Russia: Certain DTA regulations with 38 states put on hold

On Aug. 8, 2023, the Russian President Putin issued a presidential decree temporarily suspending parts of its double taxation agreements (DTAs) with 38 so-called “unfriendly” states. The relevant decree was published on the Russian Legal Portal and entered into force immediately. The decree instructs the Russian government to submit to the parliament a draft law on the suspension of DTT provisions, but according to paragraph 4 of the decree, the suspension of certain DTA provisions comes into force from the date of the publication of the decree, i.e. on August 8th, 2023.

This affects the EU Member states with the exception of Estonia (Russia does not have a ratified DTA with Estonia), Latvia (Latvia suspended the DTA in 2022) and the Netherlands (The DTA was denounced fully at the beginning of 2022).

Moreover the following states are affected: US, Canada, Japan, Korea, Singapore, Australia, New Zealand, UK, Switzerland, Norway, Albania, Montenegro, Macedonia and Iceland.

As a consequence, from 08.08.2023 on the preferential withholding tax rates for dividends, interest and royalties cease to apply. Instead, payments from Russia are subject to the standard withholding tax rates ( Dividends: 15%, Interest/Royalties/Other Income: 20% ) established by the Tax Code of the Russian Federation.

For any questions please do not hesitate to reach out to Dr. Igor Fleischmann.