Russia's Ministry of Finance recently published Guidance Letter No. 03-03-06/1/46720, which clarifies the taxation of interest payments from a Russian entity to a Dutch related party under the Netherlands-Russia tax treaty. According to the letter, when such payments are made to a related party (20% direct or indirect ownership) and the debtors thin capitalization threshold has been exceeded (3:1 standard, 12.5:1 for banks), then the portion of the payment that would not be deductible due to the thin cap rules will be treated as a deemed dividend. As such, Article 10 (Dividends) of the Netherlands-Russia tax treaty will apply on...