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Finland will suspend the application of the tax treaty between Finland and Russia as of 1 July 2026

News, 6/17/2026

Finland will suspend the application of the tax treaty on income tax between Finland and Russia as of 1 July 2026. In August 2023, Russia unilaterally suspended the application of tax treaties with Finland and other countries that had imposed sanctions on Russia. Up until now, Finland has continued to apply the tax treaty in full even though the application has no longer been reciprocal.

The tax treaty stipulates which country has the right to collect income tax and how double taxation is eliminated when a person or company receives income from the other tax treaty country.
 
The change may affect individuals and companies residing in Finland and receiving income from Russia, and individuals and companies residing in Russia and receiving income from Finland. 

What the suspension means in practice

Following the suspension, both income taxation and elimination of double taxation are governed by each country’s national tax laws. For example, the reduced tax rates according to the tax treaty are no longer applied to dividends received from the other tax treaty country. In individual cases, it may also not be possible to eliminate double taxation.

According to Finnish tax laws, when an individual residing in Finland pays taxes to Finland, the taxes they have paid on the same income to Russia will be credited from the taxes payable in Finland.

Impact on pensions received from Russia

The change is estimated to concern around 3,000 pension recipients living in Finland.

Up until 30 June 2026, Finnish tax was not imposed on pensions received from Russia because of the tax treaty. However, a pension from Russia could raise the tax rate applied to the individual’s other earned income. 

Starting on 1 July 2026, pensions received from Russia will be taxed in Finland in the same way as Finnish pensions. However, state tax paid to Russia can be credited in Finnish taxation, i.e. state taxes paid on pension income to Russia can be credited from tax payable in Finland. 

Impact on wage income

The tax treaty may previously have limited the country of work’s right to collect tax in the case of short-term work assignments, for example. When the tax treaty is suspended, as of 1 July 2026, such limitations no longer exist.

The country of work may collect tax on wages as from the beginning of employment in accordance with national laws. In some situations, this may mean that wage income is taxed both in Finland and in Russia.

Double taxation will be eliminated in the tax assessment of an individual residing in Finland. In practice, this means that the State tax paid in Russia will be credited from the tax payable in Finland.

Impact on corporate taxation

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.

Background for the suspension

Starting in July 2026, the tax treaty will not be applied between Finland and Russia at all.

The effect of the tax treaty in different stages:

  • When the tax treaty was applied in both countries
    • The tax treaty could limit the countries’ right to collect tax. If income was taxed in accordance with the tax treaty in one country, double taxation was eliminated in the individual’s or company’s country of residence. 

  • When Russia suspended the application of the tax treaty as of August 2023 but Finland continued to apply the tax treaty unilaterally
    • Russia could collect tax on income contrary to the tax treaty. This may have led to situations where tax paid to Russia could not be credited, in full or in part, in Finnish taxation if Russia did not have the right to collect tax according to the tax treaty or if the maximum amount of tax was specified in the tax treaty. 

  • No tax treaty as of 1 July 2026
    • The tax treaty no longer has an impact on taxation. Double taxation will be eliminated in Finland in accordance with Finnish tax legislation by crediting the taxes paid to Russia.

In Government Proposal HE 60/2026, the overall financial impact of the change is estimated to be small because economic activities between the countries have significantly decreased in the past few years. 

Further information

Page last updated 6/17/2026