. Due to the suspension of selected articles of the DTT, it is not possible to prevent potential double taxation under Article 23. Therefore, from 29 September 2023, in these situations, only the Income Tax Act, specifically § 24 paragraph 2 letter ch, or § 6 paragraph 13, can be applied.

Practically, this means that within the tax return, any tax imposed in Russia can only represent an item decreasing the tax base, i.e., an expense, and cannot be considered as foreign tax credit under § 38f paragraph 4 of the Income Tax Act.

For completeness, we would like to add that the above brief comment cannot replace a detailed tax assessment of a specific situation.

If you are interested in this area, please contact the authors of the article or the advisory team you usually work with.

Authors:

Jana Kovářová

Lucie Vrabcová