Surprised by the number of German businesses operating and their tax payments in Russia

Legally, these businesses have done nothing wrong, nor have they violated European Union (EU) regulations.

Exterior view of the Moscow International Trade Center (Russia). Photo: AFP/TTXVN

According to Euronews, more than half of the German companies that were active in Russia before the outbreak of the Russia-Ukraine conflict have not left the Russian market. Legally, the approximately 250 German companies operating in Russia have done nothing wrong. Many of them, such as the cheese producer Hochland and the plaster producer Knauf, are not technically in violation of EU regulations. However, there are many critics who say that the Kremlin's contribution to the budget is an issue that needs to be addressed.

According to research by the Kiev School of Economics , in 2024 alone, foreign businesses still operating in Russia paid about $20 billion in taxes to the Russian government, German companies were among them.

German companies are the second-largest taxpayers to the Russian treasury, after American companies. According to the Kiev School of Economics, in 2024, American companies paid $1.2 billion in profit taxes to Russia, while German companies paid $594 million. The Kiev School of Economics estimates that between 2022 and 2024, German companies paid up to $2 billion a year to Russia in various taxes.

On this issue, Hochland told Euronews: “We have a responsibility to about 1,800 employees and their families, as well as to Hochland Group's long-standing partners in Russia.”

Hochland Group has three factories in Russia: one in the Moscow region, one in the village of Prokhovka in the Belgorod region – about two hours from the Ukrainian border – and one in Belinski in the Penza region. The group continues to operate in Russia and withdrawal is not an option.

For foreign companies, leaving Russia is becoming more expensive. Russia announced in 2024 that the exit process for foreign companies will be more expensive, Interfax quoted Russian Finance Minister Anton Siluanov as saying. Taxes on the value of business acquisitions have increased from 15% to 35%. The mandatory discount that companies must apply when selling assets has also increased, from 50% to 60%. For transactions worth more than 50 billion rubles (about $526 million), companies need to seek approval from Russian President Vladimir Putin.

According to the Russian Federal Tax Service, corporate income tax for foreign companies in Russia is currently at 25%, the same as for domestic businesses.

However, companies operating in Russia do not just pay taxes, they also make profits. The Kiev School of Economics estimates that the total turnover of German companies in Russia in 2024 will reach about $21.7 billion.

According to the Kiev School of Economics, as of early July, only 503 international companies, or 12%, had completely withdrawn from Russia by selling or dissolving their operations. Nearly a third (33.2%, or 1,387 companies) had temporarily suspended operations or announced plans to withdraw. Meanwhile, 2,287 companies (54.8%) continued to do business in the Russian market.

Source: https://baotintuc.vn/kinh-te/bat-ngo-voi-luong-doanh-nghiep-duc-hoat-dong-va-tien-dong-thue-cua-ho-o-nga-20251101202651361.htm