German Companies Paid €1.72 Billion in Taxes to Russia, Raising Concerns About Funding the War in Ukraine
Since Russia invaded Ukraine, German companies have paid nearly €1.72 billion ($2 billion) in taxes to Russia. Critics say this money could be helping fund the war, including attacks on Ukrainian cities. A recent report shows that more than half of the German companies that were in Russia before the war are still operating there today.
Legally, around 250 German companies still in Russia are not breaking any EU rules. Companies like cheese maker Hochland and gypsum producer Knauf, which sell everyday products, are allowed to operate under current regulations.
However, critics argue that paying taxes to the Russian government indirectly supports the war.
“Companies support Russia’s war by paying taxes,” said Nezir Sinani, director of B4Ukraine, a global group that works to block funding for Russia’s aggression.
By staying in Russia, these companies help the Russian economy, which in turn helps fund the war, he says. “Foreign companies are still contributing to the Russian economy and supporting the war. This loophole must be closed,” Sinani added.
A report by the Kyiv School of Economics, B4Ukraine, and the Squeezing Putin Initiative shows that international companies operating in Russia paid at least $20 billion (€17.2 billion) in taxes in 2024 alone. German companies are part of this.
Since Russia’s full invasion of Ukraine in early 2022, international companies have paid over $60 billion (€51.8 billion) in taxes to Russia. To put it in perspective, Russia pays about $18,400 (€16,000) to recruit one soldier for the war.
The $60 billion equals nearly half of Russia’s 2025 defense budget of $145 billion (€125 billion), enough to fund more than 1 million Russian soldiers.
What German companies say about doing business in Russia
German companies are the second-largest contributors to Russia’s tax revenue, after US firms.
In 2024, US companies paid $1.2 billion (€1 billion) in profit taxes to Russia, while German companies paid $594 million (€513.5 million), according to a report by KSE, B4Ukraine, and the Squeezing Putin Initiative.
KSE estimates that between 2022 and 2024, German companies paid up to $2 billion (€1.72 billion) per year in various taxes to Russia. According to Sinani, this money helps fund missiles and bombs used against Ukrainian cities. For context, that amount could buy about 10,000 Shahed-model attack drones, which are commonly used against civilians.
Hochland, a cheese manufacturer, said it feels responsible for its 1,800 employees in Russia and their families, as well as its long-term partners. The company has three factories in Russia: one near Moscow, one in Prokhovka (Belgorod region, two hours from Ukraine), and one in Belinski (Penza region).
Hochland continues to operate in Russia, saying that leaving is not an option. The family-owned company condemns Russia’s war in Ukraine but has no plans to sell its Russian operations, despite lower profits in 2024. The company said leaving would benefit the Russian government and expressed hope that Russia might one day return to Western values.
Leaving Russia is expensive
Exiting Russia has become more costly. In 2024, Russia raised the tax on business sales from 15% to 35%, according to Finance Minister Anton Siluanov. Companies must also offer bigger discounts on assets (50% to 60%), and deals over 50 billion rubles (~$526 million) require President Putin’s approval.
Hochland also has factories in Europe: four in Germany, three in Poland, two in Romania, and one each in Bulgaria, Belgium, and Spain. The company did not reveal how much of its revenue comes from Russia or how much tax it pays there. Corporate tax in Russia is 25%, the same for foreign and domestic companies.
German companies still make profits in Russia. KSE estimates their total revenue in 2024 at around $21.7 billion. By early July, only 503 international companies (12%) had fully left Russia. About one-third (33.2%) had paused operations or planned to leave, while 2,287 companies (54.8%) are still active.
For German companies, 55% of those active before the invasion are still in Russia. Another 135 have announced plans to stop or reduce operations. Only 74 have fully left through sale or liquidation.
Sinani warned that staying in Russia goes beyond paying taxes: companies risk being involved in the country’s war efforts.
Knauf denies involvement
Knauf, another German company, has faced accusations of helping Russia rebuild Mariupol. ARD’s political program Monitor reported that a Knauf distributor built housing in the city using Knauf materials for Russia’s Ministry of Defence. Mariupol was destroyed during Russia’s 2022 siege, leaving many civilians dead or displaced.
Russian media now show Mariupol as a large construction site, often featuring Knauf-branded materials. Knauf told Europe news it “categorically rejects all allegations” that it is supporting the war or Russia’s military.
Knauf said, “We have no contracts with the Russian Ministry of Defense or any related authorities.”
The company says its Russian branches do not sell products to government bodies. Instead, they sell mostly to independent construction retailers. Knauf also says it cannot control who these retailers sell to after buying its products.
In 2024, Knauf announced it wanted to leave the Russian market. But talks with a potential buyer failed, the company told. “The buyer ended the negotiations,” Knauf said. The company is now looking at other ways to exit Russia.
“Since we announced our withdrawal, Knauf has not earned any profit from Russia,” the company added. The Russian business is run independently by local managers.
Knauf also highlighted its support for Ukraine. It runs a factory in Kyiv with 420 workers and is building two more in western Ukraine. The company helps Ukraine with product donations and renovations for schools, clinics, and other facilities.
‘Hand over the keys and leave immediately’
So far, the German government and people have given Ukraine €44 billion in military, humanitarian, and financial aid. Yet many German companies still working in Russia weaken that support, said Sinani.
Economic sanctions on Russia are also less effective because international companies keep supporting the Russian economy.
Companies help Russia’s war not just through taxes, but also by providing technology, training, and supply chains.
Since Russia launched its full-scale war on Ukraine on 24 February 2022, the EU has added massive sanctions on Russia. These build on measures from 2014 over Crimea, the war in Donbas, and Russia not following the Minsk agreements.
The sanctions include restrictions on individuals, visas, diplomacy, and the economy, all aimed at putting maximum pressure on Russia.
But almost three years later, the war continues. Why haven’t the sanctions worked as intended?
“The only reason some people think sanctions don’t work is that they are not fully enforced,” said Sinani. Companies not on the EU sanctions list still support the Russian economy—and indirectly, the war.
“The number of German companies helping Russia is too high,” said the B4Ukraine director. The government does not do enough to push them to leave Russia quickly.
“Eleven years after Russia’s aggression started, very few companies have left a market directly tied to funding Russia’s war.”
He calls for a full withdrawal. “Hand over the keys and leave immediately.” Many companies have already shown it can be done. Sinani believes there is no reason to keep doing business in Russia.
“The cost of staying in Russia is much higher than leaving, because it is measured in hundreds of thousands of lives,” he concluded.
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