There are no specific rules for setting up a trust in Russia, although several attempts to change succession rules and introduce more flexible succession tools have been made by the local government. Our experts in company formation in Russia can give you extensive details about the rules and regulations concerning the procedure of establishing a trust. Plus, they can help you open a company in Russia, by managing the entire formalities.
Features of trusts in Russia
If you want to efficiently manage your assets through the means of a trust, you should know how trusts work and what their features are. We provide you with a list of the main characteristics of the Russian trusts:
- they are not recognized by the Russian legislation – there are no restrictions for Russian residents, individuals, and legal companies alike, to enter into legal arrangements under foreign law, as long as they abide by the national legislation;
- trusts are tax-neutral in Russia;
- they can be controlled by corporate settlers, protectors, and appointers;
- the capital contribution to a trust in Russia is not taxable;
- Russian trusts are not subject to currency control restrictions on foreign investments;
- trust beneficiaries are not taxed on capital distributions in Russia;
- no self-assessment tax return has to be filed if the trust generates no income;
- according to the taxation in Russia, foreign trustees are only required to annual reporting and tax property payments.
Our specialists in company incorporation in Russia can offer you an in-depth presentation of the features and provisions of trusts and the means of setting them up.
Taxation of trusts in Russia
In terms of taxation, trusts in Russia are neutral. A trust settlor is taxed on undistributed trust income at the same income tax rate of 15%. Taxation of trusts in Russia is equal to the taxation of settlers on income generated from the assets they own directly. At the same time, the trustees are not taxed on trust income.
Settlers who have no rights and powers within the trust are exempt from Controlled Foreign Corporation (CFC) rules regarding tax and financial reporting. Also, the capital contribution to establishing a trust in Russia is not taxable, as long as the contributions are made from funds and assets belonging to the settler or his/her close family members.
What does the trust agreement entail in Russia?
A trust in Russia is established following an agreement. This document is also called a deed of trust and is signed between the settlor and the trustee, in front of the notary public. Thus, the deed of trust is certified by a notary and can have a defined period, if the legislation allows. We remind you that you can rely on one of our specialists in setting up a trust in Russia. We are at the disposal of foreign entrepreneurs who want to set up a company in Russia and need guidance in this sense.
Important facts about personal trusts in Russia
The Russian Civil Code explains how personal trusts work. It is essential to specify here that a personal trust can be established both when the interested person is alive and after his/her death. Here are other interesting aspects:
- Personal trusts can be engaged in business activities or participate in business entities in Russia.
- Properties assigned in personal trusts cannot be split between successors following the death of the founder. Such properties must have a value of at least RUB 100 million.
- Personal trusts in Russia are allowed to have beneficiaries who can receive properties from personal trusts only if the trust management decides so.
- Beneficiaries can be, as the case may be, the founder, if he is alive, or the heirs, if the founder is deceased. It is good to know in this case that profits made by a personal trust in Russia and incomes credited to the beneficiaries are levied on a general basis in Russia. Applicable rates not exceeding 0.3% of the cadastral value concerning residential properties, parking spaces, and garages owned by a personal trust.
- More about how to register and manage personal trusts in Russia can be found if you collaborate with one of our local agents.
Sanctions of Trusts in Russia
Recently, EU sanctions imposed bans on services to trusts that might have Russian connections. However, to stop providing trust services, trustees have to be replaced by new ones, suitable for the beneficiaries.
There are also alternatives for EU, EEA, or Swiss trustees in Russia. As such, if no successor is found, the trust can be closed, not before distributing the funds to the beneficiaries. The trust assets are distributed in a discretionary manner and benefit from the protector’s consent.
Investments in Russia – Why choose this business destination?
Despite the current social context, Russia continued to develop its economy, beyond the forecasted expectations. Russia continues to be an appreciated and stable business destination, and those who decide to move their businesses here can benefit from a solid and attractive climate. Here are some interesting facts about the Russian economy, if you want it to help you when you want to open a company in this country:
- The Russian economy experienced an increase of approximately 3.6% in 2023.
- Around USD 353 billion were Russia’s expenditures from the federal budget in 2023.
- A 2.3% increase in the economy in Russia is estimated for 2024.
In addition to the services and support necessary for opening a trust in Russia, you can opt for other facilities offered by our company. For example, when you open a company, you can request the services of our accountants in Russia. Feel free to contact our team of Russian company incorporation agents if you want more details about the taxation system applied to trusts.