Trusts are agreements by virtue between settlers who decide how to transfer parts or all of their assets to trustees. Trusts in Russia can protect and manage assets and be a very useful investment instrument. 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.
If you want to efficiently manage your assets thorough 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 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 payment.
Our specialists in company registration in Russia can offer you an in-depth presentation of the features and provisions of trusts and the means of setting them up.
In terms of taxation, trusts in Russia are neutral. A trust settler is taxed on undistributed trust income at the same income tax rate of 13%. Taxation of trusts in Russia is equal to the taxation of settlers on income generated from the assets they own directly. In 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.
Feel free to contact our team of Russian company incorporation agents if you want more details about the taxation system applied to trusts.