What Parts of the US-Russia Double Taxation Treaty Are Paused?

What Russia suspended in 2023, article by article

The Russian decree did not terminate the whole treaty. It suspended the operation of a named list of articles, which in substance covers the core commercial provisions that investors actually used:

Because these are named articles rather than a blanket cancellation, other parts of the treaty - including the definitional articles, the article on non-discrimination, the mutual agreement procedure and the administrative assistance provisions - were not part of the Russian suspension list.

One consequence is easy to miss: with the permanent establishment and business profits articles suspended, a US company with a Russian presence loses the treaty's protections on how that presence is defined and how its profits are taxed. Russian domestic law governs, unmediated by the treaty.

• Permanent establishment - when a US company's activity in Russia creates a taxable presence
• Business profits - the rule that profits are taxed in the residence state unless attributable to a permanent establishment
• Dividends - the source-state rate limits on dividend withholding
• Interest - the source-state rate limits on interest withholding
• Royalties - the source-state rate limits on royalty withholding

What was not in the Russian decree

The suspension is targeted, not complete. Articles of the treaty that deal with scope, definitions, non-discrimination, the mutual agreement procedure for resolving disputes between the two tax authorities, and exchange of information were not on the suspended list.

That distinction mattered in 2023 and 2024, because it meant a taxpayer could in principle still ask the competent authorities to apply the mutual agreement procedure, and the treaty's non-discrimination clause was not suspended by Russia.

Treat this as a starting point rather than a settled answer. Suspension instruments can be added to, and the effect of the counterparty's later action can change the picture again. Anyone relying on a specific remaining article should have the position confirmed for the specific year and transaction by a tax adviser.

The US side: suspension of the treaty's operation in 2024

The United States did not mirror the Russian list. In 2024 the US Treasury announced the suspension of the operation of the treaty with Russia.

A suspension of the treaty's operation as a whole is broader in effect than the Russian article-by-article approach. It means the US does not treat the treaty as operative, which removes the treaty basis for reduced US withholding and, importantly, removes the exchange-of-information and administrative-assistance machinery that the Russian decree had left standing.

The practical result is asymmetric. Russian domestic law applies on the Russian side to the commercial articles; on the US side there is no operative treaty. Neither side is treating the 1992 instrument as a functioning relief mechanism for the transactions it was designed for.

What this means in practice: dividends, interest, royalties, business profits

For a US company receiving Russian-source dividends, interest or royalties, the treaty rate cap no longer applies. The Russian withholding that applies is the domestic rate under the Tax Code, and it is set by Russian law rather than by the treaty. The same logic runs in the other direction for Russian recipients of US-source income.

For business profits, the loss of the permanent establishment and business profits articles means the analysis is conducted under Russian domestic rules. A US company with staff, an office, a dependent agent or a construction or installation project in Russia should assume that Russian tax exposure is assessed without treaty thresholds or exclusions.

Domestic Russian rates are also a live variable. Corporate profit tax stands at 25%, with 0-5% available in special regimes, and standard VAT has been 22% since 1 January 2026, per the Federal Tax Service. Where treaty relief is unavailable, these domestic figures - not treaty rates - are what a structuring discussion has to work with.

There is a second-order effect that matters more than the headline: without a treaty, double taxation is no longer relieved by the treaty mechanism. Relief, where it exists at all, depends on unilateral foreign tax credit rules in the counterparty country, which are generally narrower than treaty relief.

• Russian withholding on dividends, interest and royalties: domestic Tax Code rates apply, not treaty caps
• Business profits: taxed under Russian domestic rules, without treaty permanent establishment thresholds
• Unilateral foreign tax credits in the counterparty country are typically less generous than treaty relief
• VAT and profit tax treatment is unaffected by the treaty suspension - those are domestic rules in any case
• Check whether the transaction has a recharacterisation risk, for example royalty payments re-read as dividends

Why the impact differs sharply by investor

Russia's treaty network is not affected wholesale. Treaties with China, India, the UAE, Turkey, Kazakhstan and other partners remain operative, subject to their own terms and to the usual beneficial ownership and substance tests. For an investor from those countries, the US-Russia position is a competitor's problem, not their own - though it does affect how a US party can sit in a structure.

A common market response has been to consider interposing a holding company in a jurisdiction whose treaty with Russia is in force. This is legitimate structuring when it has real substance, but Russian tax authorities apply beneficial ownership and anti-abuse concepts, and a conduit with no economic substance is a recognised risk rather than a solution.

There is also the redomiciliation route. Russia has built special administrative regions for re-domiciling foreign companies, with 674 companies registered there as of 2025, according to the Ministry of Economic Development. For a group that genuinely wants Russian residence, this changes the treaty question entirely, but it changes the group's legal and tax identity with it, and is not a passive fix.

Context on flows: 75% of foreign direct investment into Russia now comes from friendly countries, against 25% previously, per UNCTAD data cited in 2025, and 86% of exports are settled in rubles and friendly-country currencies, per the Bank of Russia in 2025. The settlement side of cross-border business has already adapted; the tax side is adapting more slowly.

How to check your own position: a practical sequence

The work is document-driven, and it is best done before a payment is made, not after.

First, establish the direction of the exposure. Russian-source income paid to a US recipient and US-source income paid to a Russian recipient now involve two different legal frameworks, and each needs its own analysis.

Second, classify the income correctly under Russian domestic law, not under the suspended treaty articles. A royalty, a service fee and a dividend are treated differently, and recharacterisation is a real audit risk.

Third, take a written position on permanent establishment exposure for any Russian activity by a US company - people on the ground, contracts concluded in Russia, dependent agents, long projects.

Fourth, check what unilateral relief the counterparty country gives for the foreign tax paid, since the treaty mechanism is no longer available.

Fifth, review existing structures for beneficial ownership and substance before the tax authority does, especially where a third-country holding company sits between a US parent and a Russian operating entity.

The sequence is straightforward; the conclusions are country-, entity- and year-specific. This is general information, not investment or legal advice, and the suspended-article list should be verified with a qualified tax adviser before it is relied on for any particular filing.

• Confirm the direction of the payment: Russian-source or US-source
• Classify the income under Russian domestic law
• Assess permanent establishment risk separately
• Check unilateral foreign tax credit availability in the counterparty country
• Test substance and beneficial ownership for any intermediate holding company
• Get the current article list confirmed in writing by an adviser for the relevant year

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