Unregistered trademarks may not be admitted in Russia unless such marks have acquired a particular known status within the meaning of Russian law. In other words, pending national or international trademarks and regular trademark applications cannot be the subject of licensing transactions in this jurisdiction. However, if the unregistered trademark is officially recognized in Russia as a well-known trademark, it may be authorized as a mandatory condition in favor of a third party, without trademark registration. With regard to other intellectual property rights that are not subject to registration for protection in Russia, such as copyright and related rights, software and databases, know-how and others, these can be freely authorized and the corresponding license transactions do not have to be registered. By law, the legitimate user has the right to record, store and enter the necessary modifications to the software for functional purposes, unless otherwise agreed. Legitimate use also has the right, under the law, to create a backup copy of the software for archival purposes and is only destroyed and out of service if the original copy has been lost, while such a backup must be destroyed when the use of the software no longer becomes legitimate. In certain circumstances, the legitimate user may recompile or decompile the acquired software; However, all such activities are not contrary to the normal use of software in commerce and unreasonably affect the interests of the author or other rightholder. Restrictions imposed by the licensor may be implemented by contract, but they must comply with the legal provisions in force. Foreign licensors who generate revenue from Russian jurisdiction must pay corporate tax to the Russian budget. Royalties that must be paid to a foreign licensor if they are not attributable to the licensor`s Russian establishment are subject to withholding tax that must be paid by the tax representative of the foreign licensor (i.e. a Russian licensee).

The current standard corporate tax rate (CIT) in Russia is 20 percent. However, if the foreign licensor is registered in accordance with the laws of a jurisdiction that has signed a double taxation agreement with Russia and carries out transactions, a reduced (or even zero) CIT rate may be applied. However, to avoid double taxation, the foreign licensor must provide certified proof of its permanent establishment in the relevant foreign contractual jurisdiction. This evidence must be submitted to the Russian licensee before the withholding tax is paid….