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In some cases, income on Bank accounts will be subject to personal income tax

Question - answer - Legal advice 06.06.2019 at 09:26

Question - answer - Legal advice

The Tax office released the letter with clarifications concerning the taxation of interest on Deposit accounts (letter FNS of Russia from June 3, 2019 number BS-3-11/5354@ "On taxation of incomes of physical persons"). First of all, the IRS explained that the duty to pay the tax does not depend on the fact of opening a Bank account, and receiving taxable income, and the status of individuals. As a General rule, taxed on all income received in the form of interest from Russian companies (sub. 1 clause 1 of article 208 of the Tax code). But tax is not charged on the whole amount of interest. The taxable base is only the excess of interest above the contract interest calculated on the basis of the refinancing rate of the Bank of Russia plus five percentage points. Rate is taken for the period for which the interest was accrued (clause 1, article 214.2 of the tax code). Thus, all income earned from 1 January 2016 in the form of interest in excess of 13.25% per annum, will be taxed (the refinancing rate of 8.25%, approved. specifying of Bank of Russia from December 11, 2015 No. 3894-From + 5 percentage points). This rule only applies to the ruble of income. As for deposits in foreign currency, the personal income tax will be levied on all income in excess of 9% per annum (clause 1, article 214.2 of the tax code). Recall that the above income will be taxed at 35% (item 2 of article 224 of the tax code). Also, the FTS of Russia explained the procedure for taxation of income arising in Russia and paid to a resident in the Republic of Belarus. Thus, the code establishes the priority of regulations of international treaties of Russia on the rules of the code and adopted in accordance with it normative legal acts (article 7 of the tax code). Between Russia and the Republic of Belarus has an agreement on the avoidance of double taxation, which provides for the possibility of taxation in the Republic of Belarus interest received in Russia and paid to a resident in the Republic of Belarus (paragraph 1 of article 10 of the Agreement between the Government of the Russian Federation and the Government of the Republic of Belarus on avoidance of double taxation and prevention of tax evasion with respect to taxes on income and property from April 21, 1995, hereinafter – the Agreement). But the tax may be charged and the Russian side, if the interest recipient is actually entitled to them. In this case the tax should not exceed 10% of the gross amount of interest (item 2 of article 10 of the Agreement). Paid in Russia, the tax may reduce the amount of tax levied in the Republic of Belarus (article 20 of the Agreement).