Decree No. 585 and the suspended tax treaties: withholding on dividends, interest and royalties in 2026

What Decree No. 585 did

Presidential Decree No. 585 of 8 August 2023 suspended, “until the foreign states remedy their violations of Russia's legitimate economic and other interests”, the operative articles of Russia's double tax treaties with 38 states: the articles on dividends, interest, royalties, capital gains, income from independent and dependent personal services, directors' fees, pensions, other income, international transport, and — in most treaties — the article on non-discrimination. The suspension was confirmed by federal law in 2023. What remains in force is the framework: the definitions of residence and permanent establishment, the article on elimination of double taxation (so a Russian resident may still credit foreign tax under Articles 232 and 311 of the Tax Code), the exchange-of-information article and the mutual agreement procedure, which in practice no longer operates with most of these states.

The decree is a Russian measure only. It does not oblige the partner state to do anything, and for three years most partners did nothing: they kept applying the treaty to Russian-source income of their residents and, in the other direction, to Russian residents' income from their territory. That asymmetry is now closing.

The 38 states

Australia, Austria, Albania, Belgium, Bulgaria, Canada, Croatia, Cyprus, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Lithuania, Luxembourg, Malta, Montenegro, New Zealand, North Macedonia, Norway, Poland, Portugal, Romania, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, the United Kingdom and the United States. The list is narrower than the “unfriendly states” list under Directive No. 430-r: it omits states with which Russia had no treaty in force (Estonia, Taiwan, Liechtenstein, Andorra, Monaco, San Marino, Micronesia, the Bahamas) and those whose treaties had already ended (the Netherlands, terminated from 1 January 2022; Ukraine, from 1 January 2023; Latvia, from 1 January 2024 after Latvia's denunciation).

What the partners have done since

For the remaining states — Cyprus, Malta, Spain, Italy, Luxembourg, Ireland and most others — the treaty is still applied on the partner side only. In practice that produces a one-way street: a Cypriot company receiving a Russian dividend suffers 15% Russian withholding with no treaty relief, while a Russian company receiving a Cypriot dividend may still claim the treaty rate in Cyprus. Germany, while formally applying the treaty until the end of 2026, has treated Russia as a non-cooperative jurisdiction for its own purposes since 2024, so German outbound relief has already been curtailed.

What a Russian payer withholds now

With the treaty articles suspended, the Tax Code rates apply to income paid to residents of the 38 states: 15% on dividends; 20% on interest, royalties, rental income from Russian property and most other passive income of a foreign company; 10% on income from international transport and the lease of vessels and aircraft used in international traffic; 30% personal income tax on income of a non-resident individual (15% on dividends). Where the recipient is a resident of a state that has suspended or terminated the treaty on its side, the result is the same from the Russian end — the difference arises in the recipient's home state, which no longer credits or exempts the Russian tax under a treaty.

Russia enacted a short list of domestic reliefs to soften the effect for its own importers and borrowers: exemptions from withholding, introduced in late 2023 with effect from 8 August 2023, for interest paid to foreign banks and export credit agencies under pre-existing credit facilities, for royalties under licences for software and certain intellectual property concluded before 8 August 2023, for payments for international carriage and for the lease of aircraft and sea vessels. The reliefs were enacted through the end of 2025; before relying on them for a 2026 payment, confirm with the paying bank and the tax adviser whether the relevant exemption has been extended — the navigator will be updated when the position is settled.

What it means for a Western group

A parent in one of the 38 states receiving dividends from a Russian subsidiary now pays 15% Russian withholding (where a dividend can be paid at all — see the dividends guide for the counter-sanctions side) and, depending on its own state, may or may not obtain relief at home. Intra-group interest and royalties flowing out of Russia carry 20% unless a domestic exemption applies. Expatriate employees and directors who are tax resident in a partner state and receive Russian-source pay have lost the treaty allocation rules, so Russian 30% withholding applies to Russian-source employment income regardless of days spent, and relief at home depends on domestic unilateral credit.

In the other direction, a Russian resident company or individual receiving income from Germany, Finland, Lithuania, the UK, Sweden or Canada faces full source taxation there with no treaty cap, and from 2027 Germany joins that list in full. For Russian-resident individuals with German pensions, rental property or investments, 1 January 2027 is the date to plan for.

New treaties on the other side of the ledger

While the European network contracts, Russia has been building a new one: a treaty with the United Arab Emirates signed on 17 February 2025 and in force from 1 January 2026 (10% on dividends, 0% on interest and royalties, and the UAE removed from Russia's offshore list from the same date); an updated protocol with Malaysia in force from 2025; a protocol with China signed in late 2024; a first treaty with Abkhazia from 2025; and negotiations or protocols announced with Oman, Qatar, Saudi Arabia and several African states. For groups restructuring their Russian holdings, the UAE treaty is the practical alternative that did not exist in 2023.