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 of August 8, 2023 No. 585, the operation of the main provisions of 38 such agreements with "unfriendly" countries (the list is per government order No. 430-r) 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. 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 Law No. 539-FZ mainly concerned interest on old contracts and closed by 2026; they essentially 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 limited to 5 percent if a UAE-resident company directly owns at least 10 percent of the capital of a Russian company for 365 days, and 10 percent in other cases.
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.
This material is for overview purposes and does not constitute individual tax or legal advice.