German Companies’ €1.72 Billion Tax Contributions to Russia Raise Alarms Over Indirect War Funding
As the war in Ukraine grinds on well into its third year, a new controversy is challenging Europe’s political and moral landscape. A recent analysis has revealed that German companies paid an estimated €1.72 billion in taxes to the Russian government in the years following Moscow’s full-scale invasion of Ukraine. The revelation has triggered sharp criticism across Europe, raising questions about business ethics, foreign policy priorities, and the unintended consequences of maintaining commercial links with an aggressor state.
At the heart of the debate lies a troubling contradiction: Germany is one of Ukraine’s strongest supporters, offering billions in military and humanitarian aid — yet German businesses operating inside Russia are, through taxes, contributing financially to the very government waging war on Ukraine. For many observers, it feels as if the left hand is undoing what the right hand is trying to build.
This article takes a deep look into what these tax payments mean, why companies remain in Russia, and what this controversy says about the difficult intersection of business interests and geopolitical conflict.
✅ The Numbers Behind the Controversy
The figure — €1.72 billion — comes from a detailed assessment by global economic researchers monitoring foreign corporate activity in Russia. Their data suggests that:
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German companies collectively pay around $2 billion (€1.72 billion) per year in Russian taxes.
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These taxes include profit tax, VAT, social security contributions, payroll tax, customs duties, and other mandatory payments.
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Across all foreign companies, the Russian government collected more than $20 billion (€17.2 billion) in taxes in 2024 alone.
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Since the war began, foreign firms may have contributed over $60 billion (€52 billion) to Russia’s earnings.
In peacetime, such figures would not spark headlines. In wartime, however, every stream of revenue flowing into Moscow is viewed through a very different lens.
Experts warn that corporate taxes are part of Russia’s general budget, which funds — among many things — defence procurement, missile production, soldier salaries, and drone manufacturing. Even indirectly, this creates an uncomfortable reality: Western corporate operations may be helping sustain the war economy of an invading nation.
✅ Germany’s Dilemma: Support for Ukraine vs. Corporate Links With Russia
Since February 2022, Germany has transformed itself from a hesitant actor to a major pillar of support for Ukraine. It has pledged billions in military aid, advanced air-defense systems, tanks, artillery, and ammunition. Berlin frequently positions itself as a defender of European security and sovereignty.
And yet, at the same time, hundreds of German companies continue to operate inside Russia.
This duality — hailed as leadership on one side, criticized as inconsistency on the other — has sparked intense political debate.
Why it’s such a sensitive issue
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Germany is Europe’s largest economy.
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German public opinion strongly supports Ukraine.
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Berlin has repeatedly called for isolating Moscow “economically and politically.”
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And still, German corporate taxes flow into Russia’s state budget.
For critics, the situation “undermines the credibility” of Germany’s stance. For supporters, the issue is far more complicated than it appears.
✅ Why German Companies Are Still in Russia
Not all firms that remain are motivated by profit alone. Many cite ethical, practical, and legal reasons for staying — often involving local employees and the difficulties of divesting under Russian law.
Here are the primary reasons companies give:
✅ 1. Responsibility Toward Local Employees
Companies like food-producers and manufacturing firms say they cannot abandon thousands of workers.
Leaving abruptly could lead to:
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mass layoffs
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unpaid salaries
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seized assets
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local families losing income overnight
Some German companies employ between 1,000 and 5,000 local workers in Russian plants, warehouses, or distribution networks. Executives argue that a sudden exit would “punish ordinary Russians, not the government.”
✅ 2. Legal and Financial Exit Barriers
Since the war began, Russia has introduced punishing exit taxes:
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Early 2022: 10% tax
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Later 2022: 15%
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2023: 25%
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Now: 35% tax on any business sale to leave the country
Additionally, foreign companies must sell assets at a mandatory 50% discount — often to Kremlin-linked buyers. Many firms fear their factories or assets could be confiscated or nationalized if they attempt to leave.
✅ 3. Fear of Strengthening the Russian State
Some corporate leaders argue that if they sell their factories, the buyer could be a state-aligned corporation, giving even more power to Moscow. Staying, they say, maintains some degree of control — and prevents Russia from taking over the entire operation.
✅ 4. Not All Industries Are Banned
Sanctions largely target military, strategic, and energy sectors. Companies in food, hygiene, construction, and essential goods can still legally operate.
This grey zone is exactly where many German companies sit.
✅ The Ethical Debate: Are These Companies Funding the War?
This is where the controversy becomes heated.
Analysts argue that paying taxes in Russia — even unintentionally — supports the war effort. Every corporate ruble strengthens the budget that finances missiles, drones, and military operations.
Some experts estimate that taxes paid by foreign companies:
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could fund thousands of Shahed drones
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amount to the price of hundreds of Russian tanks
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represent billions that could otherwise weaken the Kremlin economically
To Ukraine and its supporters, this isn’t just economics — it’s a matter of life and death.
✅ The Political Fallout in Germany
German politicians across parties are now facing pressure to address the situation. Critics say it is unacceptable for Germany to fund both sides of the conflict — even if unintentionally.
Lawmakers are calling for:
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stricter disclosure requirements for companies operating in Russia
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penalties for firms continuing to pay taxes in Russia
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guidelines to incentivize withdrawal
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closer monitoring of corporate footprints in sanctioned countries
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alignment of business decisions with national foreign policy
Some voices even demand a full ban on Western corporate operations in Russia until the war ends.
✅ Companies Respond: “It’s Not That Simple”
German companies still present in Russia have defended their decisions. Their main arguments:
“We condemn the war, but we must protect our workers.”
Thousands of local employees depend on stable factories and supply chains.
“Leaving could put our workers in danger.”
If Russia nationalizes a plant, workers may lose protections or benefits.
“Selling assets strengthens Russia more than staying.”
Forced sales at a 50% discount benefit Kremlin-linked buyers.
“Our products are humanitarian in nature.”
Some companies produce food, baby formula, hygiene items, or medicine — industries that directly impact civilian wellbeing.
These arguments, while not universally accepted, highlight the complexity of corporate responsibility during wartime.
✅ What This Means for Europe and the Future of Business
This controversy is much larger than Germany alone. U.S., French, Swiss, Italian, and Asian firms are also active in Russia. Europe is now confronting an uncomfortable truth:
Globalization was built for a world at peace — but the world is no longer peaceful.
Business decisions now carry geopolitical consequences.
Key questions the EU must face:
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Should companies be allowed to operate in countries waging aggressive wars?
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Does paying taxes equal indirect complicity?
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Should foreign policy override business interests?
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Is it ethical to stay in a country where your taxes fund violence?
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Can Western economies truly isolate Russia without corporate alignment?
The answers will shape Europe’s economic and strategic future long after the war ends.
✅ Conclusion: A Moment of Reckoning
The revelation that German companies have paid €1.72 billion to the Russian state during wartime has opened a deep discussion about ethics, economics, and responsibility. It highlights how interconnected the world is — and how difficult it is to disentangle business operations from geopolitics.
Germany now faces a choice:
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Continue supporting Ukraine while allowing corporate tax flows to Russia, or
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Reform policies, push companies to withdraw, and align economic actions with strategic commitments.
One thing is clear: the debate is far from over, and the decisions made today will influence not only Ukraine’s future but Europe’s moral and political identity.
