CFC Fixed Profit Tax Regime: What Happens When You Leave Russia for Permanent Residence Abroad?
If an individual ceases to be a Russian tax resident, then for the period during which they are a non-resident:
▪️ there is no obligation to file a Controlled Foreign Company (CFC) notification;
▪️ there is no requirement to file a Form 3-NDFL personal income tax return;
▪️ there is no obligation to pay Russian personal income tax (PIT) under the fixed-profit CFC regime.
However, there is an important point that is often overlooked.
The mandatory period for applying the fixed-profit CFC taxation regime continues to run even though, during the period of non-residency, the taxpayer is not required to comply with the regime. In other words, the loss of Russian tax residency does not suspend or “pause” the minimum mandatory application period.
This approach is expressly provided for in Clause 3 of Article 227.2 of the Russian Tax Code, which sets out the rules governing the fixed-profit CFC regime and its mandatory minimum application period.
Practical takeaway: if the individual subsequently becomes a Russian tax resident again, they should verify whether the mandatory application period for the fixed-profit CFC regime has expired by that time. If it has, they may be able to opt out of the regime, provided it is no longer tax-efficient.
