Dependent agent in double tax treaties of Russia: a legal analysis of criteria

Abstract

   The article is devoted to dependent agent in double tax treaties of Russia. Current market conditions force companies to look for new jurisdictions to expand their activity. Under certain conditions, a foreign company’s activity in another jurisdiction may create a permanent establishment (hereinafter – PE). Profits of foreign legal entity (non-resident) is taxable in the Russian Federation if its activity creates a PE. Of course, companies are often concerned that this has not happened as it is related to tax economy. There are two types of PE in Russia – general PE and dependent agent. In this article, the authors conduct a legal analysis of the criteria for determining the agency type of the PE. A special attention is paid to Russian double tax treaties (hereinafter – DTT). The article also discusses the «Oriflame» case which addresses the issue of recognition of a legal entity as a dependent agent.