avoidance of double taxation

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The rights of foreign nationals

Question

Ms. Karina Duvall:

I have urgent question that needs your advice. You have provided me service before.

BACKGROUND -

My wife is dual US/Russia national, I'm a US citizen. We normally reside/pay taxes in New York. She is registered as living outside Russia.

Some circumstances have caused my wife to be in Russia for what will be over 183 days this year. We want to minimize the risk of any tax liability in Russia for her.

- she has no independent income

- she is listed as joint tenant on US bank and brokerage accounts.

QUESTION 1 - Russia post-nuptial

I has been suggested by a Russia attorney that we could execute a post-nuptial agreement in Russia to remove her Russian taxable common property interest in the US accounts.

- Is this a reasonable idea?

If we do this, I assume such an agreement would have no legal effect for taxation/inheritance/etc. purposes in the US (unless some similar agreement was executed in the US). That is the desired non-effect - that any Russian agreement NOT change or disturb our US status.

- Is that correct?

Question 2 - remove joint tenancy on US accounts

I can also remove her as Joint tenant from the US brokerage accounts, but leave her as beneficiary.

- Is this necessary/advised?

It would be more problematic/but possible to create a separate bank account for here in the US (one that does not receive my income / brokerage funds).

- Is this advised?

Question 3 - any other advice

Under the circumstances do you suggestion any other actions / strategy?

Answer

I do not think you have any reason to worry about taxation. All answers for your questions can be found in attached document which is called Convention between the United States of America and the Russian Federation for the avoidance of double taxation and the prevential of fiscal evasion with respect to taxes on income and capital, signed on June 17, 1992. I do not think that any agreement between the spouses can affect your relationship with tax authority of Russia or the United States. If the sources of income are located in the United States, neither of you doesn't responsible for any taxes in Russia, even if you or your wife) lives in Russia most of the time. You can sign post-nuptial agreement with your wife to protect your property or/and money from your wife, not from Russian authority. If your Russian attorney offered to you some agreement to resolve potential problem with Russian authorities, you can send it me for expertise, to be more confident.

I am also thinking that you do not have to remove the wife's name from US brokerage account unless you are thinking about divorce.

I do not think you need to do anything now. However, you can send me draft of agreement which you already have, for my reviewing. As I mentioned before, any agreement with your wife can protect you from your wife, and has nothing to do with government's obligations.

Please review attached convention, and I will be happy to answer for your additional questions.

Articles and consultations authored by attorney reflect the state of law as of the date of their writing. The laws change daily. Users of this site are advised to consult attorney regarding their situation.

The highest compliment you can pay me is the referral of a friend or a relative.

Russian attorney at law Karina Duvall.

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