Germany equates Russia to Seychelles

Berlin has added the sanctioned country to its tax haven blacklist

Russia has been added to Germany’s list of “non-cooperative jurisdictions for tax purposes,” according to an announcement published in the Bundesanzeiger (Federal Gazette) earlier this week.

The order designating Russia as a tax haven was signed by Finance Minister Christian Lindner and Economy Minister Robert Habeck, after it was approved by the Federal Council on December 15.

The document says that Russia’s inclusion is due to its alleged non-compliance with international standards on tax issues. Three more jurisdictions were added to the blacklist, which now totals 16 territories, including Antigua and Barbuda, Belize, and the Seychelles. The legislation came into force on December 20.

Countries considered tax havens face reputational damage, while any transactions between them and tax-registered individuals and firms in Germany may face additional scrutiny from the local authorities.

In February this year, Russia was added to the EU’s list of tax havens. According to a statement published on the European Council’s website at the time, the decision resulted from the fact that Russian legislation introduced in 2022 failed to ease concerns over the alleged preferential tax treatment for international holding companies.

READ MORE: Western firms lost $103 billion from Russia exits – NYT

Russia suspended tax treaties in August with ‘unfriendly states’ – countries that placed sanctions on Moscow in connection with the Ukraine conflict. The measure scrapped double-taxation agreements with 38 countries, including Germany and most of the EU, the UK, US, Canada, Japan, Singapore, and New Zealand. Moscow said at the time that the tax treaties would be suspended “until foreign states eliminate the violations they have committed of the legitimate economic and other interests of the Russian Federation, the rights of its citizens and legal entities.”

Find more stories on economy and finance in TROIB business