Simplification of cash transactions between Russian and foreign participants in foreign economic activity

The Ministry of Finance has prepared a draft resolution aimed at providing residents with the opportunity to receive cash from non-residents under export contracts as advance payments, as well as the right for residents to choose the authorized bank for the sale of foreign currency with subsequent crediting not only in Russian currency, but also in other foreign currencies.
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Parallel Import: Exceptions in Trademark Protection, Importers' Obligations, Difficulties, and Risks from Practice

Most enterprises during their activities encounter designations that individualize the goods of legal entities or individual entrepreneurs, known as trademarks.Read more

Administrative liability for non-compliance with anti-crisis measures

According to the proposal of the Ministry of Finance, from January 1, 2024, it is planned to start monitoring how companies comply with anti-crisis measures in the financial sector and establish responsibility for violations in this area. It is expected that control will be entrusted to the Federal Tax Service, the Federal Customs Service and the Central Bank, and they will be empowered to request information from the control subjects.

It is planned that the amount of fines will be tied to the amount of the transaction carried out in violation of anti-crisis measures (20-40%), however, for officials, the maximum amount of the fine will be 30,000 rubles.

For transactions (operations) that do not have a monetary value, fines for officials may amount to 40-50 thousand rubles, and for legal entities - from 800 thousand to 1 million rubles.

Link to the draft law

Issuance enforcement order for the implementation en konsu outso

Issuance of an enforcement order for the implementation of an arbitration court decision may be refused if its execution violates anti-crisis measures

As follows from the court's conclusions stated in the Resolution of the Central District Arbitration Court dated February 27, 2023 in case No. A14-13590/2022, anti-crisis measures related to obligations to foreign persons are part of the public order of the Russian Federation.
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The has included russia the blacklist jurisdictions en konsu ou

The EU has included Russia in the "blacklist" of jurisdictions. Suspension of double taxation avoidance agreements is possible.

On February 14, 2023, the Council of the European Union ("EU Council") released a press release stating that Russia has been included in the "blacklist" of non-cooperative jurisdictions for tax purposes. According to EU authorities, Russia is not striving to resolve issues related to a special regime for international companies in special administrative regions to meet the criteria of effective tax management of the European Union.

Consequences of being included in the "blacklist"

Russia's inclusion in the EU's "blacklist" means that EU member states will have the right to apply administrative and legal measures against Russia. Each EU member state must choose at least one administrative measure and one legal measure. However, the application of all measures from the specified list simultaneously is not mandatory, but may be at the discretion of the specific EU member state.

Administrative measures include:

  • Enhanced monitoring of certain transactions between EU residents and Russian entities;
  • Increased audit risks for EU taxpayers using structures or transactions involving Russian entities.

Legal measures include:

  • The impossibility of tax resident companies in EU countries to deduct expenses incurred in transactions with Russian entities for tax purposes;
  • Application of CFC (controlled foreign company) rules to EU residents who may not have previously applied these rules under national legislation;
  • Application of source taxation on income paid to Russian entities that were previously exempt from taxation;
  • Limitations on the application of the exemption rules for distributed profits received from Russian entities for EU shareholder residents.

Suspending double taxation avoidance agreements

As a retaliatory measure, the Russian Ministry of Finance and Ministry of Foreign Affairs proposed to suspend the application of the DTAs. If the proposal is supported, the application of reduced tax rates (tax exemptions) for income covered by the double taxation avoidance agreements (such as interest, dividends, royalties) will be suspended from the date of the corresponding presidential decree.

Our support

We offer the following services:

  • Analysis of risks associated with the use of restrictive measures and their legal consequences for businesses, and if necessary, assistance in developing an optimal structure for interacting with counterparties from the EU.
  • Analysis of tax consequences of possible suspension of agreements on avoidance of double taxation and development of ways to mitigate them.

Please feel free to contact us for a consultation.

Dividend payout selling shares companies and real estate en kons

Paying dividends, selling shares and real estate by owners and shareholders from the states recognized by Russian authorities as unfriendly

Decree No. 618 introduced a restriction on transactions with shares of Russian LLCs owned directly or indirectly by unfriendly residents, entailing directly and (or) indirectly the establishment, change or termination of the rights of ownership, use and (or) disposal of shares in authorized capitals of limited liability companies (with the exception of credit institutions and non-credit financial institutions) or other rights that make it possible to determine the conditions for managing such limited liability companies and (or) the conditions for their entrepreneurial activities. The list of unfriendly states was approved by Decree No. 430-р. Permit to make transactions specified in Decree 618 shall be issued by the Government Commission for Control of Foreign Investments in the Russian Federation in accordance with the Rules approved by Decree No. 295 of the Government of the Russian Federation dated March 06, 2022. Read more

Unenforceability arbitration prorogation agreement en konsu outs

Unenforceability of arbitration or prorogation agreement in connection with the sanctions of foreign states

The parties to a foreign economic contract, when structuring contractual relations, quite often include a condition in the contract to refer disputes to a foreign court (prorogation agreement) or international commercial arbitration (arbitration agreement) located outside the territory of the Russian Federation, or enter into a separate agreement regarding this issue.

However, the economic sanctions imposed by the European Union, the United States and a number of other countries against the Russian Federation, Russian legal entities and individuals have a significant impact on their ability to comply with an agreement on referring disputes to the jurisdiction of a foreign court or international commercial arbitration.

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New presidential decree has been published imposing en konsu out

A new Presidential Decree has been published imposing additional restrictions on the corporate sector

In accordance with Decree No. 618 of the President of the Russian Federation dated September 08, 2022 “On Special Procedure for the Implementation (Execution) of Certain Types of Transactions (Operations) Between Certain Persons”, a special procedure has been established between residents and non-residents from unfriendly countries for transactions (operations) entailing, directly and (or) indirectly, the establishment, change or termination of the rights of ownership, use and (or) disposal of shares in the authorized capital of limited liability companies (with the exception of credit institutions and non-bank financial institutions) or other rights that make it possible to determine the conditions for managing such limited liability companies’ liability and (or) conditions for their entrepreneurial activities. From September 08, 2022 such transactions may be carried out (executed) only on the basis of permits issued by the Government Commission for Control over Foreign Investments in the Russian Federation and, if necessary, containing conditions for the implementation (execution) of such transactions (operations). As an exception, only certain transactions with shares in the authorized capital of users of subsoil plots are defined.

Overview sanctions and other restrictions well en konsu outsourc (2)

Overview of Sanctions and Other Restrictions, as well as Legislative Easements and Measures of State Support for Business in Russia

In 2022, the conditions for doing business in Russia have changed significantly. A multitude of sanctions, restrictions, relaxations, and measures of state support are being implemented. The lawyers and tax consultants at Konsu have prepared an overview of the main changes. We constantly monitor the situation and add information about the changes as the relevant documents are adopted and come into force.
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