Thread by @virtaava

EU firms operating in Russia made a deliberate choice to stay despite the increasing reputational risks associated with the country's actions. Now, they are facing the consequences of their decision. 1/8

These companies were aware of the potential harm to their reputation due to Russia's war and even before that.

By staying in Russia, they willingly associated themselves with a nation that has been largely condemned by international community. 2/8

These firms were not blind to the financial benefits that the Russian market offered. Despite the reputational risks, they continued to see their profits from operations in Russia rise. 3/8

For example, Austria's Raiffeisen Bank International recorded record profits of €2.2 billion in 2022, with more than 60 per cent of these profits coming from their Russian operations.
The decision to stay in Russia was calculated risk that many firms believed would pay off. 4/8

But as the situation in Russia has evolved, the harsh reality of their choices has become apparent.
President Vladimir Putin's government has made it increasingly difficult for these companies to untangle themselves from the country. 5/8

As the EU prepares for its 11th round of sanctions against Russia, the situation for these firms is expected to worsen. Proposed changes to tax treaties with "unfriendly" countries, including the EU 27, could lead to higher tax rates on profits from Russian operations. 6/8

The favourable double-taxation treaties that allowed minimal tax payments within Russia are now at risk.
EU firms that chose to stay in Russia are now facing the harsh reality of potentially higher taxes, damage to their reputation, and uncertain business conditions. 7/8

euobserver.com/world/157044

#War #Sanctions #EUfirms #RussiaIsATerroristState #ReputationalRisks #Consequences 8/8