On July 1, 2024 the United States gave formal notice to the Russian Federation confirming the suspension, by mutual agreement, of paragraph 4 of Article 1, Articles 5 to 21 and Article 23 of the income tax treaty and the accompanying Protocol. The suspension took effect on August 16, 2024, both for taxes withheld at source and for other taxes, and continues until the two governments decide otherwise (IRS Table 3, note 8). The withholding and business-profits articles are among those suspended, so payments to Russian residents are withheld at the statutory 30% rate with no treaty reduction.
What to withhold
- U.S.-source FDAP income (interest, dividends, royalties, rents, pay for services performed in the United States): 30%, unless a statutory exemption applies, such as portfolio interest or effectively connected income documented on Form W-8ECI.
- Services performed entirely outside the United States are foreign-source: no withholding and no Form 1042-S.
- A W-8BEN or W-8BEN-E that claims treaty benefits under this treaty cannot be relied on for the treaty claim. It still documents foreign status.