Russia has tightened its tax reporting rules for foreign entities operating within its borders. The changes – effective from 1 January 2025 – expand mandatory disclosure obligations under Russian tax legislation and introduce stricter timelines for compliance. For international businesses that have historically relied on treaty-based protections or minimal local filings, the new rules present a material compliance risk.
Under Russia's updated tax legislation. Foreign entities earning income from Russian sources or maintaining a postoyannoye predstavitelstvo (permanent establishment) in Russia must now file expanded annual and interim tax reports directly with the Russian Federal Tax Service. The core compliance deadline for the 2024 reporting year is 28 March 2025, with quarterly interim submissions required throughout the year. Entities that fail to register or file face automatic penalties and potential withholding tax reassessments.
This alert covers who is affected, the threshold criteria triggering the new obligations, and the immediate steps international companies should take before the next reporting deadline.
What has changed and when it takes effect
Russia's tax legislation was amended in late 2024 to broaden the scope of entities subject to in-country reporting. The changes fall into three areas.
Expanded permanent establishment criteria. The definition of a permanent establishment has been widened. Activities previously considered preparatory or auxiliary – such as warehousing, data processing, or agent-based distribution – may now constitute a taxable presence. Entities relying on a narrow reading of existing tax treaty provisions should reassess their position immediately.
New corporate income tax filing obligations. Foreign legal entities deriving income from Russian sources must now submit a standalone corporate income tax return, even where no tax treaty exemption is claimed. Previously, many entities satisfied their obligations through a simplified notification procedure. That option has been significantly curtailed.
Revised withholding tax reporting by Russian payers. Russian counterparties making payments to foreign entities – dividends, royalties, interest, and service fees – are required to submit enhanced withholding tax disclosures. These reports must identify the foreign recipient's tax residency status and confirm whether a tax treaty reduction has been properly applied. Foreign payees must supply supporting documentation to their Russian counterparts within 15 calendar days of any payment.
All three changes apply from 1 January 2025. The annual return deadline for the 2024 tax year was 28 March 2025. Quarterly reporting deadlines for the 2025 tax year fall on the 28th day of the month following each quarter's close.
Which foreign entities are affected
The new obligations target a broad range of foreign business categories. An entity is affected if it meets one or more of the following threshold criteria.
- It maintains a permanent establishment in Russia – including through a dependent agent, a fixed place of business, or a construction or installation project exceeding 12 months.
- It receives income from Russian sources subject to withholding tax, including dividends, interest, royalties, or fees for services rendered within Russia.
- It holds an ownership interest in a Russian legal entity and is required to confirm its tax residency status to claim a reduced withholding tax rate under an applicable tax treaty.
- It has been classified as a Russian tax resident on the basis of effective management criteria – a separate but related risk for foreign holding structures with directors operating from Russian territory.
Entities operating through a Russian subsidiary are not automatically exempt. Where the subsidiary acts as a dependent agent or executes contracts predominantly on behalf of the foreign parent, a separate permanent establishment may be found to exist alongside the subsidiary's own tax presence.
Foreign entities that have suspended active Russian operations but retain contractual arrangements, property rights, or IP licences generating Russian-source income remain within scope. Dormancy does not eliminate the reporting obligation.
To receive an expert assessment of your tax exposure in Russia, contact us at info@ferrazwhitmore.com.
Immediate actions for international companies
Companies with any connection to the Russian market should treat the following steps as urgent priorities.
1. Audit existing Russian nexus. Conduct a rapid review of all activities, contracts, and personnel arrangements in Russia. Determine whether a permanent establishment exists under the expanded criteria. This includes reviewing the roles of local staff, agents, and digital service delivery channels. Engaging a specialist in Russian tax law at this stage reduces the risk of an adverse determination later.
2. Verify tax treaty eligibility. Where a tax treaty reduction on withholding tax is applied, confirm that current documentation satisfies Russian requirements. A certificate of tax residency from the entity's home jurisdiction is now required in a specific format and must be apostilled or legalised. Outdated or informally provided certificates are being rejected by Russian payers.
3. Notify Russian counterparties promptly. Foreign entities receiving payments from Russian sources must supply updated tax residency documentation within the 15-day window. Failure to do so shifts the withholding tax burden to the foreign payee and can trigger a reassessment of prior payments.
4. Register with the Federal Tax Service if not already registered. Foreign entities that meet the permanent establishment threshold must register with the Russian Federal Tax Service. Registration must precede the first tax return filing. Penalties for operating without registration have increased under the 2024 amendments.
5. Review corporate structures with cross-border income flows. Holding companies, IP-owning entities, and finance vehicles receiving Russian-source income should be assessed for effective management risk. If board meetings, key decisions, or senior management activity have a material Russian component, a tax residency reclassification is a realistic risk. For companies also operating in neighbouring CIS markets, our alert on tax reporting changes in Kazakhstan addresses parallel obligations under that jurisdiction's updated rules. Understanding the interaction between the two regimes is increasingly relevant for regional holding structures.
Companies with Russian corporate structures should also review whether local entity governance arrangements trigger any of the new disclosure thresholds under corporate legislation, which now operates alongside the expanded tax reporting rules.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our CIS practice covers tax law, corporate law, and dispute resolution across Russia and neighbouring markets, supporting foreign entities that need clear, actionable guidance on compliance in high-complexity regulatory environments. As a law firm advising international clients in Russia. We combine Portuguese civil law expertise with English common law tradition. a combination that proves particularly valuable when advising on cross-border structures exposed to both civil law systems and common law enforcement mechanisms. Our team includes practitioners with experience before Russian tax authorities and in cross-border arbitration proceedings involving Russian counterparties. We work with multinational corporations, investment funds, and in-house legal teams seeking a lawyer with Russia expertise who understands both the local regulatory detail and the international business context. To discuss your compliance position under the new reporting rules, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.