Taxation

Main aspects:

• Income earned by taxpayers from trading mutual fund shares is taxable.
• Income is defined as the difference between the sale (redemption) price and the purchase price of the mutual fund shares.
• There is no tax levied if the sale (redemption) price is equal to or less than the purchase price.

Tax rate:

• For tax residents of Russia,* the tax rate is 13% on income (Section 1 of Art. 224 of the RF Tax Code).
• The non-resident tax rate is 30% on income (Section 3 of Art. 224 of the RF Tax Code).

The income tax on individuals is withheld by the organization that serves as the tax agent (Art. 214.1 of the RF Tax Code), in this case, the management company.
* According to Section 2 of Article 11 of the RF Tax Code, a tax resident is an individual who resides in Russia at least 183 days per calendar year.

Property deductions:

According to Section 3 of Article 214 of the Tax Code, upon the sale of securities or mutual fund shares, a taxpayer may take the property tax deduction provided in Paragraph 1 of Subsection 1 of Article 220 of the Tax Code if the amount paid by the taxpayer for the acquisition, use or possession of the securities or mutual fund shares cannot be documented.

When the taxpayer purchases mutual fund shares from the management company or an agent of the management company, the amount paid by the taxpayer is documented (by an extract from the register on the personal account of the registered person, a notice of operations on the personal account or a bank statement). In this case, the property tax deductions upon the redemption of mutual fund shares cannot be granted.