Russia suspends double tax treaties with the UK and US. How dividend repatriation works in 2025
An international treaty no longer guarantees a reduced tax rate on dividends. Permission to transfer profits abroad is increasingly granted not by the text of a Double Taxation Treaty (DTT), but by the Government Commission on Foreign Investment Control, which evaluates the share of the payout relative to the company’s net profit, the importance of its operations to the regional economy, and the investor’s willingness to remain in Russia.
By the end of 2025, this logic had firmly taken root. Agreements with unfriendly countries have been suspended, some have ceased to operate entirely, and in their place a network of treaties with new partners has been established. Domestically, a progressive tax scale for dividends paid to individuals came into effect, while certain currency restrictions began to ease for the first time since 2022. Below, we break down what this means for a company planning a dividend payout to a foreign participant.
How Profit Repatriation Worked Prior to 2023
Before the introduction of counter-sanction measures, Russia possessed an extensive network of DTTs that covered virtually all major trading partners: European Union countries, the United States, the United Kingdom, and Japan. The withholding tax rate on dividends under most of these treaties ranged from 5% to 10%, compared to the standard 15% rate under the Tax Code of the Russian Federation (TC RF). For strategic investors who held a large equity stake over a long period, the rate was frequently reduced to 0-5%.
Corporate income tax was levied at a rate of 20%, while dividends for resident individuals were subject to Personal Income Tax (PIT) at a flat rate of 13%, regardless of the amount. Currency transfers abroad for citizens and corporations were limited only by banking compliance, without state-imposed caps or permit procedures.
What Happened to the DTT Network by 2025
Executive Order of the President of the Russian Federation No. 585 dated 8 August 2023 suspended the key articles of treaties with 38 states, including EU countries, the US, Japan, and the UK. Provisions establishing reduced rates for dividends, interest, royalties, and business profits fell within the scope of the suspension. The suspension applies from the publication date of the order, meaning it affects payouts starting from 8 August 2023.
By 2025, several partners responded with counter-measures. By a note dated 28 March 2025, the UK completely suspended the operation of the 1994 convention: provisions on corporate tax ceased to apply on 1 April 2025, while provisions on personal income tax and capital gains ceased to apply on 6 April 2025. Technically, this is a mutual suspension of operation; no denunciation of the treaty occurred. Legally, the convention continues to exist, but both sides temporarily refrain from applying its terms. Similar suspension notifications were issued by Canada and Sweden.
Concurrently, the Ministry of Finance is establishing a new network of agreements with friendly jurisdictions. The treaty with Abkhazia, signed on 7 May 2024 and ratified by Federal Law No. 372-FZ dated 2 November 2024, entered into force on 28 November 2024 and has been applied since 1 January 2025. The treaty with Malaysia was signed earlier, on 17 May 2024. However, the parties failed to exchange instruments of ratification before the end of 2024, causing the provisions to take effect only on 1 January 2026, a year later than originally planned.
The major treaty deal of 2025 took place on a different front. On 17 February 2025, Russia and the United Arab Emirates (UAE) signed a new DTT, which Russia ratified via Federal Law No. 189-FZ dated 7 July 2025. The treaty entered into force on 18 July 2025 and applies to taxes starting 1 January 2026. It replaces the highly restrictive 2011 convention, which effectively covered only government bodies.
The new agreement with the UAE is built on a «10-10-10» formula: a uniform 10% withholding tax rate on dividends, interest, and royalties for any private business or individual. By comparison, active treaties with Saudi Arabia and Qatar maintain a more favorable 5% rate on dividends (and 0% for state-owned companies). The UAE is pressing for a revision of those two treaties toward a uniform 10% rate; however, as of mid-2025, negotiations with Riyadh and Doha remain incomplete, and the existing terms stay in effect.
| Jurisdiction | DTT Status at End of 2025 | Dividend Withholding Tax Rate in RF |
|---|---|---|
| United Kingdom | Suspended from 1 April 2025 | 15% per TC RF |
| USA, EU Countries, Japan | Suspended from 8 August 2023 (Order No. 585) | 15% per TC RF |
| UAE | In force from 18 July 2025; applies from 1 January 2026 | 10% |
| Saudi Arabia, Qatar | In force under original wording | 5% (0% for state-owned companies) |
| Abkhazia | In force and applies from 1 January 2025 | Per new agreement |
| Malaysia | Entered into force in 2024; applies from 1 January 2026 | 10% |
The DTT being in force does not by itself grant an automatic right to a reduced rate. A tax agent applies it only if two documents are provided by the recipient: a Tax Residency Certificate (TRC) issued by the competent authority of the foreign state and duly apostilled, and confirmation of beneficial ownership (actual right to income). The second document proves that the recipient manages the dividend funds independently and does not serve as a conduit entity for a subsequent transfer to another jurisdiction. Without both documents, the agent is required to withhold tax at the standard rate under the TC RF, regardless of the text of an active treaty.
New Domestic Tax Rates on Dividends in Russia
Federal Law No. 176-FZ dated 12 July 2024 revised domestic rates applied to payouts when a DTT is absent or suspended. The corporate income tax rate rose from 20% to 25%. Inter-corporate dividend rates retained their prior structure: 0% when owning at least 50% of capital for at least 365 consecutive days, 13% in other cases for Russian entities, and 15% when paying a foreign corporation without an active DTT.
For resident individuals, a truncated progressive scale applies starting in 2025: 13% on dividend income up to 2.4 million rubles per tax period, and 15% on any excess amount. For non-resident individuals, the rate remains flat at 15% regardless of the payout amount, unless a more favorable regime is established by an active DTT.
Calculation example. A resident receives 5 million rubles in dividends over the year. From the first 2.4 million, the tax agent withholds 13% (312,000 rubles); from the remaining 2.6 million, 15% (390,000 rubles). Total PIT comes to 702,000 rubles, compared with 650,000 rubles under the flat 13% rate that applied before 2025.
Currency Control on Dividend Payouts to Unfriendly Non-Residents
Executive Orders of the President of the Russian Federation No. 95 dated 5 March 2022 and No. 254 dated 4 May 2022 established a special settlement procedure for corporate liabilities owed to unfriendly non-residents, including JSC dividends and distributed LLC profits. For payouts exceeding 10 million rubles, a Type «C» account in rubles must be used, or a separate permit must be secured.
What does a Type «C» account mean in practice? The dividend amount is credited to the recipient in rubles into a special account at a Russian bank. These funds are not remitted abroad directly. The foreign equity holder can use them only in a limited set of cases defined by the Bank of Russia. Unrestricted transfer of the sum outside the Russian Federation without using such an account is possible only with a separate permit.
Since 9 September 2024, Executive Order of the President of the Russian Federation No. 767 has been in effect. It transferred the authority to issue such permits (for amounts exceeding 10 million rubles, bypassing Type «C» accounts) from the Ministry of Finance to the Government Commission on Foreign Investment Control. The criteria the Commission considers when reviewing dividend payout requests were set out in the Sub-commission Protocol Excerpt No. 118/1 dated 22 December 2022 and remain in effect:
the payout amount does not exceed 50% of the resident’s net profit for the previous year;
the company’s history of dividend payouts in past periods has been taken into account;
the foreign participant confirms its intention to continue commercial activity in the RF;
federal executive bodies have set quarterly KPIs (key performance indicators) for the company;
distributions are allowed on a quarterly basis, subject to meeting these performance targets.
It is important not to confuse these conditions with the requirements for a different category of transactions: the sale of shares or equity interests in Russian companies by unfriendly non-residents. For asset sales, the same protocol excerpt sets out a separate set of conditions: an independent valuation of the asset, a discount of at least 50% off market value, KPIs for the new owner, and a voluntary contribution to the federal budget of at least 10% of the transaction value. This voluntary budget contribution does not apply to dividend payouts to an existing equity holder.
Currency Limits and Mandatory Sale of Export Revenue
On 8 December 2025, the Bank of Russia lifted limits on foreign currency transfers abroad for Russian citizens and non-resident individuals from friendly countries (previously capped at $1 million per month to accounts abroad and $10,000 per month via money transfer systems). Through 7 June 2026, restrictions remain in place only for non-residents from unfriendly countries: those working in Russia may transfer no more than their salary amount, while non-working individuals and legal entities from such states are barred from transfers, except for companies controlled by Russian residents.
A separate matter is the mandatory sale of foreign currency revenue by exporters under Executive Order of the President of the Russian Federation No. 771 dated 11 October 2023. Government Decree No. 698 dated 22 May 2025 extended the requirement to credit at least 40% of foreign currency earnings to authorized bank accounts and sell at least 90% of that credited amount, through 30 April 2026. However, as early as August 2025 the Government Commission reduced the actual mandatory sale ratio to zero. Formally, the executive order and the decree remain in force, and the monitoring and reporting mechanism before Rosfinmonitoring is intact, but exporters on the list currently have no obligation to sell currency. The ratio can be changed at any moment by a decision of the Commission.
Failure to credit currency earnings to accounts at authorized banks within the set deadline constitutes an administrative offense under Article 15.25 of the Code of Administrative Offenses of the Russian Federation. For legal entities, the fine ranges from 5% to 30% of the amount not credited on time, for transactions in foreign currency. For officials, the same percentage range applies, but the total fine is capped at 30,000 rubles. The repatriation obligation itself remains with the resident regardless of whether the mandatory sale requirement is active for them at any given moment.
Action Plan
Check the current status of the DTT with the recipient’s jurisdiction. Determine specifically whether the agreement is merely suspended (like most of the 38 countries under Order No. 585) or terminated entirely, since this affects the ability to claim a foreign tax credit for individuals.
Recalculate the tax under the progressive scale. If dividends paid to a resident individual exceed 2.4 million rubles per year, split the PIT calculation into a 13% portion and a 15% portion.
Determine whether a Type «C» account or Government Commission approval is required. For a payout to an unfriendly non-resident exceeding 10 million rubles, prepare in advance a record of prior distributions, the quarterly KPIs, and a letter confirming the participant’s intention to continue operating in Russia.
Obtain the Tax Residency Certificate (TRC) and confirmation of beneficial ownership. For countries with an active or new DTT (UAE, Malaysia, Saudi Arabia), these documents are a condition for applying the reduced rate, and the TRC must be apostilled.
Check the current mandatory currency-sale ratio before structuring the settlement. If your company is on the list under Executive Order No. 771, verify the Government Commission’s latest decision as of the payment date. Figures set out in a government decree may be outdated by then.
None of these steps override the core rule of 2025: formal compliance with DTT terms no longer guarantees an unhindered transfer of funds. For unfriendly non-residents, the deciding factor remains the discretion of the Government Commission; for everyone else, it is careful documentation of the payout and an accurate calculation under the new progressive scale.
Regulatory Sources:
1. Official Information from the Bank of Russia dated 5 December 2025
2. Executive Order of the President of the RF dated 8 August 2023, No. 585, «On the Suspension by the Russian Federation of Certain Provisions of International Treaties of the Russian Federation on Taxation Matters»
3. Federal Law dated 12 July 2024, No. 176-FZ, «On Amendments to Parts One and Two of the Tax Code of the Russian Federation…»
4. Executive Order of the President of the RF dated 5 March 2022, No. 95, «On the Temporary Procedure for the Fulfillment of Obligations to Certain Foreign Creditors»
5. Executive Order of the President of the RF dated 4 May 2022, No. 254, «On the Temporary Procedure for the Fulfillment of Financial Obligations in the Sphere of Corporate Relations to Certain Foreign Creditors»
6. Executive Order of the President of the RF dated 9 September 2024, No. 767, «On Amendments to Certain Executive Orders of the President of the Russian Federation»
7. Executive Order of the President of the RF dated 11 October 2023, No. 771, «On the Mandatory Sale of Foreign Currency Earnings Received by Certain Russian Exporters Under Foreign Trade Agreements (Contracts)»
8. Decree of the Government of the RF dated 22 May 2025, No. 698
9. Agreement between the Government of the RF and the Government of the UAE on the Elimination of Double Taxation, dated 17 February 2025, ratified by Federal Law No. 189-FZ dated 7 July 2025
10. Agreement between the Government of the RF and the Government of the Republic of Abkhazia, dated 7 May 2024, ratified by Federal Law No. 372-FZ dated 2 November 2024
11. Agreement between the Government of the RF and the Government of Malaysia, dated 17 May 2024
12. Article 15.25 of the Code of Administrative Offenses of the Russian Federation