Dividends are the most direct way to extract profit from a Russian company, and for an owner living outside Russia, this is where the main tax arises. After 2022, the rules here changed more dramatically than in most other areas: the familiar reduced rates under tax treaties stopped working for a whole range of countries, and the withholding rate reverted to the domestic rate set by the Tax Code. Below we explain how much is withheld today, why this happened, and what legal opportunities to reduce the burden still remain.
Concept
When a Russian company pays dividends to a non-resident shareholder, tax is withheld at source in Russia. The base rate is 15 percent, and since August 2023, most mechanisms for reducing it have ceased to work. For a private owner who has changed tax residency or holds Russian assets through a foreign structure, this means one simple thing: the path of money out of Russia has become noticeably more expensive.
How Much Is Withheld
For an individual who is a tax non-resident, the rate on dividends from Russian companies is 15 percent and does not depend on the payment amount (clause 3 of Article 224 of the Tax Code). For a foreign organization, the same 15 percent rate applies (clause 3 of Article 284). The Russian company paying the dividends withholds and remits the tax—it acts as a tax agent, so the amount reaches the recipient already net of tax.
For comparison, a resident pays 13 percent on dividends and 15 percent on the portion exceeding 2.4 million rubles per year. The progressive scale with rates up to 22 percent introduced from 2025 does not apply to dividends—they are calculated on a separate tax base. For non-residents there are no gradations: the entire payment is taxed at a single 15 percent rate.
The Role of Treaties and Their Suspension
Previously, the burden was smoothed by double tax avoidance agreements (DTAAs): under a typical treaty, the withholding rate on dividends was reduced to 5 or 10 percent depending on the participation share and treaty conditions. By Presidential Decree No. 585 of 8 August 2023, On the Suspension by the Russian Federation of Certain Provisions of International Treaties of the Russian Federation on Taxation, the operation of the main provisions of 38 such agreements with "unfriendly" countries was suspended—including treaties with almost all EU states, the United Kingdom, the United States, Switzerland, Japan, and Singapore; the treaties themselves formally remain in force. The list is set by the Decree itself: all 38 treaties are enumerated by name in its Article 1, and the Decree contains no reference to Government Order No. 430-r of 5 March 2022. These are two different registers and they do not fully overlap: the register of unfriendly states under Order No. 430-r (23 entries, corresponding to 49 states) also covers countries whose treaties are not on the Decree's list—Latvia, Estonia, Ukraine, Monaco, the Bahamas. Whether a reduced treaty rate is available at source is therefore checked against Article 1 of Decree No. 585, not against Order No. 430-r. From this date, reduced rates do not apply to payments to these jurisdictions, and the tax agent withholds tax at the Tax Code rate—15 percent. The suspension applies to payments made starting from August 8, 2023—it does not affect what was paid earlier. The temporary reliefs of Federal Law No. 539-FZ of 27 November 2023 — which preserved the withholding exemption for income that was treaty-exempt before the Decree (subparagraph 11 of clause 2 of Article 310 of the Tax Code) — did not close by 2026: as amended by Federal Law No. 425-FZ of 28 November 2025, the exemption for interest paid to independent foreign export-credit agencies and banks under agreements concluded before 8 August 2023 runs until 1 January 2036, while the exemption for aircraft leasing, broadcasting rights, royalties and international shipping runs until 1 January 2029. These reliefs did not apply to dividends to private owners—here the 15 percent rate has been in effect from the very beginning. The full history of the suspension—from the list of unfriendly countries to mirror responses from partners—is in the dedicated article.
What Routes Remain
Agreements with countries that did not fall into the suspension list continue to operate, and reduced rates under them are in principle available—but applicability must be checked against the text of the specific treaty and the actual right to income and tax residency of the recipient must be confirmed. Some owners, in response to the suspension, have restructured their flows: they leave profits in the Russian perimeter, move holdings to special administrative regions, or reconsider through which jurisdiction payments go. There is currently no universal way to bypass the 15 percent rate for "unfriendly" destinations.
How This Looks in Practice
The most common case is when an individual has changed tax residency and continues to directly own shares or stock in a Russian company. When dividends are paid, the issuer as tax agent will withhold 15 percent regardless of the country where the recipient now lives, and the amount will arrive already net of tax. No applications need to be filed, but it is also not possible to reduce the rate in this configuration if the agreement with the country of residency is suspended.
The second typical configuration is when Russian assets are held by a foreign holding company, and dividends go to it first. If it is registered in a country whose agreement did not fall under suspension, a reduced rate is in principle available. It is not applied automatically: the tax agent must be satisfied that the recipient has beneficial ownership of the income and that it is a tax resident of the treaty country. An intermediate "empty" structure without its own personnel and functions does not confer entitlement to the benefit.
Holding and Look-Through Approach
When a benefit at the level of an intermediate company is unavailable, the look-through approach remains (clause 4 of Article 7 of the Tax Code): tax is calculated as if the income were received directly by the person with beneficial ownership, and the treaty of that person's country is applied. For a Russian owner who has closed the chain on themselves, this usually means the rate for an individual non-resident—the same 15 percent, and in parallel the question of CFC rules for the foreign company itself arises. The look-through approach provides tangible benefit where the ultimate recipient is a resident of a friendly jurisdiction with an operating treaty.
What the Tax Agent Needs to Confirm
The right to a reduced rate under an operating agreement must be substantiated before payment. Article 312 of the Tax Code requires that the foreign recipient provide the tax agent in advance with confirmation of tax residency in the treaty country and confirmation of beneficial ownership of the income. Without these documents, the agent will withhold tax at the domestic rate, and refund of the overpayment is then a separate and slow procedure.
There is also a flip side—adjustments. Under rules introduced in 2023, if in a transaction between related parties the price deviates from market and the tax authority adjusts the base, the adjustment amount in favor of a non-resident is equated to dividends and taxed accordingly. Therefore, intra-group payments—loans, royalties, payment for services—should be structured on an arm's length basis: an understated or overstated price can unexpectedly turn into taxable dividends.
Where This Is Heading
A notable recent event is the new agreement with the UAE. The previous 2011 treaty covered only government entities; the agreement signed on February 17, 2025, covers business and private individuals. It entered into force on July 18, 2025, and applies from January 1, 2026. The withholding rate on dividends under it is capped at 10 percent — a single figure, without the reduced tier for substantial holdings familiar from the OECD Model Convention. The treaty sets the same 10 percent ceiling for interest and royalties.
This sets a benchmark for the coming years: preferential rates are returning selectively, through new treaties with jurisdictions outside the unfriendly list. The practical rule for an owner is simple. Reducing the rate today is realistic where there is an operating or newly concluded agreement, a real presence of the recipient in the treaty country, and confirmed beneficial ownership. For most unfriendly destinations, the baseline figure remains 15 percent, and it is reasonable to factor it into calculations by default.
Q/A
Is 15 per cent always withheld from a non-resident’s dividends?
No, but 15 per cent is the domestic starting rate for dividends paid to a non-resident individual or a foreign company. An operative tax treaty may cap Russian tax at a lower rate where it applies to the particular payment and the recipient timely proves treaty residence and beneficial ownership of the income.
Did Decree No. 585 terminate the tax treaties themselves?
No. The Decree suspended specified treaty provisions rather than terminating the treaties in full. For dividends paid from 8 August 2023 into a destination whose dividend article is suspended, the Russian tax agent applies the domestic 15 per cent rate; the treaty position must be checked on each payment date.
Does a foreign holding company obtain the treaty rate automatically?
No. Incorporation in a country with an operative treaty is insufficient: before payment, the tax agent needs proof of residence and of the recipient’s beneficial ownership of the income. Personnel, functions, risks and control over the dividends must support a real role rather than a conduit company.
What if the residence certificate is not ready when dividends are paid?
The tax agent should not apply a reduced treaty rate without the required evidence and will withhold under domestic rules. A later refund may be available through a separate procedure once the documents are assembled, but it is not an automatic correction; the deadline, filing set and recipient authority depend on the type of payee.
Does the new Russia–UAE treaty’s 10 per cent dividend rate apply?
Yes. The treaty caps source taxation of dividends at 10 per cent for a recipient with beneficial ownership of the income. For withholding taxes it applies to amounts paid or credited from 1 January 2026; treaty residence, beneficial ownership and the remaining conditions still have to be substantiated before payment.