Finland will suspend its income tax treaty with Russia effective 1 July 2026, ending a unilateral application that began after Russia's August 2023 suspension. The move will reinstate domestic tax laws for determining rights to taxation and double taxation relief between the two countries.
Finland will formally suspend its income tax treaty with Russia effective 1 July 2026, aligning with Russia’s August 2023 decision to suspend reciprocal application. Up until now, Finland maintained the treaty unilaterally despite the lack of mutual obligation, but has now decided to discontinue this one-sided approach.
The suspension means both nations will revert to their domestic tax laws for determining taxation rights and managing double taxation relief. Treaty provisions—including preferential dividend rates and other beneficial terms—will no longer apply.
Corporate income tax implications
Starting on 1 July 2026, income paid from Finland to Russia or from Russia to Finland will be taxed according to each country’s national tax laws. The reduced tax rates according to the tax treaty will no longer be applied. The suspension of the tax treaty also affects the application of such national provisions that apply only when the tax treaty is in force.
Pension income under new rules
The change directly affects approximately 3,000 Finnish pension recipients drawing income from Russia. Previously shielded from Finnish taxation by the treaty, Russian pensions will now be treated identically to domestic pensions beginning 1 July 2026.
However, pensions will continue to trigger tax rate adjustments on other earned income. The upside: Russian state taxes paid on pension amounts can be credited against Finnish tax liabilities, preventing double taxation through the Finnish tax assessment process.
Wage and employment changes
Employees on short-term assignments will lose treaty protections that once restricted host-country taxation rights. From 1 July onwards, employers may levy tax from day one of employment per their national legislation. While this could result in dual taxation on wages, Finnish residents will receive relief through state tax credits applied during annual assessment.
Legislative reference
Government Proposal HE 60/2026 projects minimal aggregate financial impact, attributing this to substantially diminished bilateral economic activity since 2023.
Earlier, Finland’s President signed the law suspending the implementing Act for the 1996 tax treaty with Russia on 29 May 2026.
