Russia's Ministry of Finance has published Letter no. 03-03-06/1/82163 of 25 October 2019, which clarifies eligibility for the dividend participation exemption following a merger.
The letter notes that Russia provides a general participation exemption for dividends where a participation of at least 50% in a distributing subsidiary is held for an uninterrupted period of at least 365 days on the date the decision to pay the dividends is made. The letter also notes that when one legal entity is merged with another legal entity, the rights and obligations of the former pass to the latter, with the former deemed to be reorganized on the date the termination of activity of the former is recorded in the state company register.
Based on this, the letter clarifies that the holding period is considered interrupted on the date of recording, although dividends paid after the reorganization may still qualify for the participation exemption if the decision to pay the dividends was made before the reorganization and the conditions were met at that time.
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