Withholding tax from Russia after DTT suspension: what European companies pay in 2026

Russia suspended DTTs with 38 countries in 2023. Domestic rates now apply: 15% dividends, 20% interest and royalties. Country-by-country guide for 2026.

What happened and when

On 8 August 2023, Russian President Vladimir Putin signed Decree No. 585, suspending key provisions of Russia's double tax treaties with 38 "unfriendly" countries. The suspension took effect immediately.

The suspended provisions include the articles governing: dividends, interest, royalties, capital gains, employment income, director fees, and other income. The general treaty provisions — on residency determination, tie-breaker rules, exchange of information, and mechanisms to eliminate double taxation — remain formally in force, but their practical utility is limited when the income-specific articles are suspended.

The affected countries include virtually all EU and EEA member states, the UK, the US, Canada, Japan, Australia, South Korea, Singapore and others. Two countries have since gone further: Denmark and Latvia terminated their treaties with Russia entirely, with effect from 1 January 2024.

Several treaty partners responded formally: France, Austria and the Czech Republic confirmed reciprocal suspension. The US formalised its suspension from 16 August 2024. Japan protested but did not terminate.

Current rates: what applies in 2026

With the income-specific treaty articles suspended, Russian domestic withholding tax rates under the Tax Code apply in full to payments made to residents of affected countries.

Note: the 15% dividend rate applies to all non-resident corporate shareholders regardless of stake size. Under the suspended treaties, rates of 5% for stakes of 10%+ (Germany, France, Netherlands) or 0% (some treaties) were available.

Country-by-country: what each suspended treaty offered

The table below shows the reduced rates that were available under each suspended DTT, now replaced by the domestic rates above.

Double taxation: the unresolved problem

The suspension creates a structural double taxation problem. Consider a German parent company receiving dividends from its Russian subsidiary:

The precise interaction depends on domestic law in the shareholder's country. Most EU countries apply a participation exemption that exempts qualifying dividends from corporate tax regardless of the DTT. In those cases, the Russian WHT is an absolute cost — there is no home-country tax to credit it against.

For interest and royalties, the problem is more acute. Most countries tax inbound interest and royalties as ordinary income, against which a foreign tax credit should theoretically be available. But claiming a credit for Russian WHT on payments from suspended-DTT countries has become complex — the mechanism in many DTTs for claiming credit refers to tax paid "pursuant to the treaty," and since the treaty is suspended, the credit mechanism itself is disrupted.

Several affected companies have challenged this in court in their home countries. The outcomes vary by jurisdiction.

Alternatives: restructuring around the suspension

Companies that cannot absorb the additional WHT cost have explored several structural alternatives. Each comes with caveats.

Routing through an active-treaty jurisdiction:

The most commonly discussed approach is interposing a holding entity in a country whose DTT with Russia is not suspended — Turkey (10% on dividends), UAE (5%/10% under the new 2025 treaty), India (10%), China (10%), Kazakhstan (10%). The Russian subsidiary pays dividends to the intermediate holding; the holding then distributes to the European parent.