Taxation of dividends payable to individual shareholders depends on whether they hold resident status in Russia at the time of income payment. Dividend tax rate in 2021:
Shareholders receive dividends net of personal income tax paid to the federal budget.
According to the applicable Russian tax laws, taxation of dividend income paid out by a legal entity is mandatory as personal income tax. There are no exceptions to these laws.
The rate of personal income tax depends on the tax residency of shareholders.
There are two rates for shareholders residing in the Russian Federation: if the annual income of an individual is not more than RUB 5 m, the rate stands at 13%; if it exceeds RUB 5 m – at 15%.
For shareholders with residency in a foreign country, the basic rate of personal income tax is 15%. The rate may be reduced under a double taxation treaty between the Russian Federation and the country of residence of the respective shareholder.
For more information about tax residencies, see the Russian Federal Tax Service website.
Personal income tax is charged and paid by a tax agent. If the rights to shares are recorded in the register of the Company’s securities/shareholders, the Company itself acts as a tax agent. Otherwise, this role may be assumed by a trustee, a broker, or a depository.
If dividends are paid more than once a year, personal income tax is calculated on a cumulative basis offsetting the amount paid earlier.