The Russian government has suspended double taxation treaties with more than 30 countries for “violations of the legitimate economic and other interests of the Russian Federation”. Austria is also affected by the measure against “unfriendly states”!
Tuesday’s decree by the Russian president also explicitly refers to the Austro-Russian agreement from the year 2000. Effects are particularly to be expected for international companies that continue to operate in Russia. In bilateral agreements with Austria and 37 other countries, Russia wants to apply only a few articles that explicitly refer to individuals. The Russian business medium ‘The Bell’ therefore wrote on Tuesday evening that Putin had implemented a soft version of the proposals of the Russian ministries of finance and foreign affairs, which had already called in March for the freezing of double taxation agreements with ‘unfriendly’ states.
The tax burden on companies is getting heavier
Putin’s decision could exacerbate the question of whether to continue operating in Russia or abroad for many international and Russian companies, the Moscow daily Kommersant told tax expert Aleksandr Jerassow. The newspaper wrote that the decision will certainly increase the tax burden on businesses, with the magnitude of the impact depending on the backlash from the “unfriendly” states.
Relations between Moscow and the West are at an all-time low since Russia attacked neighboring Ukraine more than 17 months ago. The European Union, but also the US and Great Britain reacted to the brutal war with, among other things, far-reaching economic sanctions against Russia. This may also be the background of the Kremlin decree.
Agreement possible in 2025 at the earliest?
However, in the case of Austria, contractual deadlines are likely to prevent an immediate suspension of the double taxation treaty. A written cancellation must be made before June 30 to take effect on January 1 of the following year.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
