Withholding Tax and Closed-End Mutual Funds (ZPIF)
Previously, tax consultants held the view that the presence of a Closed-End Mutual Fund (ZPIF) in the ownership structure of Russian assets provided protection against potential withholding tax risks in Russia.
However, court practice has shown that this position is no longer relevant.
For example, on August 16, the Arbitration Court of Saint Petersburg and Leningrad Region issued a ruling in case No. A56-22968/2024, which addressed the issue of taxation of income paid by the management company of a ZPIF to a related foreign entity.
In this case, the court sided with the tax authorities and agreed that the taxpayer was actually paying income to a foreign entity from the use of real estate in Russia (which is subject to taxation in Russia) disguised as other types of income eligible for preferential tax treatment.
