February 2025: The UK Suspends Double Taxation Convention with Russia

In August 2023, Russia suspended almost all provisions of its double tax treaty with the UK, as well as with several other "unfriendly" nations. These included treaties with Australia, Canada, EU Member States, Japan, Malta, New Zealand, Singapore, South Korea, Switzerland, the UK, and the US.

The only provision not fully suspended by these suspensions was that for elimination of double taxation. The Russian decree's wording was couched to impose higher taxes on the domestic income of residents of other states, but at the same time avoid double taxation of Russian residents.

At the time, the UK did not immediately accept Russia's suspension, urging the country to reverse its decision. The UK government expressed serious concerns and maintained that the treaty remained in effect.

However, the UK has now issued legal instruments reversing its earlier stance and informing Russia of its intentions. The tax treaties will no longer apply for income and capital gains tax starting 6 April 2025, and for corporation tax from 1 April 2025. According to HMRC, from that point forward, UK domestic tax laws will take precedence, but the treaty's terms will remain applicable for prior periods. If Russia complies with its treaty obligations again, new legislation could be enacted to reinstate the treaty in UK law.