The relevance of the topic of double taxation in Russia is explained by the fact that the collection system is different in all countries. Each state forms a system of taxes and fees only at its discretion. Some require certain contributions from all the world incomes of their residents, others adhere to the principle of territoriality and charge any amount from operations carried out within their state. It would be ideal if all countries adhered to one single principle. This would greatly facilitate this system in the world both for the fiscal authorities themselves and for payers. But due to the different level of development and the criteria for determining the sources of income, this is impossible. A striking example is double taxation. At the moment, however, there are ways to eliminate this unpleasant moment. This article will examine double taxation in Russia and how it is eliminated.
What is included in this concept?
The tax system allows for double taxation. This definition implies the collection of taxes from a person simultaneously by two states. As already mentioned above, there are two areas in which the work of the fiscal authorities is carried out:
- The principle of residency. In this case, the tax system is aimed at maximizing fundraising. That is, the state does not care where any operation was carried out; deductions should, according to the law, be paid to the budget.
- The principle of territoriality. Those states that adhere to this option are more loyal to the system of taxes and fees. According to regulatory legal acts, they cannot apply for economic operations that have taken place outside the country.
How is this phenomenon classified according to the principle of implementation?
Double taxation in Russia has its own division. It is not homogeneous and is carried out according to several classification criteria.
Depending on the principle of this process, it can be of the following types:
- International double economic type. Its essence lies in the fact that fees are levied simultaneously from several entities, but those involved in the same economic operation. That is, the income of these individuals is common.
- International double legal type. In this case, one entity owns an operation. The income received as a result of it is taxed by fiscal services of several states at once.
This division also explains how to avoid double taxation. Concerning the first type - the offset is applied on an initiative basis, which is carried out by the resident of the fees paid abroad. With regard to the international double legal type, the formation of a set of special rules is recommended. This allows you to share the jurisdiction of the two countries in relation to the operation. That is, for this it is necessary to establish a business relationship between the state in which the company is a resident and the state, which is the source of income. These methods of eliminating double taxation are quite effective. Many governments have entered into specialized agreements to address this problem.
How is this phenomenon classified by level?
There is another classification feature.Depending on the level at which this procedure is carried out, it can be of the following types:
- Interior. Double taxation in Russia and a number of other countries involves the recovery of finance, depending on the importance and level of the administrative-territorial unit. But at the same time, this process is carried out on each of them. It has its own division also depending on the channel. It can be vertical and horizontal. The first includes two types of taxes. One must be paid to the budget of the local fiscal service, and the second to the state. A feature of the second is that the system of income and fees is determined independently in each administrative-territorial unit. That is, somewhere penalties relate to all types of income, in some places - received only within its limits, and sometimes transactions made on the territory of the entire state are taken into account.
- External. Double taxation in Russia may have an international character. That is, in this situation there is a clash of national interests at the same time between the two countries. Penalties are determined by the legislation of each. Codes of normative legal acts distinguish an object that is taxed and an entity that must make a contribution. This person must be obligated to another country as well.
What contradictions arise due to this phenomenon?
The elimination of double taxation is a priority for fiscal services in various countries. This helps establish contact between governments and reduce contention. This topic is currently very relevant, since it has actually become a global problem.
The content of this concept is very incomprehensible and illogical for many people. Of course, you can understand the powers that be who want to attract more funds to the budget, while grabbing at every opportunity and using any means. But a person in this situation suffers, because he is forced to give part of his income to the fiscal services of two states simultaneously, moreover, at the same time period.
Another challenge is balancing the relevant legislative system. It should clearly highlight the very base that will be the object of foreclosure. It is quite difficult to distinguish between the so-called residents and non-residents, as this requires a classification of the income itself. The latter need to keep records and distinguish them based on territoriality and country accounting.
An agreement on avoiding double taxation, thus, will help to solve the problem in the difference in the forms of this process. After all, each state defines an object that will become a source of collection in completely different ways. Back in the twentieth century, the League of Nations entrusted the solution of this issue to a group of scientists who developed certain recommendations. They are aimed at eliminating the different interpretations of the norms and elements of this procedure.
What does an agreement include to avoid this?
Applying a double taxation avoidance agreement is a very effective way to solve this problem. This agreement is a consolidation of certain rules, according to which the systems of taxes and fees of both countries carry out their work. This agreement spelled out such items highlighting those entities that are required to pay contributions. The contract applies to both individuals and organizations. A separate rule fixes the issue of assets that provide a certain income, but are not geographically located in the home state of the resident. The agreement on the avoidance of double taxation also provides for various types of taxes and fees and the circle of persons falling under the payment. This is necessary in order to highlight those points for which the agreement is relevant.When it is concluded, the period of validity of the document is prescribed, as well as the procedure for its implementation and termination. The agreements on the avoidance of double taxation, which the Russian Federation concluded, allowed to solve the problem of fees at the same time as eighty-two world powers.
Experts believe this solution to the problem is very beneficial for residents, because this allows them not to overpay twice. As for other countries, the situation is completely different with respect to the operations performed. That is, if in another state the fiscal service levies a tax on a non-resident, then this will in no way be taken into account by a similar structure of Russia.
How does the agreement affect rental income taxes?
The conclusion of this agreement is very important for those who have or intend to acquire real estate abroad. This is due to the fact that in this case, the Russian fiscal service will count taxes on income from renting or selling property.
The double taxation law implies that if income is derived from real estate located outside the territory of the Russian Federation, then tax on it paid in another country is deducted from the Russian tax. In order to calculate the amount of finance that must be paid to the domestic fiscal service, it is necessary to take the opposite effect - that is, deduct thirteen percent from the foreign amount established by law. It follows from this that the difference cannot be negative, that is, the foreign tax cannot be less than the Russian one. In the end, it turns out that a person in any case must make payments in full, but part goes to the budget of one country, and part to another. In any case, this is better than paying double the size of bets.
How to make profit from rental?
The Russian regulatory framework also provides that profits derived from immovable property located abroad in the form of a lease should be officially declared. For this, there is a special form of 3-personal income tax. In another way, it is a so-called sheet "B". It captures all income received outside the Russian Federation. A number of other papers must also be attached to this document, which confirm the amount of profit and that tax was paid in the territory of another country. This certificate must be translated and notarized. In addition to it, the paper package reflects the type of income and its size for the calendar year. It should contain information about the date and amount of the fee. It is necessary to notarize a copy of the tax return and a document confirming the payment. Such a statement can be made within three years after receiving this profit.
It is important to remember that, undergoing the simplified taxation procedure, it is impossible to get credit for another country. Payments in this case are carried out at a double rate.
How is the tax deductible for profit from the sale of property abroad?
Art. 232 of the Tax Code provides and takes into account taxes that were paid on the sale of real estate outside the country. A letter approved in 2012 recorded the fact that the procedure for selling a house in Russia and abroad is no different. The rules apply equally to both cases.
Under the new rules, a person who has received remuneration for the sale of an apartment is not required to pay fees in two cases. This installation concerns objects that came into the possession of the buyer before January 1, 2016. It must be in the ownership of the previous owner for at least three years.
In the second case, you do not need to make contributions for the Russian fiscal service if the apartment was purchased after January 1, 2016. But there are a number of certain conditions.Firstly, it should have been owned by the seller for at least five years. The exception is immovable property, which was inherited in accordance with a donation contract from a relative or in the course of an agreement on a lifelong maintenance of a non-independent family member. In this situation, the minimum period is three years.
It is important to remember the fact that such exemption from payment of fees is advisable and legal only if the property was not used for business purposes.
How to make a profit from the sale?
In order to carry out this procedure, it is necessary to go through a series of the following stages:
- Make sure that you meet the above conditions.
- Fill out and file a tax return. This must be done on time. This is the thirtieth of April of the year following the receipt of profit.
- Make the amount of the fee to the fiscal service by July 15 of the current year.
A common point with the taxation of rental income is that the fact of a double tariff is possible. It is carried out at a rate equal to thirteen percent.
How is business taxed in this case?
Entrepreneurship, according to any agreement, is carried out under a single requirement. It states that fees should be paid only to the country that is the source of income, only under the following conditions:
- the person making a profit is not a resident in another state;
- profit is obtained through a permanent establishment.
Only that part of the income that is obtained with the help of the last paragraph is subject to taxation. You can talk about permanent representation only if there are a number of certain factors. Firstly, entrepreneurial activity should have a certain location. That is, it may be some kind of room or platform. This place itself should not be one-time. Of course, there are exceptions in the form of work requiring movement. In such a situation, the economic integrity of the project is taken into account.
The second condition is that the commercial activity passes - partially or in full - just through this location. The place of business of the representative office is not considered permanent if it is carried out through an agent having a dependent status.
If the work is of an auxiliary or preparatory nature, then this also cannot be attributed to a permanent mission. It is believed that if the facilities are used solely for the purpose of storage, demonstration, purchase or delivery of goods, this does not give the right to pay tax to only one country. This applies even to cases where these facilities are managed through a permanent office. Income of this kind of organization is not taxed by a foreign state.