Recently, the Ministry of Finance issued Letter 03-08-05/6369, clarifying the tax treatment applicable to interest payments based on the Russia-Spain Income and Capital Tax Treaty (1998). A Russian limited liability company entered into a 5-year loan agreement with its Spanish parent company that holds 100% in the capital of the Russian subsidiary. Based on the loan agreement the Russian subsidiary was making interest payments on a quarterly basis. The Ministry of Finance clarified that, according to article 7 of the Tax Code, the provisions of the tax treaty prevail over the domestic legislation. Therefore, the provisions of article 11 of...