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example, the landlord having the right to terminate without
recourse to the court for the most minor breaches by the
tenant, with no corresponding rights for the tenant); however,
as a result of the recent economic downturn the position of
the landlord has been weakened and tenants have increased
their negotiating power in this area.
TAX
VAT
• Generally, commercial property transactions are subject
to VAT. Presently, the sale of land and residential property
transactions are not subject to VAT.
• The standard VAT rate is 18%.
• A company’s VAT liability is generally calculated as its output
VAT invoiced to customers minus the value of input VAT
invoiced to the company by suppliers or paid to customs upon
the importation of goods. If the amount of input VAT exceeds
the amount of output VAT then the difference is recoverable.
Withholding tax
• The sale of shares of a company by its foreign parent entity
is subject to withholding tax in Russia if the assets of this
company directly or indirectly consist, by more than 50%,
of real estate located in Russia and of derivative financial
instruments from these shares with exception to shares in
circulation.
• In certain cases the sale of these shares may be exempt from
the Russian withholding tax based on the relevant double tax
treaty provisions.
Property tax
• Russian companies are liable to pay property tax on the
average annual net book value (or in certain cases — cadastre
value) of the fixed assets on their balance sheet; all movable
fixed assets acquired after 1 January 2013 are exempt from
property tax (save for certain limited exceptions).
• Foreign companies with a permanent establishment in Russia
are subject to tax on immovable and movable fixed assets
attributable to such an establishment (subject to the above
exemption for movable fixed assets acquired after 1 January
2013). Foreign companies without a permanent establishment
in Russia are subject to property tax on immovable
property only.
• Land is exempt from property tax and may be subject to a
separate land tax.
• The standard property tax rate is 2.2%; special rates apply to
property taxable on cadastre value; regional authorities may
reduce that rate or in some cases provide a full exemption for
all or certain categories of taxpayers or based on the type of
property.
Land tax
• Land tax is payable by land owners at the rate determined
by the municipal authorities. Land tax is assessed on the
cadastre value of the land, which used to be substantially
lower than its actual market value; however, recently this
difference was decreased or even eliminated.
• Land tax rates may not exceed 0.3% of the cadastre value of
agricultural and residential land. With respect to other land
plots, the maximum rate is 1.5% of the cadastre value.
• The Russian Tax Code permits municipal authorities to
establish tax incentives for certain categories of taxpayers.
• Businesses leasing land are not subject to land tax. Instead,
they are liable for the land lease payments established by
federal, regional or local authorities or other land owners.
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Investors Guide to Europe 2015