Finland’s tax treaty with Russia is set to be suspended from 1 July 2026, after the Finnish government proposed ending the application of the bilateral agreement that has regulated the taxation of cross-border income between the two countries since the 1990s. The move follows Russia’s decision in 2023 to suspend parts of the treaty in response to EU sanctions, while Finland had continued to apply it unilaterally.
What the Finland-Russia tax treaty covers
The Finland-Russia tax treaty is a bilateral agreement designed to avoid double taxation and prevent tax evasion on income earned across the two countries. In practice, treaties of this kind help decide which country has the right to tax certain forms of income, such as wages, dividends, interest or business profits, so that the same income is not taxed twice.
The agreement between Helsinki and Moscow was originally signed in 1996 and updated in 2002. According to Finland’s Ministry of Finance (Valtiovarainministeriö), the treaty had remained in force even after Russia suspended the application of some of its provisions in August 2023.
Why Finland is now suspending the agreement
The Finnish government said on Thursday that it will ask the President of the Republic to approve the suspension of the treaty’s application from the start of July. The proposal does not formally terminate the agreement, but it would stop Finland from continuing to apply it on its side.
That marks a change from the position Finland has maintained since 2023. After Russia partially suspended provisions in several tax treaties with what it called “unfriendly” countries, including EU states, Finland chose to keep applying the agreement unilaterally. The new decision would end that asymmetrical arrangement.
In its statement, the Ministry of Finance said the change is not expected to have significant economic effects.
Russia’s 2023 move and the wider sanctions context
Russia announced in August 2023 that it was suspending parts of its double taxation agreements with Finland and other EU countries. Moscow presented the measure as a response to the economic sanctions imposed after Russia’s full-scale invasion of Ukraine.
Finland’s move now reflects the broader deterioration in relations between Russia and EU member states since 2022. While the issue is technical and tax-related, it also fits into a wider pattern in which bilateral arrangements with Russia have been scaled back or frozen.
What happens next for taxpayers and cross-border income
The practical impact is likely to concern a limited number of cases, which helps explain why Finnish authorities do not expect major economic consequences. Still, suspending the treaty means that the legal framework for handling cross-border taxation between Finland and Russia will become less predictable.
In general, when a tax treaty is not applied, companies and individuals can face a higher risk of overlapping tax claims, depending on domestic tax rules and the type of income involved. Finnish authorities have not presented the move as a major fiscal measure, but as a legal and political adjustment to a situation that had already changed on the Russian side.
A technical step with political meaning
The suspension of the Finland-Russia tax treaty is a limited measure in economic terms, but it is politically telling. It shows that Finland is no longer willing to keep applying a bilateral framework alone after Russia stepped back from parts of the same deal. In the current Nordic and EU context, even technical agreements with Moscow are increasingly shaped by the fallout of war, sanctions and long-term strategic disengagement.
