The Russian Ministry of Finance Revises Its Position on Passive Income of Private Foundations

The Ministry of Finance has officially revised its previously stated approach to the taxation of private foundations.

As a reminder, private foundations are entitled to apply a reduced corporate income tax rate of 15% instead of 25%, provided that more than 90% of their annual income is derived from a strictly defined list of passive income sources set out in Article 284.12 of the Russian Tax Code.

However, in March 2025, the Ministry issued Letter No. 03-03-07/27539, stating that income from the sale of shares and participatory interests in Russian companies did not fall within this list and therefore could not be included in the calculation of the passive income threshold. This position caused considerable concern in the market.

In June, the situation changed.

In a new letter dated June 4, 2025 (No. 03-03-04/55121), the Ministry reversed its position, officially acknowledging that:

“Income from the sale of shares (participatory interests) in Russian companies may be taken into account when determining the 90% share of passive income of a private foundation for the purposes of applying the reduced 15% corporate income tax rate.”

This clarification is significant for all those using private foundations as a capital structuring tool in Russia — especially those with investment strategies focused on Russian businesses.

We continue to monitor legal and regulatory developments and will keep you informed of the key updates.

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