Customising tax planning for companies involved in cross-border cooperation

Background

Our client, a manufacturer of industrial equipment with multi-jurisdiction legal structure (Russia, Belarus, Cyprus, Estonia), requested us to provide support in tax matters. Comprehensive analysis of the company’s existing legal structure has identified a significant risk of additional tax claims under the applicable Russian laws and BEPS Action Plan.

The Case

CG advisors in cooperation with partners from other jurisdictions developed an algorithm for legal restructuring of the company (through dissolution of Cypriot and Estonian legal entities and establishment of legal entities in Luxembourg) considering the latest developments in Russian tax laws and BEPS provisions. As a result, the business structure of the company was brought into compliance with the current legal requirements.

While previously the Client was subject to high fiscal risks with potential of falling into bankruptcy, now it may enjoy a sound operative corporate structure consistent both with market and regulatory requirements.

Other tools used in the case implementation included tax compliance, international tax planning, corporate law, banker’s compliance and migration compliance practices.

Why is it of importance?

According to the RF Central Bank, financial distributions from Russia to Cyprus reached USD 37.1 billion and USD 35.9 billion in 2016 and 2017 respectively. The market was intensely employing the opportunities of cross-border interaction between Russia and Cyprus motivating the Russian regulators to initiate changes which make these deals illegal. The CG advisors successfully offer and implement business models minimizing any potential risk while remaining within the framework of the law.