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Duties and obligations of Russian residents. Currency control and tax consulting

Duties and obligations of Russian residents
Currency control and tax consulting

Foreign citizens as "currency residents" and "tax residents" in Russia

Legal and ilegal currency transactions for the purposes of currency legislation

Repatriation of currency to the Russian Federation

Notifications and reports for the purposes of currency legislation

Tax on income in Russia and abroad, documents and information

Controlled foreign companies (foreign organizations)

Legislation against financing of terrorism and money laundering

Legal consulting services for foreign individuals becoming Russian residents




Foreign citizens as "currency residents" and "tax residents" in Russia

When you as a foreign citizen obtain a resident permit in Russia you become a Russian resident for the purposes of the currency legislation of the Russian Federation ("currency resident").

When you stay in Russia for more than 183 calendar days within 12 consecutive months you become a Russian resident for the purposes of the tax legislation of the Russian Federation ("tax resident").

From the viewpoint of statutory and de facto obligations (), adverse consequences in the event of non-compliance and prohibitions (), rights and legal opportunities () the duties of Russian currency and tax residents pursuant to Russian laws and regulations and practices may be summarized as follows.


Legal and ilegal currency transactions for the purposes of currency legislation

General duty to comply with currency and legal prohibitions and restrictions on transactions on foreign accounts outside Russia and other foreign exchange transactions

Extends to the past year, for which a person is recognized as a currency resident

General duty not to carry out prohibited currency transactions

General duty not to carry out transactions in violation of Russian currency laws (not provided for by law)

General duty not to carry out unauthorized transactions on foreign accounts outside Russia

General obligation not to carry out unauthorized transactions not through accounts in banks of the Russian Federation

Fine 75% - 100% of the amount of each illegal currency transaction

When such a fine is to be imposed, consideration should be given to the mitigating and aggravating circumstances in a specific situation


General rights under the currency regulation and currency control legislation

Right to make payments that are not currency transactions

Right to make the authorized currency transactions between residents and non-residents

Right to authorized currency transactions between residents

Right to authorized currency transactions not through accounts in Russian banks

Right to authorized currency transactions in foreign accounts outside Russia

Right to transfer monetary funds from one account to another of the same person



Repatriation of currency to the Russian Federation

Obligation to ensure the repatriation of currency on loans to non-residents

Not applicable to loan agreements entered into before 14 April 2018 provided there has been no substantial modifications thereof

Obligation to specify time terms in loan agreements for the purposes of repatriation of currency

Obligation to inform Russian banks about the expected time terms of repayment of loans

Fines from 3% to 100% of the amount of not repaid money on loans to non-residents


Obligation to comply with the Instruction of the Central Bank of the Russian Federation No. 181-I when granting loans to non-residents

Obligation to submit loan agreements and information on transactions to Russian bank through which payments are made

Fines for non-compliance with these obligations


Possible obligation to ensure the repatriation of currency when importing and exporting goods into/from Russia

Possible obligation to ensure the repatriation of currency in foreign trade services, work with non-residents

Possible obligation to ensure the repatriation of currency in the transfer of rights, information

Fines from 3% to 100% of the amount of non-received or non-repaid funds



Notifications and reports for the purposes of currency legislation

Obligation to notify tax agency about resident's foreign accounts in banks and other financial institutions

Duty to notify tax agency of changes in the account, in bank details, of account closure

Prohibition to have accounts abroad for Russian government employees and their families


Obligation to report on the movement of assets on foreign accounts

Exception from this duty for accounts that meet certain criteria of 600,000 rubles


Duty to keep bank documents on foreign accounts, documents on income abroad, documents on controlled foreign companies for the purpose of currency control and taxation in Russia


Obligation to submit bank documents to the report on the movement of assets at request of tax agency

Obligation to provide translation of foreign bank documents into Russian language

Obligation to provide a notarized translation of documents at request of tax agency

Right to provide explanations along with the report on movement of assets

Getting into the automatic exchange of information about foreign accounts for tax purposes

De facto obligation to report a change of residency to foreign bank where you have your accounts



Tax on income in Russia and abroad, documents and information

Obligation to file the 3-NDFL tax declaration on income abroad and profits / loss of controlled foreign companies

Obligation to submit proper documents on tax deductions (expenses)

Obligation to submit proper documents on offsetting the income tax paid abroad

Obligation to classify the foreign financial instruments as securities and derivative financial instruments for the purposes of Russian law

Right to assign losses on securities for future tax periods

Tax problem with expenses on foreign financial instruments not accepted in Russia as securities

Necessity to provide tax agency with full required information and to avoid contradictions in documents

Necessity to ensure that documents do not contain unnecessary, problematic information

Tax liability for failure to submit / delay the submission of the 3-NDFL tax declaration


Obligation to pay income tax on foreign income and income in Russia

At the same time, the Russian income tax rate decreases from 30% to 13 (15) %

Criminal liability for evasion of income tax

Tax liability with respect to income tax



Controlled foreign companies (foreign organizations)

Obligation to submit the notice on participation in controlled foreign companies (in foreign organizations)

Fines of 50 thousand rubles for failure to submit the notice or submitting an incorrect notice

Disclosure of participation in a foreign controlled company (or other foreign organization) to tax authorities of the Russian Federation


Obligation to submit notices on controlled foreign companies (including foreign organizations)

Obligation to submit financial statements of controlled foreign companies

Obligation to submit proper documents for the exemption of profits of controlled foreign companies from the income tax in Russia

Obligation to submit documents with respect to controlled foreign companies at request of tax agency

Fines of 500,000 rubles - 1 million rubles for violations regarding the notice on controlled foreign companies

Disclosure of controlled foreign companies' financial statements to tax authorities of the Russian Federation

Mitigating and aggravating circumstances when estimating the amount of the fine in a specific situation


General obligation to pay the income tax in Russia on profits of controlled foreign companies

Exemption from income tax for the "active" controlled foreign companies

Exemption from income tax for controlled foreign companies founded in the Eurasian Economic Union

Exemption from income tax for controlled foreign companies in high-tax countries

Exemption from income tax for controlled foreign companies under some other conditions / grounds

Tax benefit of 10 million rubles on profit of controlled foreign companies

Criminal liability for evasion of income tax (tax on profit of controlled foreign companies)

Tax liability with respect to income tax (tax on profit of controlled foreign companies)


Opportunity to switch to a fixed profit taxation of controlled foreign companies

Opportunity to recognize one's controlled foreign company as a tax resident of the Russian Federation

Opportunity of the re-registration ("redomiciliing") of a controlled foreign company as an international company of the Russian Federation



Legislation against financing of terrorism and money laundering

De facto duty not to carry out "dubious transactions" for the purposes of the Russian legislation to combat the financing of terrorism and money laundering

Difficulties in transferring money from Russia to controlled foreign companies' accounts



Legal consulting services for foreign individuals becoming Russian residents

Legal consulting services and drafting documents. Depending on specific client's situation, the currency control and tax consulting legal services may include:

  • oral consultations on general currency and taxation legal issues, basic laws and regulations, judicial (arbitration) practice in relevant currency and tax cases, first-opinion consultations on the clients situation, questions, problems
  • preliminary analysis of submitted documents and information and questions raised, checking the documents and situation for any signs and components of currency and/or tax offenses, legal risks, contradictions, missing details, and further oral consultation and opinion
  • preparation of written short estimations for legal solutions regarding specific questions and situations, with references to legal laws and regulations, key extracts from currency and tax legal rules and court decisions
  • advice in writing on currency legislation and currency control and on tax legislation and tax control in Russia
  • written legal opinion on questions raised and/or documents provided by client
  • detailed legal memoranda on questions raised and situations specified by the client providing legal analysis, conclusions, recommendations, comments
  • editing or drafting client's agreements and documents for the purposes of compliance with Russian currency and tax laws and regulations and practices
  • preparation of the client's notices on his (hers) foreign accounts outside Russia, reports on movement of assets in foreign accounts, 3-NDFL tax declaration, notices regarding controlled foreign companies
  • drafting written answers in the client's name to requests and demands of Russian tax authorities regarding currency control and tax issues
  • other legal services as the case may be

Price at request. Legal services are based and depend on circumstances, details of specific legal issues, situations, projects. Therefore, prices may be offered at request on a case-by-case basis. General terms and conditions and in particular the partner approach to the provision of legal services are set out on the page of the Proyecto-VS law company.

Time terms depend on specific situation, weekends available as well. The times for the provision of legal services depend on specific issues and situations and generally shall be specified in business days. If necessary and on urgent orders, the time period for preparing a written consultations and documents may include weekends and (or) holidays in the Russian Federation.

For companies and entrepreneurs, consultations on behalf of law company "Proyecto-VS". For com­pa­nies and individual entrepreneurs, legal services shall be provided on the basis of a general agreement for legal services and invoice(s) on behalf of the Russian law company OOO Proyecto-VS. The law company uses the simplified taxation system and pursuatn to this tax regime the services are not subjected to VAT in Russia.

For individuals, consultations and services under the "NPD" tax regime. For clients - individuals who are not in­di­vi­du­al entrepreneurs, legal services shall be provided by the author of this page and website under the tax regime for self-employed individuals "Tax on rofessional income" (having the Russian abbreviation "NPD") (Federal Law of the Russian Federation of 27 November 2018 No. 422-‘«).

Information
for this page
?Clear explanation and solutions for Russian legal issues

?Obligation of Russian residents to repatriate currency back to Russia

?Currency operations (payments) under currency legislation of the Russian Federation

?Residents and non-residents for the purposes of currency legislation of the Russian Federation

News and practices
for this page (11)
12.05.2021
The Ministry of Finance will modify tax conventions with Hong Kong, Sin­ga­po­re, and Switzerland

20.04.2021
Banks will strengthen control over dubious transactions of customers

19.03.2021
Foreign programmers will be offered a residence permit

10.02.2021
Income tax when selling investment coins made of precious metals

14.01.2021
Beginning from 2021, tax regulation of controlled foreign companies amended and fines sharply increased

23.12.2020
Fines of 18 million rubles for the sale of an apartment at the price of 12 million rubles to currency non-residents with payment of cash through a bank cell

01.09.2020
Courts of three levels supported tax agency in dispute with taxpayer about non-compliance with the terms of tax exemption of income received when liquidating a controlled foreign company

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