Bill No. 568223-8 ^[1]on the regulation of trading activities on marketplaces (the “Bill”) has been submitted to the State Duma for consideration. According to the Bill, the new rules will ensure that the rights and legitimate interests of sellers, owners of pick-up points and aggregators of information about goods (“Marketplace” or “Trading Platform”) are respected. The purpose of this bill is to provide general regulation for all marketplaces.

In particular, it defines the requirements for contracts, which must contain the procedure for the sale of goods, determining and changing the price, mutual settlements between the parties, as well as the liability of the parties and the procedure for dispute resolution. In particular, the contract between a trading platform and the owner of a pick-up point shall, among other things, specify the requirements for the infrastructure of such pick-up point.

Also, according to the bill, when concluding a contract for the provision of services, the trading platform will be obliged to carry out a procedure to confirm the seller's profile and identify the owner of a a pick-up point by requesting documents certifying identity and (or) confirming the state registration of a legal entity or the status of an individual entrepreneur, self-employed person, etc.

It is not allowed to place information on the web-page of the trading platform about goods, the free sale of which is prohibited or subject to mandatory labelling in accordance with the requirements of the legislation of the Russian Federation. A trading platform must, among other things, ensure that the age of the purchaser is verified when attempting to access the card of a product whose sale is age-restricted in accordance with current Russian legislation. Trading platforms will also be prohibited from demanding and receiving from the buyer compensation and other payments in connection with the return of goods.

Special rules are introduced for marketplaces that occupy a significant position on the market, the share of transactions between sellers and buyers in value terms exceeds 20% of the total volume of transactions made on marketplaces in Russia for the preceding calendar year. Such marketplaces occupying a significant position on the market are prohibited from changing the terms and conditions of the service agreement, which worsen the position of sellers and owners of pick-up points, without prior notice (at least 30 days in advance). In addition, such marketplaces are prohibited from creating conditions for the sale of goods on other trading platforms on the Internet.

If adopted, this law will enter into force on March 1, 2025. Compliance with the rules and requirements stipulated by this federal law will be supervised by the Federal Antimonopoly Service of Russia.

[1] Bill No. 568223-8 on State Regulation of Trade Activities of Aggregators of Information on Goods in the Russian Federation and on Amendments to the Federal Law "On the Basics of State Regulation of Trade Activities in the Russian Federation"

The background of the court case: the seller of a share in the authorized capital of a limited liability company entered into a preliminary contract for the sale of the share with the buyer with the notarized consent of the spouse both for the sale of the share and for the conclusion of a preliminary agreement.

Under the terms of the preliminary contract, the parties undertook to enter into the main contract for the sale of the share in the future. After the conclusion of the preliminary contract, the seller's spouse stated that she did not give her consent to the conclusion of the main contract for the sale of the share on the terms of the preliminary contract and withdrew first her consent to the conclusion of the preliminary contract and later - to the sale of the share, in connection with which the seller avoided concluding the main contract with the buyer. This was the reason for the latter's appeal to the court with a claim to compel the conclusion of the main contract of sale of the share. In turn, the seller filed a counterclaim to recognize the concluded preliminary agreement as invalid, concluded on bonded terms and under the influence of deceit.

The courts of the first, second and third instances refused the seller’s claims, indicating the impossibility of forcing the seller to alienate a share in the authorized capital of the company with a violation of the right of joint ownership of the spouses, as the consent of the spouses to the alienation of the share and the conclusion of the preliminary agreement were withdrawn. The courts also rejected the seller's claim, pointing to the lapse of the limitation period. Disagreeing with the lower courts, the buyer appealed to the Supreme Court of Russia to review these judicial acts in part of her claim, referring to significant violations of substantive law norms committed by the courts.

The Supreme Court of the Russian Federation considered otherwise. Civil legislation contains no provisions regulating the withdrawal of prior consent to a transaction. The essence of family relations does not exclude the possibility of withdrawal of such consent given by one of the spouses, for example, in connection with a change in the interests of the family, the occurrence of circumstances leading to the loss of the consent of the spouses regarding the disposal of their common property. At the same time, the possibility of withdrawal of prior consent to a transaction may not be unlimited in time, since such action may affect the rights of other parties to the turnover arising from the consent previously given by a third party. Withdrawal of consent, the notice of which was received by the parties to the transaction after its execution, shall be deemed to have failed^[1]. Revocation of a preliminary consent after the transaction has been made, as well as revocation of a subsequent consent (approval) may not serve as a basis for recognizing the transaction invalid. The possibility of withdrawal of prior consent is lost from the moment when it has affected the legal relations of other parties to the turnover, namely, served as a basis for the emergence of their rights and obligations under the contract. Withdrawal of consent is allowed before the parties, based on the consent of a third party, have entered into a contractual relationship. Therefore, withdrawal of the spouse's consent after the conclusion of the preliminary contract has no legal consequences, the main contract must be concluded. The spouse's consent contained an indication that her spouse was entitled to sell the share for a price and under conditions at his own discretion, so the arguments of the counterclaim also cannot be taken into account.

Information source: Ruling of the Supreme Court of the Russian Federation of 09.08.2022 Nu. 307-ES22-6562 in case Nu. A26-7222/2020.

[1] Par. 57 of the Resolution of the Plenum of the Supreme Court of the Russian Federation of 23.06.2015 Nu. 25 “On the application by the courts of certain provisions of Section I of Section I of Part I of the Civil Code of Russia”.

According to media reports, the Russian Ministry of Economic Development has drafted an updated version of the bill on determining the value of the share of LLC shareholders withdrawing from the company, which was presented last year. Currently, upon withdrawal from an LLC, a shareholder receives payment based on the book value of net assets determined by the company, which usually does not correspond to the market value of the share. The existing mechanism often leads to court disputes, and the amendments proposed by the Ministry are expected to reduce their number.

The document provides for the company to assess the market value of a withdrawing shareholder's share at the latter's initiative and expense. Payments will be made on the basis of this assessment, and in case of disagreement with the assessment, the withdrawing shareholder will have the right to challenge it in court.

The valuation of the share may also be initiated by the company’s creditors in case the court forecloses on the shareholder's share, as well as other persons, for example, heirs, to whom its value is to be paid.

While it is in the interests of the withdrawing shareholders to receive the market value of the share rather than the book value, its payment may become a serious burden for companies with low asset value. It is also debatable whether the company has the right to independently select (including expensive) appraisers, since the obligation to pay for their services falls on the withdrawing shareholder.

Russian companies engaged in foreign trade activities may now not submit documents on transactions with foreign partners to the bank if the price of such a transaction does not exceed 1 million roubles. Previously, this threshold amounted to 600,000 roubles.

Such changes are stipulated by the Bank of Russia's Instruction Nu. 6663-U from 09.01.2024 (hereinafter - the “Instruction”) and came into force on April 1, 2024.

The obligation of businesses to send to authorized banks shipping, delivery and other documents confirming the movement of goods within the EAEU is also abolished - the Federal Customs Service will exchange such information with banks independently in electronic form.

In addition, it establishes the right of companies to settle foreign trade contracts through any authorized bank, not only through the bank where they are registered.

The Instruction also defines the peculiarities of submitting to the bank documents on transactions with foreign counterparties in cash and the formation of reports on such transactions, and expands the composition of information reflected in the bank control statement - all this is aimed at more effective monitoring and accounting of currency transactions.^[1]


[1] Information from the Central Bank of the Russian Federation from March 27, 2024

The Federal Tax Service has launched a new service enabling any person to obtain free of charge copies of the constituent documents of any legal entity contained in the Unified State Register of Legal Entities (EGRUL) and amendments made to them in the form of an electronic document by authorization through Gosuslugi (ESIA).

After compulsory authorization, any interested person will be able no more than 10 times a day:
- find and view, with respect to a particular company, the list of documents contained in the EGRUL that can be obtained in electronic form;
- choose from the list of documents to receive them electronically.

In case a legal entity acts on the basis of a model charter, information on the number of the model charter and the possibility to download such model charter is provided.

In accordance with Article 6 of the Federal Law of 08.08.2001 № 129-FZ “On State Registration of Legal Entities and Individual Entrepreneurs” copies of constituent documents of a legal entity can be issued even if they contain passport data of individuals.

The service does not yet allow obtaining copies of other documents contained in the Unified State Register of Legal Entities, except for constituent documents. If necessary or if it is not possible to obtain the necessary documents using the service, the user may apply to the registration authority at the location of the legal entity to obtain them.

On April 3, 2024 the Federation Council of the Russian Federation approved a law on increasing the minimum thresholds for big and particularly big endamagement for a number of economic crimes. Corresponding amendments were made to the Criminal Code and the Code of Criminal Procedure of the Russian Federation.^[1]

According to the explanatory note the increase in inflation in recent years has led to the fact that the degree of public danger of the committed crime in the amount of 1 million rubles in 2022 has significantly decreased compared to the same in 2011. In addition, one of the priorities in the case of unprecedented external economic sanctions should be to ensure maximum economic freedom of doing business which implies liberalization of criminal law.

The changes were made in a number of articles of the Criminal Code of the Russian Federation which provide for punishment for crimes related to the avoidance of mandatory payments to the state budget (Art. 199, 199.1, 199.3 and 199.4). Thus, the threshold for tax avoidance (Art. 199) and for violation of the duty of the taxpayer (Article 199.1) is increased from 15 million rubles to 18.75 million rubles for big damage and from 45 million rubles to 56.25 million rubles for particularly big damage.

The thresholds for big and particularly big damages under articles for the avoidance of payment of contributions by the insurant - a natural person (Art. 199.3) increased from 1.8 million rubles to 2.250 million rubles and from 9 million rubles to 11.25 million rubles and under Article for the avoidance of payment of contributions by the insurant - an organization (Art. 199.4) – from 6 million rubles to 7.5 million rubles and from 30 million rubles to 37.5 Million rubles.

The changes also involved Article 159 of the Criminal Code (fraud). The amount of the big damage was increased from 3 million rubles to 4.5 million rubles and the particularly big damage - from 12 million rubles to 18 million rubles.

Articles 170.2 (entering of obviously incorrect information in the demarcation plan), 178 (restriction of competition), 180 (the illegal use of means for individualization of goods (works, services) of the Criminal Code and other were also amended.

The law will enter into force after its signing by the President of the Russian Federation and after 10 days of its official publication without changes to Article 194 of the Criminal Code regarding the avoidance of payment of customs duties. These changes come into force after 90 days from the date of publication.

[1] Draft Law No. 327269-8 "About Amendments to the Criminal Code of the Russian Federation and the Code of Criminal Procedure of the Russian Federation"

On March 29, 2024, the Russian anti-sanctions legislation was supplemented by a new Presidential Decree No. 221 “On the special procedure for the execution of certain transactions (operations) with stocks (shares in authorized capitals) of certain companies” (“Decree No. 121”). The list of companies affected by Decree No. 121 is not disclosed, and the information under paragraphs 1 and 2, which establish a special procedure for certain types of transactions with shares in certain business entities, is for official use only.


The companies directly subject to the regulation of Decree No. 121, as well as companies controlled by them, are exempt from mandatory disclosure/provision of information based on the requirements of the Russian legislation. Russian legal entities that have acquired stocks/shares in these companies are also not required to disclose or provide information. They are only required to send relevant notification to federal executive authorities and other persons authorized to receive such information and provide such information upon request of the competent authorities.

According to the Decision of the Working Group of the Bank of Russia dated 06.03.2024 № PRG-12-3/534 "On Consideration of Issues of Issuance of Permits for Carrying out (Execution) of Operations (Transactions), in respect of which prohibitions (restrictions) on their performance are established in connection with unfriendly actions of foreign states", from April 1, 2024 the conditions for carrying out operations on payment for shares, contributions, units in the authorized capital of legal entities - non-residents are changed, also it concerns payment of contribution by residents within the framework of execution of simple partnership agreements with capital investments. Now the implementation of these transactions will be allowed without obtaining individual authorization from the Bank of Russia. However, the total amount of funds under the transactions should not exceed RUB 15 000 000 (at the official exchange rate of the Central Bank of Russia on the date of payment). Transactions may be made in rubles or foreign currency, regardless of the location of the recipient of the funds. That is, the aggregate volume of resident's transactions in favor of one non-resident legal entity should not exceed the established amount.

Previously, according to the Decision of the Working Group of the Bank of Russia of 23.06.2022 № PRG-12-4/1383^[1] limit of RUB 15 000 000 applied to transactions in foreign currency of "unfriendly" states, and for transactions in rubles or foreign currency of a "friendly" state, individual authorization of the Bank of Russia was not required.


[1] Decision of the Working Group of the Bank of Russia of 23.06.2022 No. PRG-12-4/1383 "On Consideration of Issues of Issuance of Permits for Performing (Executing) Transactions by Residents, Non-Residents, in respect of Which Prohibitions (Restrictions) on Their Performance are Established in Connection with Unfriendly Actions of Foreign States".

Additional: Presidential Decree of 18.03.2022 No. 126 (ed. 18.12.2023) “On additional temporary measures of economic nature to ensure financial stability of the Russian Federation in the sphere of currency regulation”.

Earlier, Presidential Decree No. 844 of November 8, 2023 “On Additional Temporary Measures of Economic Nature Related to the Circulation of Foreign Securities” (hereinafter - the “decree”) defined the conditions for the exchange of blocked assets, established the procedure for calculating the aggregate initial value of alienated foreign securities owned by one resident, and approved the terms of trading and transactions (operations) with foreign securities.

On March 11, 2024 the Ministry of Finance announced the appointment of the broker OOO Investment Chamber as the organizer of trades between Russian investors and foreigners. The exchange of blocked assets will take place within the framework of this decree, according to which foreign investors with money from accounts type "C" will be able to purchase foreign securities of Russians, which were blocked due to sanctions against the National Settlement Depository (NSD). Only foreign securities held on NSD's accounts with foreign organizations can be tendered for redemption.

The aggregate value of the alienated foreign securities owned by one resident must not exceed RUB 100,000. The initial value of the assets will be determined as of March 22, 2024, based on the closing price of foreign securities on the foreign market. The actual sale value of assets may be higher than the initial value, as it will be formed after the receipt of bids from non-residents and will depend on the actual demand and market conditions.
The procedure for collecting applications from residents will be held until May 8, 2024. An application for sale of blocked foreign securities can be submitted only through a broker, management company or a manager of a unit investment trust. Applications sent directly to the organizer of trades will not be accepted. Until May 31, 2024, all bids will be allocated to lots for redemption by non-residents. They must be identical in terms of the composition of securities and aggregate value. In this case, the organizer of the auction will determine the maximum price, which will allow to sell all lots.

Applications from potential non-residential buyers will be accepted until July 5, 2024, and until July 29, 2024, based on the results of the auction settlements between foreign and Russian investors will be made. If foreign investors do not buy out all lots, the remaining securities will be returned to Russian investors.


The transactions are planned to be completed by September 1, 2024. Participation in the exchange of blocked assets is voluntary, but it will be impossible to withdraw the application. The procedure is free of charge. Assets bought by non-residents will be credited to special transit depo accounts to be opened at the end of the trades; the money that Russian investor receive from the sale will be transferred to accounts specified by them.

The Federal Law from 10.12.2003 N 173-FZ “On Currency Regulation and Currency Control” has been amended to allow the use of digital financial assets (DFA), utilitarian digital rights, as well as digital rights that include both of these instruments at the same time, in international settlements. Also, utilitarian digital rights may be used as counter-provision under foreign trade contracts concluded between residents and non-residents, which provide for the transfer of goods, performance of work, rendering of services, transfer of information and results of intellectual activity, including exclusive rights thereto.

Digital financial assets are digital analogues of debt receipts, bonds and equity participation rights formalized via blockchain. Cryptocurrencies, including bitcoin, do not belong to CFAs.

At the same time, the Central Bank of the Russian Federation, in order to ensure the stability of the financial market of the Russian Federation, will be entitled:

• to establish a ban on certain types of currency transactions related to the acquisition and alienation of digital rights;
• determine the conditions for the performance of certain types of currency transactions related to the acquisition and alienation of digital rights;
• request information on beneficial owners from the person who issued the digital currency rights and from the operator of the information system in which they are issued.

Russian Government has approved the list of economically significant organizations (Order of the Government of the Russian Federation No. 491-r "On Approval of the List of Economically Significant Organizations" dated March 1, 2024). This list includes six companies from different sectors of the economy that are essential for the country's economic security. The first version of the list included organizations involved in the ownership structure of Alfa-Bank, AlfaStrakhovanie, X5 and Azbuka Vkusa chains, including fertilizer producer Acron: AB Holding JSC, UNS-Holding LLC, IKS 5 Corporate Center LLC, Acron Group JSC, City Supermarket LLC and Razrez Arshanovsky LLC. The Ministry of Economic Development of the Russian Federation specifies that this list may be expanded. To be included in the list, a company must meet the following criteria:

• annual revenue of more than 75 billion rubles,
• the value of assets – more than 150 billion rubles,
• the number of employees – more than 4 thousand people,
• the amount of taxes paid for the previous year – not less than 10 billion rubles,
• the company's work in critical industries, as well as
• ownership of direct and indirect participation of Russian shareholders in a foreign holding company – as a general rule – more than 50%.

The Federal Law No. 470-FZ "On Peculiarities of Regulation of Corporate Relations in Business Companies that are Economically Significant Organizations" adopted in 2023 gave Russian shareholders controlling economically significant organizations the right to transfer to Russian jurisdiction shares (stakes) owned by Western investors from "unfriendly" countries.

Inclusion in the list gives an opportunity to suspend the exercise by a foreign holding company of corporate rights in respect of an economically significant organization through a court.

Also, Russian President's Decree No. 73 of January 27, 2024 allowed economically significant organizations and persons who have transferred to direct ownership of shares and interests in them not to disclose information about their activities in the public domain, which must be disclosed in accordance with the Federal Laws "On JSC", "On LLC", "On Banks and Banking Activities", "On Audit Activities" and others.

According to the amendments to the Federal Law "On the Legal Status of Foreign Citizens in the Russian Federation", new salary requirements for foreign highly qualified specialists (HQS) came into force on March 1, 2024. Employment of foreign employees in the status of HQS requires compliance with the legislation of the Russian Federation and provision of an appropriate level of income.

Now the minimum salary for HQS must be at least 750,000 rubles before tax deduction for one quarter, which is at least 250,000 rubles per month, (previously – 167,000 rubles per month). This means that by the end of Q1 2024 (end of March) the salary of a foreign highly qualified specialist should already meet the new requirements and amount to at least 750,000 rubles for a given quarter. But there are no specific requirements for the distribution of monthly payments during the quarter. Nevertheless, the salary for January and February must be at least 167,000 rubles, and at the end of March the amount of payments must be at least 750,000 rubles before tax.

Non-compliance with the requirements for the payment of foreign highly qualified employees threatens the employing company with an administrative fine, temporary suspension of the organization's activities or, in some cases, criminal liability.

A new bill (No. 557616-8 "On Amending Article 35 of the Family Code of the Russian Federation") has been introduced to the State Duma, according to which the written consent of the spouse will be required to conclude a transaction for the sale of a motor vehicle (car, motorcycle, snowmobile, snowmobile, snowmobile). In the absence of such a document, the disagreeing spouse has the right to demand in court that the transaction be recognized as invalid within one year when he or she found out or should have found out about the transaction.

According to the current Family Code of the Russian Federation, when one of the spouses makes a transaction on the disposal of the common property of the spouses, it is assumed that he/she acts with the consent of the other spouse. However, such a transaction may be recognized by the court as invalid if the other spouse proves the fact of his (her) disagreement prior to the implementation of the transaction. Judicial practice shows that it can be extremely difficult to prove this.

The explanatory note to the bill states that the vast majority of transactions falls on the alienation of vehicles, and in some cases the value of movable property exceeds the value of real estate (apartments, houses, land plots, shares in them). Thus, the consent of the second spouse may be given in a simple written form, the joint participation of spouses in the transaction is not excluded either. Where both spouses are named in the contract, a separate written consent isn’t required.

Thus, in the event of a court challenge to the transaction, the spouse who did not participate in it is relieved of the obligation to prove that the other party to the transaction knew or should have known of his or her opposition to the transaction, since the evidence will be the very fact of the absence of written consent.

On February 26, 2024 amendments were made to the Decree of the President of the Russian Federation of 05.08.2022 № 520 “On the application of special economic measures in the financial and fuel and energy spheres in connection with unfriendly actions of certain foreign states and international organizations”.

Decree No. 520 establishes a general ban on transactions (operations) entailing the establishment, change, termination or encumbrance of rights to own, use and dispose of securities, shares (contributions) in the authorized capitals of Russian companies, as well as rights and obligations under production sharing agreements, joint activity agreements or other agreements on the basis of which investment projects are implemented in the territory of the Russian Federation. These transactions may be made only on the basis of a special decision of the Russian President.

This prohibition applies to transactions with shares, stakes in authorized capitals of strategic enterprises, companies of the fuel and energy complex, credit organizations, rights and obligations belonging to participants in Production Sharing Agreements for the Sakhalin-1 project and oil production at the Kharyaga field, as well as a number of other enterprises owned by foreign persons from unfriendly states.

According to the introduced amendments, the Government Commission for Control over Foreign Investments will consider the expediency of the above transactions and prepare a motivated recommendation on the (in)expediency of such transactions. If the transactions concern financial organizations, prior consent of the Central Bank of the Russian Federation will be necessary for the preparation of the recommendation.

It is emphasized that a special decision of the President of the Russian Federation may be adopted without taking into account the recommendation of the Government Commission.

The Federal Tax Service considers it unlawful to receive money from the letting of immovable property abroad on foreign accounts.

For example, a Russian resident leased out commercial premises belonging to him which were located in Germany. He received a fine of 30% of the profit received from the Russian tax authorities.

In the opinion of the fiscal authorities, the same rules should apply to individual entrepreneurs as to legal entities with regard to currency control. This means that all currency transactions must be conducted through accounts in Russian banks. At the same time, the absence of official status of an individual entrepreneur is not a barrier to recognizing a person as such. For the tax authority a sufficient argumentation may be the fact that the actions of a citizen are aimed at systematic profit making – in this case, the conclusion of a lease agreement.

If this approach finds support in Russian courts, landlords with foreign accounts will receive fines of 20-40% of their profits. Owners of foreign shares and deposits may also be at risk.

Russian Court of Cassation has put an end to the case on the claim of the Cypriot company A1 Capital Limited against the Swiss bank Credit Suisse AG for recovery of debt in the amount of more than 22 million U.S. dollars and interest for delay in fulfilment of the obligation. The plaintiff's Russian subdivisions JSC “Credit Suisse Bank (Moscow)”, LLC “Credit Suisse Securities (Moscow)” were involved as third parties. To ensure satisfaction of the plaintiff's claims, Credit Suisse AG seized 99.999995 % of the stocks of “Credit Suisse Bank (Moscow)” and 99.9999073 % of the shares of “Credit Suisse Securities (Moscow)” owned by Credit Suisse AG (Case No. A40-304601/2023).

It follows from the case materials that in April 2019 the plaintiff opened bank accounts in US dollars, euros and Russian rubles with Credit Suisse AG Bank. In March 2022, the bank stopped executing the plaintiff's orders for banking operations, closed access to the bank-client system and froze all funds in the accounts. In support of its actions, the bank pointed out that the plaintiff had been identified as a sanctioned person.

In May 2022, the plaintiff sent the bank a notice of unilateral termination of the agreement and requested that the funds be transferred to the plaintiff's accounts opened with a Russian bank.

Despite the fact that by agreement of the parties the applicable law was Swiss law, the plaintiff managed to have the case heard in a Russian court. The basis for this was the fact that the ultimate beneficiaries of A1 Capital Limited with a 100% interest are Russian citizens A.N. Kosogov and M.M. Fridman, against whom anti-Russian sanctions were imposed by Switzerland, the UK and EU countries. The bank's arguments that the plaintiff is trying to protect the interests of a foreign offshore organization, as well as to withdraw funds that did not enter the territory of Russia to an offshore zone, the court found untenable for the following reasons.

The adopted sanctions restrictions, which prevented the transfer of A1 Capital Limited's funds, in the court's opinion, contradict the fundamental principles provided for by the Russian Constitution. The civil legislation of the Russian Federation does not allow a Russian court to apply foreign sanctions legislation directed against the interests of the Russian Federation.

Since the defendant has not cited any other circumstances for refusing to fulfil its obligation to disburse funds to the plaintiff other than compliance with the Swiss sanctions, this objection of the defendant is not justiciable and cannot be taken into account. “Unfriendly” bank cannot unilaterally cease to fulfil a contract solely on the ground that its client is on the sanctions list.

Thus, the court satisfied the claims of A1 Capital Limited – as of May 16, 2022, the agreement with the bank is considered terminated, and the bank in turn had a monetary obligation to the plaintiff to pay the above amounts. To date, the bank has filed several applications to challenge the actions of bailiffs (cases No. A40-304601/2023, No. A40-305524/2023b No. A40-7087/2024 and No. A40-15084/2024).

On February 1, 2024, amendments^[1] to the Federal Law No. 281-FZ “On Special Economic Measures and Coercive Measures” of December 30, 2006 will come into force, dedicated to restrictive measures in respect of so-called blocked persons.

Such measures include, in particular:

• prohibition (restriction) of financial transactions of blocked persons;
• freezing (blocking) of monetary funds and property of blocked persons, as well as financial transactions in the interests and in favour of such persons.

The additions also introduce the concept of a blocked person. Blocked persons are foreign states, organizations, citizens, as well as stateless persons determined by the decision of the President of the Russian Federation, as well as legal entities controlled by foreign organizations, citizens and stateless persons according to the control criteria established by this law.

The amendments establish a closed list of transactions permitted to blocked persons. These include: receipt of salary and its expenditure in the amount not exceeding 10 thousand rubles (its equivalent in foreign currency) per calendar month per each member of his family who does not have independent income, payment for medical services in the Russian Federation for himself and close family members in the amount not exceeding 10 thousand rubles (its equivalent in foreign currency) per calendar month per each member of his family, and so on. There are no restrictions on receiving and spending pensions, scholarships, allowances, social payments guaranteed by the state in accordance with the legislation of the Russian Federation. It is also allowed to pay taxes and fees in accordance with the Russian legislation. Additional restrictions may be established by sectoral laws.

The obligation to implement special economic measures in respect of blocked persons is imposed on banks, insurance organizations, microfinance organizations, leasing companies, pawnshops, payment acceptance operators, postal service organizations and other organizations from the list established by additions to the law. The law also imposes on them the obligation to report to higher supervisory authorities^[2]:

• to the Central Bank of Russia – for supervised financial sector organizations;
• to the Federal Assay Chamber – for organizations involved in the circulation of precious metals, precious stones, jewellery and scrap thereof;
• to the Federal Service for Supervision in the Sphere of Communications, Information Technologies and Mass Communications – for independent organizations and telecommunications operators;
• to the Federal Tax Service – for organizers of gambling games and lottery operators with regard to activities involving the payment, transfer or provision of winnings under a contract on participation in a lottery.

Failure to comply with special economic measures in respect of blocked persons is punishable up to the deprivation of a license, prohibition of operations and cessation of activities – the relevant amendments have been made to the relevant specialized laws.


[1] Federal Law No. 422-FZ from 04.08.2023.
[2] Resolution of the Government of the Russian Federation of 22.01.2024 No. 41.

Russian President has signed a decree allowing economically significant organizations not to disclose certain information, the disclosure of which is mandatory under a number of regulations, such as laws on joint stock companies, limited liability companies, banks, consolidated financial statements, etc. Also, persons who have taken direct ownership of shares or stakes in such companies, as well as judicially created companies to which the management of economically significant organizations has been transferred instead of foreign holding companies, are exempted from the obligation to disclose information.

Despite the fact that publication of a number of data in respect of economically significant organizations is now not mandatory, this information must nevertheless be provided at the request of federal executive authorities.

Economically significant organizations appeared in the Russian legislation in summer 2023, and the Russian Government is entitled to form a list of such companies (although such a list has not yet been published). A company may be recognized as economically significant if it reaches threshold values of revenue, assets, taxes paid or number of employees. A number of other legal entities, such as companies that implement technologies and software for publicly important services and services, systemically important credit organizations and their parent structures, city-forming enterprises and critical information infrastructure entities, may also obtain such status. At the end of 2023, this list was expanded to include securities market participants – management companies that manage assets of at least 300,000 clients worth more than RUB 400 billion, and organizations whose services are used by more than 2 million people.

Russian beneficiaries of economically significant organizations, owning them through foreign holding structures, by the court order may acquire their shares and stakes in them in direct possession, as well as to receive dividends directly.


Source: Decree of the President of the Russian Federation from January 27, 2024 Nu. 73 "On Temporary Procedure for Disclosure and Provision of Information by Business Companies that are Economically Significant Organizations and Certain Related Persons"

On January 23, 2024, amendments^[1] to the rules for the issuance of permits by the Government Commission for transactions (operations) (hereinafter, the “Government Commission Permit Rules”) came into force.

The Rules for the Issuance of Permits by the Government Commission approved by the Government of the Russian Federation were supplemented by paragraph 5(1) with a list of additional documents to be attached to an applicant's application for a permit, namely:

• a report on an independent appraisal of the market value of alienated securities of Russian legal entities and (or) shares in the authorized capitals of Russian legal entities, conducted by an appraiser from the list recommended by the Government Commission;
• key performance indicators (KPI) and their target values (if any) for buyers (acquirers).

However, these additions are not new, as the rule on submission of such appraisal report and KPIs was previously stipulated by the minutes of the Government Commission and applied in practice.

What is new, however, is that this clause 5(1) does not apply to:

• intra-group transactions, i.e., transactions between persons included in one group of persons in accordance with the legislation of the Russian Federation on the protection of competition;
• transactions carried out between persons connected with unfriendly states.

The rules for the issuance of permissions by the Government Commission have also been supplemented with provisions on the monitoring of the achievement of key performance indicators (KPIs) by specialized supervising agencies through which applicants apply for the permissions.


[1] Resolution of the Government of the Russian Federation of 22.01.2024 No. 40 "On Amendments to Resolution of the Government of the Russian Federation of March 6, 2022 No. 295".

The State Duma passed in the first reading a bill^[1] limiting the share of foreigners in companies that analyse the consumer market. The amendments will serve to regulate the work of research companies that analyse consumer markets.

Data on the structure of the commodity market means information on the level of supply and demand on the commodity market in the Russian Federation and on the conditions of circulation of certain goods on the relevant commodity market, including information on the cost of goods, the volume of production, import (export) and sales of goods, generalized data on consumers, producers and importers of goods, the conditions of sale of goods and the principles of determining their price, other information necessary for the promotion of certain goods on the market.

However, the research on the structure of the consumer market does not include research:

• conducted in the interests of state and local government bodies and organizations under their jurisdiction;
• conducted with the use of information contained in state information systems;
• conducted in the organizations' own interests;
• of a scientific, educational or journalistic nature;
• intended for the general public without charging a fee for access to their results.

Research companies must not allow the implementation of decisions by "unfriendly" states on the imposition of restrictive measures against the Russian Federation and must not publish knowingly unreliable data.

According to the bill, companies with revenue for the last calendar year of at least 30 million rubles and with at least 80% of the authorized capital owned by Russians and Russian legal entities will be able to conduct research on the Russian commodity market. In cases where the share of ownership in the authorized capital of a company is more than 20% and belongs to a foreign person, the ownership, management and control of this organization will require approval of the Government Commission.

The research company must comply with Russian law, including the processing and storage of collected data on the territory of the Russian Federation. In addition, a register to be maintained by FAS must be implemented. It is also planned to introduce a specialized register under the supervision of the Federal Antimonopoly Service, where research companies will have to send their applications for inclusion of information about themselves.

Such a measure will prevent foreign governments from obtaining information that could later be used against the Russian Federation.


[1] Bill No. 412669-8 Concerning the Introduction of Amendments to Chapter 4 of the Federal Law "On the Principles of State Regulation of Trade Activities in the Russian Federation" (Concerning Studies of the Structure of the Consumption Market).

In the new year, amendments to the Russian Tax Code have been made, which from January 1, 2024, simplify the collection of documents, introduce new rules for determining the tax base and in some cases cancel customs marks.

What's changed:

Collecting a package of export documents
What was: Collection of a package of paper documents.
What will be: Submission of the electronic register:

• declarations for the release of goods under the export regime and for their export outside the EAEU;
• an export contract with a foreign entity or a foreign separate subdivision of a Russian entity;
• commission agreement and related contracts for the supply of goods, if the export is done through an intermediary.

Tax base for unconfirmed exports
What was: Determined retroactively to the date of shipment of goods.
What will be: Determined on the last day of the quarter in which 180 days from the export of goods expire.

Customs marks in orders for the shipment of goods
What was: The Federal Customs Service used to mark "Loading is authorized" on orders for the shipment of goods. The exporter would then send the documents to the FTS within 180 days in the following cases:

• International transportation of goods by sea and river vessels and vessels of mixed navigation.
• Reloading and storage of goods in ports, if the goods are transported across the border by sea or river and the accompanying documents indicate a point of departure and/or destination outside Russia.
• Transportation of export goods by inland waterway transportation to the point of unloading or reloading.
• Transportation of goods from Russia by sea vessels to the point of unloading or reloading for further export.
• Icebreaking of sea vessels carrying export goods.

What will be: The Federal Tax Service will check data from a taxpayer against information from the Federal Customs Service. If the information does not match, the zero rate of VAT will not be confirmed. Documents must be sent to the Federal Tax Service within 180 days from the issuance of the shipment order.

Goods declaration as a separate document
What was: The term "customs declaration" was used, which included not only the goods documents, but also the transit declaration and the customs value declaration.
What will be: The name will correspond to the content of the document – "goods declaration".

The Government Commission has approved a bill by the Ministry of Economic Development on changes to the procedure for transactions involving large blocks of stocks in public companies. The amendments are planned to be made to the Federal Laws “On Joint Stock Companies” and “On the Securities Market” and aimed at protecting the rights of minority shareholders of public JSCs during takeovers. The document specifies that these adjustments should contribute to “increasing investor confidence in the Russian financial market”. In addition, the adoption of the bill could equalize the interests of all participants in the transaction and ensure a high degree of protection of minority shareholders' interests.

According to the bill, it is proposed to switch from the term “affiliated person” who exercise control over a JSC, to the concept of “person and related persons”. That is, both direct and indirect obtaining of control over the company should be taken into account. It is proposed that persons related to a certain person should include:

• spouses, parents, children, siblings, adoptive parents and adopted children;
• persons controlled by it and those who control it;
• persons who have entered with it into a long-term asset management / partnership / assignment agreement or a shareholders' agreement or other written agreement that relates to the acquisition of control over the relevant public company.

This will help to identify the persons who act jointly in an economic relationship.

A new mechanism is being introduced for minority shareholders to protect their interests. A person who alone or jointly with related parties intends to acquire 30, 50 or 75% of a public company's stocks is now obliged to send a public offer to PJSC to acquire shares from its shareholders. Not only voting shares, but also non-voting preferred shares and issuable securities convertible into shares will be subject to redemption. Minority shareholders who have not received an offer will be able to make demands to the purchasers. Related parties will be jointly and severally liable to minority shareholders. Claims may be directed both to all such persons and to each of them individually. At the same time, conditions are prescribed under which there is no need to make an offer.

The bill also establishes a direct prohibition on accounting for shares acquired from related persons for the purposes of compulsory redemption.

The main purpose of this bill is to protect the rights of shareholders with a small number of shares and to establish a certain threshold value of the amount of shares to be acquired for a person intending to acquire more than 30% of securities.

A draft order of the Ministry of Finance on the approval of a special list of states and territories with a preferential tax regime for taxation and (or) which do not provide for the disclosure and provision of information in financial transactions (offshore zones) has been published on the Federal Portal of Draft Normative Legal Acts.

This list includes 40 countries and territories, including Monaco, UAE, Liechtenstein, certain administrative units of the United Kingdom and others. This order shall come into force on January 1, 2024 and will apply for tax periods 2024-2026.

Earlier, the President of the Russian Federation at a meeting with business gave a number of instructions related to taxation and offshore. In particular, it was about the possibility of introducing a differentiated profit tax rate and improving the transfer of companies to the Russian jurisdiction.

At the end of September 2023, VK Holding completed the change of jurisdiction from the British Virgin Islands to a special district on Oktyabrsky Island in the Kaliningrad Region. And at the end of December 2023, Yandex completed its registration process in the Russian offshore.

Federal Law No. 625-FZ of December 25, 2023, as well as Presidential Decree No. 958 of December 18, 2023, extended anti-crisis measures for 2024. Some of the measures still concern the corporate relations.

Decision-making by management bodies of legal entities

The possibility to hold annual meetings in JSCs and LLCs in the form of absentee voting has been extended until the end of 2024. For the first time such an opportunity appeared for the shareholders as a result of a pandemic, and then it was extended annually.

Board of Directors (Supervisory Board) in a joint stock company

Until July 1, 2024, the Board of Directors of a JSC retains its powers until the re-election of a new composition, if its quantitative composition becomes less than that provided for by law, but retains at least 3 members. In such a case, a meeting of the Board of Directors is legally competent if at least half of the remaining members participate in the meeting.

Members of the Board of Directors of a JSC may be elected for a term of up to the third annual general meeting of shareholders from the date of election (previously – for a period until the next general meeting).

Until July 1, 2024, in companies in respect of which restrictive measures have been imposed by foreign states and international organizations, the Board of Directors, even if its formation is provided for by law or the charter, may not be formed at all.

Restriction of rights of shareholders

Until July 1, 2024, there are increased shareholding requirements for access to information and documents of a Russian JSC or the right to appeal to a court. Until 2022, the holder of 1% of the company's shares had such an opportunity, today it is from 5%.

Until the end of 2024, the possibility to suspend the corporate rights of so-called “unfriendly” foreign shareholders holding at least 25% of the votes in the supreme governing body of a significant business entity or having another opportunity to exercise the voting rights granted by shares in the authorized capital of such entity is retained.

The right of energy, electric power, machine building and trade companies that meet certain criteria to make decisions without taking into account the votes of, inter alia, persons from “countries committing unfriendly acts”, if such persons are members of the management body, has been extended until the end of 2024.

Restriction of transactions/operations

Presidential Decree No. 958 extends until the end of 2025 the ban on transactions (operations) with securities and shares in authorized capitals of Russian legal entities owned by non-residents from “unfriendly” countries.

Also extended until the end of 2024 is the ban on residents carrying out certain transactions without obtaining authorizations from the Bank of Russia, such as:

• payment for shares, deposits, units in the property of foreign legal entities;
• making contributions to a non-resident as part of the execution of a simple partnership agreement with investment in the form of capital investments.

The above list of measures is not exhaustive and also affects other areas. Among other things, restrictions related to repatriation of foreign currency proceeds^[1] have been extended until July 1, 2024, special measures in the financial and fuel and energy sectors^[2] and existing restrictions in the sphere of currency regulation^[3] have been extended until December 31 of this year.


[1] Presidential Decree No. 430 from July 5, 2022 "On repatriation of foreign currency and currency of the Russian Federation by residents - participants of foreign economic activity".

[2] Presidential Decree No. 520 from August 5, 2022 "On the application of special economic measures in the financial and fuel and energy spheres in connection with unfriendly actions of certain foreign states and international organizations".

[3] Presidential Decree No. 126 of March 18, 2022 "On additional temporary measures of economic nature to ensure financial stability of the Russian Federation in the sphere of currency regulation".

On January 3, 2024, amendments came into force which prohibit foreclosure under enforcement documents, seizure and other interim measures in respect of funds and securities held in “C” type bank accounts. Similar measures have been taken with respect to assets held in “I”-type accounts^[1].

"C"-type accounts were introduced to block and prevent uncontrolled withdrawal of funds of so-called “unfriendly” non-residents as a reaction to the freezing of foreign currency reserves of Russian individuals and legal entities. The use of "C"-type accounts restricts the withdrawal of funds and assets only to the list of controlled transactions. Thus, non-residents have no possibility to withdraw funds from Russia, which in turn remain frozen in the country.

“I”-type accounts are used by non-residents in Russia for investments and reinvestments and currently make it possible to compensate Russian investors for assets frozen in foreign depositories.

Despite the fact that to date there is no positive practice of successful seizure of assets on these accounts, the legislator has stopped any possibility of withdrawal of assets, including through favorable decisions of Western courts. It is possible to assume that the above measure is also intended to develop a mechanism for realization of mutual unblocking of assets.


[1] The ban is established by Presidential Decree No. 8 of January 3, 2024 “On Amendments to Presidential Decree No. 95 of March 5, 2022 “On the Temporary Procedure for the Execution of Obligations to Certain Foreign Creditors” and Presidential Decree No. 665 of September 9, 2023 “On the Temporary Procedure for the Execution to Residents and Foreign Creditors of State Debt Obligations of the Russian Federation Expressed in State Securities, the Nominal Value of Which is Specified in Foreign Currency, and Other Obligations on Foreign Securities".

As of January 1, 2024, a number of amendments to Federal Law No. 89-FZ dated 24.06.1998 "On Production and Consumption Waste" came into force. In particular, the concepts of "utilization of waste from the use of goods" and "environmental levy" were introduced, as well as the procedure for calculating the environmental levy in relation to packaging for the reporting periods 2024-2026.

As a general rule, producers and importers of goods shall ensure the utilization of waste from the use of goods in accordance with the utilization standards established by the Government of the Russian Federation. The same body establishes the list of goods and packaging, the waste from the use of which is subject to utilization.

A manufacturer of goods that packages the goods produced by it, including by heating, pulling, dividing into parts of the packaging, is not obliged to ensure the utilization of waste from the use of the said packaging, unless the said packaging is produced by this manufacturer of goods.

At the same time, until January 1, 2027, producers of goods, importers of goods shall ensure the disposal of waste from the use of packaging:

1. during 2024 – according to utilization standards established by the Russian Government;
2. during 2025 – in respect of 55% of the mass of packaging produced in Russia and (or) imported from states that are not members of the Eurasian Economic Union or member states of the EAEU;
3. during 2026 – in respect of 75% of the mass of packaging produced in Russia and (or) imported from states that are not members of the Eurasian Economic Union or member states of the Eurasian Economic Union.

On December 29, 2023, the Russian Government approved these lists and regulations by Decree No. 2414:

• list of goods, packaging, waste from the use of which is subject to utilization, for 2024;
• list of goods, packaging, waste from the use of which is subject to recycling for the period from January 1, 2025 to January 1, 2030;
• standards for the utilization of waste from the use of goods for the years 2024-2029;
• standards for the utilization of packaging waste for 2024.

After a meeting with business representatives on November 15, the Russian President signed a list of instructions for the Government to consider and prepare the necessary amendments to laws.

The main instructions from the list are:

Tax and corporate legislation

• Differentiated profit tax rate depending on the investment activity of companies, taking into account the existing benefits and preferential regimes;
• Abandonment of temporary measures of fiscal burden, such as export customs duties;
• Extension of the right to state support for projects involving foreign legal entities (applies to offshore legal entities) for the duration of such projects;
• Restricted disclosure of information on companies established on the basis of foreign holdings - information on beneficiaries and indirect owners of shares will be concealed;
• Allowing non-residents – indirect shareholders of economically significant organizations and companies established on the basis of foreign holdings – to take direct ownership of their shares, even if this violates certain corporate procedures. Such a right has already been given to Russian businessmen who own assets in Russia through foreign intermediaries. Now they can take back their shareholder rights through the court and de jure exclude an intermediate company in an "unfriendly" country from managing the company;
• Mechanism for the creation of international funds for the purpose of transferring assets to Russian jurisdiction by way of redomiciliation.

Criminal legislation

• The procedure for determining the amount of bail to be used as a preventive measure in criminal cases. The amount of bail will depend on the amount of damage from the crime;
• Allowing entrepreneurs under house arrest to transfer authority to run a company without being present in person through the government's web portal "Gosuslugi”.

The Russian President signed two decrees on the creation of Russian limited liability companies to transfer to them the stakes held by “unfriendly” foreigners in Gazprom's joint ventures – Severneftegazprom (developing the Yuzhno-Russkoye field) and Achimgaz and Achim Development (the Urengoyskoye field).

It is assumed that instead of “Wintershall Dea” (Germany) and “OMV” (Austria), a Russian joint-stock company “SOGAZ” will become a co-owner “Severneftegazprom”, and OOO “Gasovye Technologii” will acquire shares in “Achimgaz” and “Achim Development”.

Future shareholders are offered to purchase shares in the companies at market price, and the cash will then be credited to the "C"-type accounts of the former shareholders. All corporate contracts and agreements between the shareholders are terminated from the date of the decrees, but the remaining rights and obligations of the “old” companies are transferred to the new ones. In a month the new shareholders will adopt the charters of the companies, and all employees will be transferred to the newly created corporations. The size of the authorized capitals of the companies will not change, as well as the sole executive bodies will remain the same (subject to their consent).

It should be noted that at the beginning of the year “Wintershall Dea” announced its intention to withdraw from the Russian market, and “OMV” was also planning to reconsider its stake in the Yuzhno-Russkoye oil and gas field.

A spokesman for the Russian President claims that “there was and is no process of seizure [of assets from foreigners]”, the matter is only about the sale or transfer of assets of investors leaving Russia.


Sources:
Presidential Decree No. 965 of December 19, 2023 "On Special Economic Measures in the Fuel and Energy Sphere in Connection with Unfriendly Actions by Certain Foreign States and International Organizations";
Presidential Decree No. 966 of December 19, 2023 "On Additional Special Economic Measures in the Fuel and Energy Sphere in Connection with Unfriendly Actions by Certain Foreign States and International Organizations".

On December 8, 2023, the position of the Ministry of Labor and Social Protection regarding the possibility of concluding employment contracts with Russian citizens who have left the territory of the country was published.

In the opinion of the Ministry, the conclusion of an employment contract on remote work with a citizen for the purpose of carrying out labor activities outside the Russian Federation is not allowed, and cooperation with persons for the purpose of remote work abroad for Russian organizations may be carried out within the framework of civil law relations. The reply also refers to the letter No. 14-2/OOG-5755 from September 9, 2022, which states, among other things, that the execution of relations with persons residing abroad (even in the case of dual citizenship) under employment contracts is contrary to the law and entails serious risks for the Russian labor market.

The position of the Russian Ministry of Labor is not a clarification or a normative legal act, which is directly mentioned in the text. Nevertheless, despite the absence of prohibitions and restrictions on remote work from abroad in the Labor Code of the Russian Federation, the tendency to limit the rights of employees by interpreting the law remains. The above opinion of the Ministry of Labor, although it has no legal force, may nevertheless be used as an argument in labor disputes.

The legislator's position is also confirmed by the initiative of the Ministry of Justice in relation to the activities of lawyers from abroad. The official website of the Ministry reports that on December 11, 2023 at a meeting of the Government Commission on Legislative Activity approved amendments to the Federal Law “On Advocacy in the Russian Federation”, adopted by the State Duma in the first reading on April 12, 2023.

The amendments propose to introduce another ground for termination of the status of an advocate by the Council of the Bar Association, in particular, the departure of an advocate for permanent residence or for a period of more than one year outside the Russian Federation. This introduction will not affect advocates who have left for medical treatment or training, or to accompany family members, who have been sent to perform labor or other duties outside Russia by state authorities or Russian organizations, and for other valid reasons. If the above facts are established, disciplinary proceedings against advocates who have left Russia will be considered under the general rules set out in the Code of Professional Ethics for Advocates.

On December 11, 2023, the Russian Central Bank published on its official website the Decision of the Board of Directors of the Bank of Russia from December 8, 2023 on establishing the procedure and terms of interaction between professional securities market participants and their clients, as well as with trade organizers for the purpose of concluding transactions (operations) with foreign securities and transactions (operations) necessary for their execution (the “Decision”) in accordance with the Presidential Decree No. 844 from November 08, 2023.

The Decision determines the methods of sending information by depositories to depositors and specifies the sending of the following information:

• about foreign securities and the date and terms of transactions (operations);
• on the organizer of trades, as well as details of the depo account of the owner of the organizer of trades, where foreign securities purchased by non-residents will be credited;
• on the possibility for certain categories of residents to alienate foreign securities with an aggregate value of no more than 100 thousand rubles;
• on the procedure for submitting an order to a broker;
• on the start and end dates for the organizer of trades to accept sellers' offers.

The Decision also determines a similar procedure for informing non-resident buyers by depositories.

In addition, the Decision determines the procedure for acceptance of orders by brokers and the conditions for their forwarding to the trade organizer, as well as the terms of making entries by depositories on the depo account and the content of such orders, in particular, the indication of removal of restrictions on the order, etc.

The Decision applies from the date of its publication, i.e., from December 11, 2023.

Formally, for Presidential Decree No. 844 to start functioning, it is still required that the Government Commission determines the terms and conditions of trading and transactions (operations).

On December 6, 2023, the Russian State Duma passed in the third reading a Bill No. 471073-8, which amends Article 4.2 of Federal Law No. 127-FZ “On Measures to Influence (Counteract) Unfriendly Actions of the United States of America and Other Foreign States” and expands the list of special economic measures that the Russian President is entitled to establish to ensure the economic sovereignty and security of the country in response to Western sanctions.

Previously, the law provided a special procedure for transactions and operations with persons from so-called “unfriendly” foreign states, for currency transactions, as well as for the payment of profits to foreign shareholders.

Now the Federal Law has been supplemented with new measures. The President of the Russian Federation has the right to introduce temporary management in respect of movable and immovable property, stakes, shares and property rights belonging to persons from “unfriendly” states; to determine the procedure for foreclosure of funds and securities on special accounts; to establish the specifics of creation, reorganization, liquidation and legal status of Russian legal entities, including in terms of disclosure of information on their activities, as well as transactions, including their notarization and accounting. The Russian President determines the peculiarities of the legal status of issuers and professional participants of the securities market, as well as the peculiarities of accounting of information on securities. A special procedure may be established not only for the distribution of profits (dividends), but also for the payment to foreign shareholders of the actual value of a share in the authorized capital of a Russian legal entity.

The law applies to legal relations arising from February 24, 2022.

It’s worth noting that some measures are already in force. In particular, the Presidential Decree from April 25, 2023, N 302 in the edition of November 22, 2023, introduced temporary management of stakes and shares of some Russian companies owned by foreigners from “unfriendly” states.

The Ministry of Industry and Trade of Russia has proposed amendments to Presidential Decree No. 81 of March 1, 2022, expanding the list of transactions involving “unfriendly” foreigners, which require permission from the Government Commission for Control of Foreign Investments in the Russian Federation.

Minpromtorg considers it necessary to establish a permissive procedure for transactions involving the alienation or pledge of exclusive rights to a result of intellectual activity or a means of individualization. According to the Ministry, this measure will minimize “the risk of unfair law enforcement practice, ... as well as will contribute to ensuring additional cash flow to the federal budget” through the payment of a matching contribution by the beneficiary of the transaction.

Currently the permission of the Government Commission must be obtained for transactions involving shares in Russian companies, as well as for most deals involving securities and real estate (with a number of exceptions) if the party to the transaction is a person from an “unfriendly” state. So far, the voluntary contribution to the budget has been set only for the transactions with shares in Russian LLCs and amounts to 15% of the market value of the asset. In this case, the valuation of shares is performed by an independent appraiser, and then the report is subject to verification by a self-regulatory organization (both the appraiser and the SRO must be from the lists recommended by the Ministry of Finance).

So far, only the restrictions established by the Presidential Decree No. 322 from May 27, 2022 have been applicable to intellectual property. This document defines the procedure for the fulfilment by residents of obligations related to the use of results of intellectual activity and (or) means of individualization, the right holder of which is an “unfriendly” person. If such right holder publicly supported the anti-Russian sanctions, prohibited the use of its intellectual property in Russia due to the imposition of sanctions, or ceased, suspended or significantly restricted the production (supply) of goods, provision of services and (or) performance of work in Russia after the start of a special military operation, the resident shall make payments under license and sub-license agreements and other agreements on the use of intellectual property, as well as penalties thereunder to a special “O”-type ruble account opened in a Russian bank in the name of a rights holder from an “unfriendly” country. The transfer of funds to such an account is recognized as a proper fulfillment of obligations by the debtor, and to transfer money to another, including foreign, account of the right holder, the latter needs to apply to the Government Commission for yet another permission. In some cases, this procedure does not apply, for example, if payments under agreements on the use of intellectual property:

• do not exceed 100 thousand roubles (or the equivalent of this amount in foreign currency) and are made by an individual Russian resident who uses IP for personal (not related to entrepreneurial activity) needs;
• are made to a right holder from a “unfriendly” state who duly fulfills his obligations under the contract.

On November 30, 2023, the President of the Russian Federation signed Decree No. 909 on the temporary transfer of the Pulkovo Airport management company from the Cypriot structure to the newly established LLC “VVSS Holding”, which will own 100% of the shares of this management company instead of the Cypriot structure. On the same day the Decree was published and came into force.

As follows from the Decree, the measures were taken in connection with "a threat to the national interests and economic security of the Russian Federation, resulting from the violation by certain foreign legal entities of obligations associated with the management of LLC Vozdushnye Vorota Severnoy Stolitsy (abbr. VVSS, English translation is “Air Gateway of the Northern Capital”), which is the management company of Pulkovo Airport.

OOO “VVSS Holding” will be established by the Russian Government, but it will not be its shareholder. The authorized capital of the new company will amount to 169 billion rubles, and 14 companies, including foreign ones (however, temporarily without the right to dispose of votes attributable to such shares in the new company), will become direct shareholders in order to preserve the property rights of such companies indirectly owning shares in the authorized capital of the Pulkovo Airport management company. The Russian Government will establish the governing body of the new company and approve its charter. It is noteworthy that from the date of the establishment of LLC “VVSS Holding”, obligations under loan agreements entered into by the foreign owners of the Cyprus structure and their affiliates for the purpose of financing the Cyprus structure will cease.

As Vice-Prime Minister Tatyana Golikova reported, from 2024 the preventive medical examination of working citizens will be introduced in Russia. Preventive medical examination can be completed at the workplace as part of Obligatory Medical Insurance, as well as through a contract with an external medical organization. In the second case, employers will conclude contracts with medical organizations for medical checkup.

At this point in time, free preventive medical examination is available in Russia every three years for citizens from 18 to 39 years old, and annual for people over 40 years old. The preventive medical examination of working citizens is planned to be introduced with a separate tariff under the Obligatory Medical Insurance.

The legislator continues to toughen penalties for personal data (PD) leakage, which should become a significant incentive for PD operators to invest in information security. Along with Bill No. 353266-8, adopted by the State Duma on November 30, 2023 in the second reading, which toughens penalties for illegal processing and leakage of biometric personal data, the Duma will consider Bill No. 502104-8 “On Amending the Code of Administrative Offences of the Russian Federation”, as well as Bill No. 502113-8 “On Amending the Criminal Code of the Russian Federation”, which provides for a significant increase in criminal liability for crimes related to the illegal trafficking of personal data. Both bills were registered and sent to the State Duma on December 4, 2023 and aim to significantly reduce the number of PD leaks in the Russian Federation.

If the first bill is adopted, the processing of personal data in cases not stipulated by law or the processing of personal data incompatible with the purposes of its collection will entail an administrative fine:

• for citizens – from 10 to 15 thousand rubles (currently: from 2 to 6 thousand rubles),
• for officials – from 50 to 100 thousand rubles (currently: from 10 to 20 thousand rubles),
• for legal entities – from 150 to 300 thousand rubles (currently: from 60 thousand to 100 thousand rubles).

And the repeated commission of the specified administrative offense will entail the imposition of an administrative fine:

• on citizens – from 15 to 30 thousand rubles (currently: from 4 to 12 thousand rubles),
• on officials – from 100 to 200 thousand rubles (currently: from 20 to 50 thousand rubles),
• on legal entities – from 300 to 500 thousand rubles (currently: from 100 thousand to 300 thousand rubles).

The Russian Code of Administrative Offences has also been supplemented with liability for failure and untimely fulfillment by the operator of the obligation to notify Roskomnadzor of the intention to process personal data or in case of establishing the fact of unlawful transfer of personal data, as well as the following fines for leakage of citizens' data depending on the number of victims.

Thus, for actions resulting in the leakage of PD:

• from 1,000 to 10,000 subjects and (or) from 1,000 to 100,000 unique designations of information about individuals (identifiers) necessary to identify such persons the fine for citizens will be from 100 to 200 thousand rubles, for officials – from 800 thousand to 1 million rubles; for legal entities – from 3 to 5 million rubles.
• from 10,000 to 100,000 subjects and (or) from 100,000 to 1 million identifiers: the fine for citizens will amount from 200 to 300 thousand rubles; for officials – from 1 to 1.5 million rubles; for legal entities – from 5 to 10 million rubles.
• more than 100,000 subjects and (or) more than 1 million identifiers: the fine for citizens will amount from 300 to 400 thousand rubles; for officials – from 1.5 to 2 million rubles; for legal entities – from 10 to 15 million rubles.

The authors of the second bill propose to supplement the Criminal Code with Article 272.1 “Illegal use and (or) transfer, collection and (or) storage of computer information containing personal data, as well as creating and (or) ensuring the functioning of information resources intended for its illegal storage and (or) dissemination”. The minimum penalty for such a violation will be a fine of 300 thousand rubles (for biometric personal data – up to 700 thousand rubles), and the maximum – imprisonment for up to 10 years with a fine of up to 3 million rubles or in the amount of wages or other income of the convicted person for a period of up to 4 years with deprivation of the right to hold certain positions or engage in certain activities for up to 5 years.

The creation of information resources (a site on the Internet, information system, program) knowingly intended for illegal storage, transfer (distribution, provision, access) of computer information containing personal data will be singled out separately. The sanction will provide for a minimum penalty in the form of a fine of up to 700 thousand rubles to the maximum – imprisonment for up to 5 years with a fine of up to 700 thousand rubles or other income of the convicted person for a period of up to 2 years with deprivation of the right to hold certain positions or engage in certain activities for up to 2 years.

The Ministry of Finance of the Russian Federation is currently actively working on amendments to the Tax Code, which will restrict the rights of companies to recognize expenses on advertising on the Internet for the purposes of reducing profits tax if such advertising is not marked and information about it is not submitted to Roskomnadzor.

The essence of the changes is the following – if a company does recognize such expenses, the tax authority will recognize them as unreasonable and impose additional income tax, fines and penalties.

Example: A company using the general system of taxation, which implies payment of income tax at 20%, did not mark advertising for 1 million rubles. In this case, the tax authority will impose an additional charge of 200 thousand rubles of profit tax and a fine of 500 thousand rubles for the lack of labelling.

The law on labelling of online advertising came into force on September 1, 2022. A year lates, fines for the lack of labelling became effective: for individuals – up to 30 thousand rubles, for officials – up to 100 thousand rubles, for legal entities – up to 500 thousand.

Also, since March 2022, the social networks Instagram and Facebook, which were highly demanded by advertisers, have been blocked in Russia. After that Russian companies began to remove links to their profiles in these media from their official websites, but they did not completely stop their advertising presence and activity.

At the same time, the law on advertising labelling, which came into force in September 2022, does not give an unambiguous answer to the question of the need to label advertising on banned resources. Opinions of the agencies controlling the implementation of the law are divided. At the end of August 2023, the Federal Antimonopoly Service (FAS) clarified that banned networks are outside the legal field and advertising in them does not fall under the regulation of Russian law. But already in November 2023, Roskomnadzor demanded that advertising in blocked social media be labelled and that such campaigns be registered in the Unified Internet Advertising Registry.

The new requirements are expected to become an additional lever for compliance with advertising legislation, as well as an incentive for businesses to place advertising on domestic advertising platforms.

Representatives of the business community have asked the Ministry of Finance to postpone the tax changes until 2025. However, there are reports that the amendments may be submitted to the State Duma and adopted as early as the end of 2023 and they will come into force in 2024.

A bill No. 411567-8 has been submitted to the State Duma of the Russian Federation to amend the Russian Criminal Code to increase liability for petty bribery and commercial bribery. These crimes are very widespread and individually do not pose a great public danger, but if systematic, they are no less dangerous threat to the realization of citizens' rights protected by the law and the state. Especially since, according to the statistics of the Russian Supreme Court, the number of these crimes for 2021 has increased significantly.

According to this bill, it is proposed to strengthen criminal liability for bribery or commercial bribery in an amount not exceeding 10 thousand rubles. Now, according to article 204.2 "Small commercial bribery" of the Criminal Code of the Russian Federation, for commercial bribery in an amount not exceeding 10 thousand rubles, the maximum term of restriction of freedom - two years or one year of imprisonment. There will also appear qualifying features of these crimes, such as “knowingly illegal actions (inaction)”, “acts committed by a group of persons by prior conspiracy or organized group”, “by a person with a criminal record for committing crimes under Articles 204 and 204.1 of the Criminal Code of the Russian Federation” (Articles 290, 291, 291.1 of the Criminal Code of the Russian Federation), as well as “with extortion”.

In case of commercial bribery, a person performing managerial functions in a commercial or other organization is proposed to be punished by a fine of up to 150 thousand rubles, or compulsory labor for up to 200 hours, or correctional work for up to one year, or restriction of freedom for up to one year. In the presence of qualifying signs will face a fine of up to 500 thousand rubles, or correctional labor for up to 18 months, or restriction of freedom for up to two years, or imprisonment for up to one year.

For giving or receiving a bribe by an official, a foreign official or an official of a public international organization personally or through an intermediary it is proposed to introduce a fine of up to 300 thousand rubles, or correctional work for up to one year, or restriction of freedom for up to two years. If there are qualifying features, the punishment may be a fine of up to 1 million rubles, correctional labor for up to 18 months, restriction of freedom for a period of three months to four years, or imprisonment for up to three years.

In addition, these offenses fall under the category of crimes for which confiscation of property is applied (paragraph "a" of part 1 of Article 104.1 of the Criminal Code of the Russian Federation). It is not provided for under the current legislation, but its introduction will make it possible to compensate victims. At present, both crimes (without aggravating circumstances) are punishable by a fine of up to 200,000 rubles, or restriction of freedom for up to two years, or imprisonment for up to one year.

In August 2023, a law was adopted establishing the specifics of regulating corporate relations in economically significant companies. Later, by Decree of the Government of the Russian Federation dated November 1, 2023, No. 1836, the Rules for making a decision on the inclusion of a Russian business entity in the list of economically significant companies were approved. These rules establish the procedure for the Government of the Russian Federation to make a decision to include a Russian business entity in the specified list in accordance with Part 2 of Article 2 of the Federal Law “On the particularity of regulation of corporate relations in business entities that are economically significant companies“.

The document establishes that the federal executive body that carries out legal regulation in the field of activity (the economy) what is the main type of economic activity of a Russian business entity, forms a motivated proposal to include such a entity in the list, and submits it to the Ministry of Economic Development of the Russian Federation with attached information about the entity, as well as a draft of an act of the Government of the Russian Federation on the inclusion of a business entity in the list.

Within 14 working days from the date of receipt of a motivated proposal, the Ministry of Economic Development of the Russian Federation submits a draft of an act to the Government of the Russian Federation on the inclusion of a Russian business entity in the list. Based on this motivated proposal, the Government of the Russian Federation makes a decision to include such an entity in the list.

A motivated proposal is formed by the industry body based on the documents and information listed in clauses 4, 5-8 of this Decree.

Also, a Russian business entity has the right to apply to the industry body with an application in any form, attaching the required information and documents in 2 copies, bound, with a list of the documents being sent.

In addition, the Decree provides that the federal executive body authorized to apply to the arbitration court to suspend the exercise of corporate rights of an economically significant company in relation to a foreign holding company is the federal executive body specified in the Government decision to include a Russian business entity in the list of economically significant companies at whose proposal such a decision was made. This provision is valid until December 31, 2024.

The Decree came into force on November 20, 2023.

On November 27, 2023, the President of the Russian Federation signed a law amending the Russian Tax Code regarding the taxation of foreign services. These changes will come into force on January 1, 2024.

Thus, Article 309 of the Russian Tax Code, which regulates the taxation of income received by a foreign organization from sources in the Russian Federation, adds income received by such an organization from the performance of work (provision of services) in the territory of Russia to an interdependent person.

Works will be considered performed (services rendered) in the territory of the Russian Federation if the buyer of works (services) carries out its activities in Russia, and the place of activities is determined by the place of state registration of the buyer. Thus, the object of taxation will be such services as management, consulting, marketing, engineering, legal support, IT, and so on (the list of services is open). Such intra-group income will be taxed at the rate of 15% (subpar. 4, par. 2, Art. 284).

These changes will primarily affect organizations from the so-called unfriendly countries with which Double Tax Agreements has been suspended. Organizations from friendly jurisdictions with existing DTAs can expect taxation under the provisions of such agreements.

At the same time, transitional provisions are provided for a number of incomes until December 31, 2025, under which the following types of income of foreign organizations will not be subject to withholding tax provided that there is no interdependence:

• interest income paid to foreign banks and export credit organizations;
• income from renting (leasing) aircraft under contracts concluded before March 2022;
• income from the use and granting of rights to use audiovisual works;
• income from the use and granting of rights to use an object of copyright, patent, drawing, model, know-how;
• income from the sale of marine vessels;
• income from international transportation;
• income from leasing out sea vessels.

Source: Federal Law of 27.11.2023 No. 539-FZ “On Amendments to Parts One and Two of the Tax Code of the Russian Federation, Certain Legislative Acts of the Russian Federation and Recognition of Certain Provisions of Legislative Acts of the Russian Federation as null and void”.

A number of legislative acts have brought sweeping changes to transfer pricing that will come into effect on January 1, 2024.

The most important changes were brought by the bill No. 448566-8 of the Federal Law “On Amendments to Parts One and Two of the Tax Code of the Russian Federation”, which was approved by the State Duma in the second reading on November 17, 2023.


Expansion of the circle of interdependent persons
Criteria for legal entities and individuals:

• shareholding directly or indirectly more than 25%;
• authority to appoint a single executive body or at least 50% of the collegial executive body.

Added to the list of interdependent persons:

• controlling persons and their controlled foreign companies, as well as controlled companies of the same controlled persons (i.e., daughters, granddaughters, etc.);
• controlled transactions with foreign structures without formation of a legal entity registered in an offshore jurisdiction or if one of the participants of such structure is registered in an offshore jurisdiction.

Transactions with counterparties from the countries included in the List of the Ministry of Finance are also recognized as controlled transactions if the value threshold exceeds RUB 120 million. An exception is made for transactions:

• with foreign export credit agencies and foreign organizations engaged in banking activities from jurisdictions with which double taxation avoidance agreements have been suspended, provided that the conditions are met:

1. obligations arose before August 8, 2023 and
2. the absence of interdependence of the Russian organization-debtor and the foreign organization-creditor is confirmed;

• with counterparties from jurisdictions with which double taxation avoidance agreements have been suspended, provided that the contracts for such transactions were concluded before March 1, 2022 and the procedure for determining prices and (or) pricing methods (formulas) used in such transactions was not changed after that date, and such transactions are not recognized as controlled in accordance with the provisions of paragraphs 1 and 3 of Article 105.14 of the Russian Tax Code in effect as of March 1, 2022;
• on the basis of which debt obligations from Article 310.2, par. 2, subpar. 8 of the Tax Code were incurred.

Secondary adjustment mechanism
If, following an audit, the prices of a controlled transaction are recognized as non-market prices, the amounts of the adjustments will be recognized as dividends received from a source in the Russian Federation, on which the relevant tax will be withheld.

No withholding tax will be withheld if the foreign entity returns the amount of the adjustment to the taxpayer's accounts in Russia no later than the date of payment of the relevant tax. No withholding tax will be withheld if the foreign entity returns the amount of the adjustment to the taxpayer's accounts in the Russian Federation and interest income for the use of funds later than the date of payment of the relevant tax.


Calculation of market price interval
Exclusion of par. 6 of Article 105.9 of the Tax Code and, as a consequence, the use of published data for the minimum and maximum threshold for determining the price level. The price level is determined in connection with the provisions of Article 105.9 of the Russian Rax Code.


Median value of the market price interval
The concept of median value of market prices for adjustments for controlled transactions is introduced. When making an independent adjustment, the taxpayer may choose any value within the market price range.


Pricing agreements for taxation purposes
For large taxpayers, pricing agreements are provided for 5 years for transactions from the following commodity groups:

1. petroleum and goods derived from petroleum;
2. ferrous and non-ferrous metals;
3. precious metals and precious stones;
4. mineral fertilizers.

Information disclosure requirements
Notification of controlled transactions:

• disclosure of terms of transactions;
• mandatory disclosure of methods and sources of information;
• for interdependent persons – disclosure of the value chain for foreign trade transactions by groups of goods from Article 105.14 of the Tax Code (specified above).

Transfer pricing:

• disclosure of terms of transactions;
• financial statements of foreign counterparties;
• data on income and expenses, amount of profits (losses), number of personnel, value of non-current assets of a foreign counterparty.

Refusal of a foreign counterparty to provide information is not a sufficient argument for the tax authorities!


Increase in penalties
RUB 100,000 – for failure to provide notification of controlled transactions.
RUB 1,000,000 – for failure to provide the following documentation on an international group of companies:

• country report;
• national and global documentation;
• accounting statements of each group member.

RUB 500,000 – for failure to provide notification of participation in an international group of companies and/or documentation on a transaction (group of homogeneous transactions) in due time.

For failure to pay tax as a result of applying non-market prices:

• in respect of foreign trade transactions – 100% of the amount of unpaid tax on the foreign counterparty's income (equal to the amount of the transfer pricing adjustment), but not less than RUB 500,000;
• in respect of Russian transactions – 40% of the amount of unpaid tax, but not less than RUB 30,000.

These changes should be taken into account when preparing transfer pricing documentation for 2024.

The need to increase the level of protection of citizens' biometric personal data (PD), as well as to prevent the leakage of their personal information, were the prerequisites for introducing amendments to the current legislation. The authorities have repeatedly emphasized the need to toughen sanctions for the leakage of personal data, and in June this year the State Duma considered and passed in the first reading the bill, which toughens penalties for illegal processing and leakage of biometric personal data. At the moment, the bill is being prepared for the second reading, and if the proposed version of the Code of Administrative Offences is adopted, fines for personal data leakage may increase significantly.

Along with the processing of personal data without consent (in writing), the draft law proposes to establish administrative liability for placing biometric personal data in the unified biometric system, in other information systems providing identification and (or) authentication using biometric personal data of individuals, in violation of the established requirements, as well as to increase the existing liability for the illegal processing of personal data, both for the initial and repeated commission of such administrative offenses.

Thus, processing of personal data without written consent of the subject of personal data in cases when such consent must be obtained in accordance with the legislation of the Russian Federation, as well as placement of biometric personal data in the unified biometric system, in other information systems that provide identification and (or) authentication using biometric personal data of individuals, in violation of the requirements established by the legislation of the Russian Federation in the field of personal data will entail the imposition of administrative sanctions.

• on officials – from 100 to 300 thousand rubles (currently: from 20 to 40 thousand rubles);
• for legal entities – from 300 to 700 thousand rubles (currently: from 30 to 150 thousand rubles).

And the repeated commission of the specified administrative offense will entail the imposition of an administrative fine:

• on officials – from 300 to 500 thousand rubles (currently: from 40 to 100 thousand rubles);
• on individual entrepreneurs – from 500 thousand rubles to 1 million rubles (currently: from 100 to 300 thousand rubles);
• on legal entities from 1 to 1.5 million rubles (currently: from 300 to 500 thousand rubles).

According to the media, the authors of the bill in the second reading also propose to significantly increase fines for processing personal data without written consent and for citizens – up to 15 thousand rubles (currently: from 6 to 10 thousand rubles).

It is also worth noting the position of the Government of the Russian Federation, according to which the liability proposed by the draft law should be established by introducing Article 13.112 in the Code of Administrative Offences, allocating in an independent part of the responsibility for officials of credit organizations. This proposal is likely to be discussed in the course of further work on the draft law.

The Constitutional Court of the Russian Federation has protected^[1] the founder and director of a bankrupt debtor from whom the courts of all instances recovered multi-million-dollar tax fines in a bankruptcy case as part of bringing the debtor's controlling person to subsidiary liability.

The Constitutional Court of the Russian Federation pointed out that tax liability is a public-law liability^[2]. Subsidiary liability of persons controlling the debtor is, on the contrary, of a private-law nature, being a measure of civil-law (tort) liability, the function of which is to protect the violated rights of creditors and restore their property status^[3]. Subsidiary liability provides for taking into account the controlling person’s fault. When bringing a person to subsidiary liability in connection with non-payment of taxes by a bankrupt debtor, this person compensates for the damage caused to the debtor (creditors), but is not responsible for tax offenses of the debtor, i.e., there is a transformation of tax relations into civil ones. Recovery of various kinds of fines in its essence goes beyond the tax obligation and is not restorative, but punitive in nature and is a punishment for a tax offense, i.e., for a wrongful guilty act provided for by law, committed intentionally or negligently.

Russian Constitutional Court recognized par. 11 Article 61.11 of the Federal Law “On Insolvency (Bankruptcy)” as not contradicting the Constitution of the Russian Federation insofar as, according to its constitutional and legal meaning in the system of current legal regulation, it does not imply recovery from the persons controlling the debtor of the amount of fines for tax offenses imposed on the taxpayer organization.


[1] Resolution of the Constitutional Court of the Russian Federation of October 30, 2023 No. 50-P.

[2] Resolutions No. 20-P of December 17, 1996, No. 9-P of July 14, 2005 and others; Resolutions No. 1572-O-O of December 7, 2010, No. 571-O of March 10, 2016 and others.

[3] Resolutions from May 21, 2021, No. 20-P and November 16, 2021, No. 49-P.

On November 13, 2023, amendments to the Law on State Registration of Legal Entities and Individual Entrepreneurs will come into force.

These amendments expanded the list of cases in which a legal entity is excluded from the Unified State Register of Legal Entities by the registration authority, synchronizing it with par. 4 of Article 7.8 of the Law on Combating Money Laundering and Financing of Terrorism, introduced on October 1, 2022. According to this provision, the Bank of Russia shall send to the registering authority information on legal entities, which are classified by it within the framework of implementation of the “Know Your Client” powers by banks to a high-risk group due to suspicious transactions, for the purpose of their exclusion from the EGRUL. However, before the relevant amendments were made to the Law on State Registration of Legal Entities, this norm was not applied (Resolution of the Moscow Arbitrage Court of October 3, 2023 in case No. A40-148759/23-147-1193).

Similar norms have been adopted with regard to the exclusion from the Unified State Register of Individual Entrepreneurs (EGRIP).

In addition, amendments to the Law on State Registration of Legal Entities provide for the inclusion of information on the forthcoming exclusion of any organizations from the EGRUL and entrepreneurs from the EGRIP, as well as the procedure and terms for submitting objections to such exclusion. Currently such information is reflected only in the EGRUL in respect of legal entities which are small and medium-sized enterprises.

On November 8, 2023, the President of the Russian Federation signed Decree No. 844 on the procedure for the sale of foreign securities owned by Russians to non-residents, including “unfriendly” ones. The latter will be able to pay for the purchase with funds held in Russian banks on “C”-type ruble accounts. Importantly, regardless of the “(un)friendliness” of the non-resident, such transactions will not require authorization from the Government Commission.

According to the Presidential Decree, a Russian investor is entitled to sell his foreign securities with an aggregate initial value of up to one hundred thousand rubles, and the transactions themselves will be concluded by auction. The procedure for calculating the initial value of alienated securities, as well as the terms and conditions of bidding and transactions will be determined by the Government Commission for Control over Foreign Investments in the Russian Federation.

Broker will also be involved in the transaction. The procedure for their interaction with clients will be regulated by decisions of the Board of Directors of the Central Bank of the Russian Federation, but it is already known that Russian residents will not pay them a commission for the execution of the deals (however, the collection of the relevant fee from foreign investors is implied).

The purchased securities will be credited to a special transit depo account of a non-resident opened by Russian depositories and may be debited on the basis of orders of foreign buyers to their accounts in foreign banks. The regime of such a depo account and the peculiarities of identification of foreign investors will also be established by the Central Bank of Russia.

The projects on exchange of blocked assets of Russian and foreign investors were discussed already in August 2023, and even then there were doubts about the readiness of foreigners to purchase such securities. Although the Government Commission's permission for the transaction itself will no longer be required, after the change of ownership such assets will still be blocked on the accounts of the sanctioned National Settlement Depository. Thus, any deals with these securities will still require a license from European regulators.


Source: Decree of the President of the Russian Federation No. 844 from November 8, 2023 “On Additional Temporary Economic Measures Related to the Circulation of Foreign Securities”

On February 14, the Council for Economics and Finance of the Federal Republic of Germany updated the list of countries that do not cooperate with the European Union. The Russian Federation was included in this version of the list.

The Council revises this list twice a year – in February and October respectively.

If this list is approved by the Ministry of Finance and the Federal Ministry for Economic Affairs and Climate Protection, additional taxation and withholding measures will be applied for the countries on this list from January 1, 2024 (par. 9 and 10 of the Tax Haven Protection Act).

This means that a withholding tax of 15% will be withheld at source on the following payments to residents from such countries:

• provision of services to German residents,
• trading in goods or services with German residents,
• leasing or selling rights entered in the domestic public register,
• income from financial relationships with German residents.

A so-called solidarity tax of 5.5% is also added to the withholding tax, resulting in a withholding of 15.825% on the above payments.

If you have income contracts with Germany, we recommend that you analyse the terms and conditions of the wording of prices and payments and amend the contracts accordingly.

A Russian tax authority held a citizen (a tax resident of the Russian Federation) liable for failure to submit notifications on controlled foreign companies (CFCs). The courts upheld the legality of imposing a fine for each offense under clause 1 article 129.6 of the Tax Code of the Russian Federation (TC RF). After that, the citizen tried to challenge the constitutionality of a number of provisions of the Tax Code^[1]. In the applicant's opinion, the challenged provisions do not comply with the Russian Constitution, as they allow to recognize an individual as a controlling foreign company if the latter is in the process of liquidation.

The Constitutional Court of the Russian Federation did not accept the complaint for consideration, having found no violation of the applicant's constitutional rights in the challenged provisions. In its reasoning, the Russian Constitutional Court^[2] stated:

“For taxpayers recognized as tax residents of the Russian Federation, the Tax Code of the Russian Federation provides for the obligation to notify the tax authority of controlled foreign companies, the controlling persons of which they are by virtue of objective criteria (in particular, the size of the shareholding). The envisaged legal mechanism of such notifications, as well as the procedure for recognizing taxpayers as controlling persons, is aimed at providing the tax authority with reliable information on taxpayers' participation in foreign companies and thus at establishing the circumstances affecting the actual amount of tax liabilities of tax residents of the Russian Federation.

The liquidation procedures in respect of a CFC do not exclude the emergence of tax liabilities of the person controlling the company in accordance with the requirements of the Russian tax legislation”.


[1] clauses 1, 3 and 7 of Article 25.13 and clauses 1-3, 5-8 of Article 25.14 of the TC RF
[2] Resolution of the Constitutional Court of the Russian Federation No. 2207-O of September 28, 2023

On October 11, 2023, the President of Russia signed a decree “On the compulsory sale of foreign currency proceeds received by certain Russian exporters under foreign trade agreements (contracts)”.

The Presidential decree affects 43 groups of companies that belong to ferrous and non-ferrous metallurgy, grain production, timber and chemical industries, and fuel and energy complex industries. The decree contains a “specific list of exporters”, but the names of the companies are not given in the text.

The document introduces three main rules:

1. Certain companies are obliged to repatriate and sell foreign currency proceeds on the Russian market within six months in amounts and within the timeframe set by the government. The Cabinet of Ministers plans to adopt a corresponding order within a twenty-four-hour period.
2. Certain companies are obliged to submit to the Bank of Russia and Rosfinmonitoring indicative plans-schedules for the purchase and sale of foreign currency on the domestic market.
3. The representatives of Rosfinmonitoring a will be sent to certain companies. Their tasks will include monitoring and ensuring compliance with currency regulation rules.

The head of a branch or representative office of a foreign legal entity may now obtain a qualified electronic signature certificate (QES) from the Certification Center of the Federal Tax Service of Russia. This can be done at a personal visit to the tax authority providing the service of issuing the QES. An electronic signature is issued without a prior appointment with the tax authorities.

To issue an electronic signature it is necessary to present:

• identity card;
• information on the taxpayer identification number (INN) and insurance number of the individual personal account (SNILS) of the branch manager;
• information on the taxpayer identification number of a foreign legal entity;
• information on the Registration Reason Code (RRC) and the Accreditation Record Number (NZA) of the Russian branch / representative office;
• notarized power of attorney on granting the necessary powers to the head of the subsidiary of the foreign company on the territory of the Russian Federation;
• information carrier having a certificate of conformity of the Russian Federal Service for Technical and Export Control or Federal Security Service of Russia.

An employee borrowed the client base of his former employer upon dismissal and transferred it to his new employer. The latter, carrying out similar activities, used the client base and entered into contracts with some clients for large sums of money.

The former employer considered that the employee, who had access to the customer database, had violated his labour contract and trade secret clause and applied to the court for recovery of direct actual damages from the employee.

The courts of three instances^[1] dismissed the former employer's claims, as the plaintiff had failed to provide evidence meeting the requirements of sufficiency, relevance and admissibility, testifying to the disclosure or use by the defendant of information constituting the company’s trade secret. The plaintiff also failed to prove that he suffered direct actual damage by the defendant's actions. In particular, the courts noted the following circumstances:

• the employer did not prove that the measures specified in part 1 of Article 10, Article 11 of Federal Law No. 98-FZ “On Commercial Secrets” were taken to extend the commercial secret regime to information in the client base and to protect confidential information within the framework of labour relations, despite the existence in the employee's labour contract of the obligation not to disclose commercial, technical, personal information that became known to him in the course of performing his work function, as well as the existence of a provision on commercial secrecy, which applies to the information on commercial secrets in the client base;
• the existence in an employment contract of an employee's obligation to comply with the trade secret regime does not exclude the employer's obligation to establish measures to ensure such regime;
• there is no causal link between the actions of the defendant and the resulting consequences in the form of actual damage for the plaintiff, and lost income (lost profit) is not subject to recovery from the employee. The fact that the defendant is currently in an employment relationship with another company engaged in similar activities, does not indicate the unlawfulness of his actions and the infliction of direct actual damage to the plaintiff. The conclusion by the new employer of contracts with several of the plaintiff's counterparties does not indicate that the defendant disclosed information constituting a trade secret and that the defendant caused direct actual damage to the plaintiff.

[1] Judgement of the First Cassation Court of General Jurisdiction No. 88-12649/2023 from April 17, 2023

In Letter No. 08-12-4/8271 from August 31, 2023, the Bank of Russia changed its position on the admissibility of set-off of counterclaims between residents and foreign creditors from “unfriendly” states in pursuance of Presidential Decree No. 95 from March 5, 2022, for the amount exceeding 10 million rubles or the equivalent of this amount in foreign currency per calendar month.

In this amended position, the Bank of Russia considers it inadmissible to circumvent the procedure established by this Decree No. 95 by means of set-off, taking into account the purposes for which Decree No. 95 was adopted and considering the common legal consequences for the fulfilment of obligations and set-off of counterclaims, which are expressed in the termination of such obligations. Accordingly, the termination of obligations by means other than the fulfilment of obligations requires authorization by the CB RF or the Ministry of Finance of Russia in consultation with the Bank of Russia.

Presidential Decree No. 95 from March 5, 2022 restricts the performance by residents of certain obligations to “unfriendly” non-residents in the amount exceeding 10 million rubles per calendar month, establishing a special regime for payments to the “C”-type account or a permissive regime with the permission of the Subcommission of the Government Commission for the Control over Foreign Investments under the Ministry of Finance of Russia in coordination with the Bank of Russia or the permission of the latter. Under the restriction fell repayment of loans and credits, payment of dividends of joint stock companies and distribution of net profits of limited liability companies (in conjunction with Presidential Decree No. 254 from May 4, 2022), fulfilments of other obligations under financial instruments.

Previously, the Bank of Russia allowed set-offs of counterclaims for obligations in pursuance of Presidential Decree No. 95 from March 5, 2022 as a method of terminating obligations without authorization. This position was set forth in paragraph 1.9. of the Official Explanations of the Bank of Russia from March 18, 2022 No. 2-OR.

For the period from October 1, 2023 to the end of 2024, Russia will introduce customs duties linked to the dollar exchange rate on exports of a number of goods outside the Eurasian Economic Union.

The official reason for the introduction is to protect the domestic market from “unreasonable price increases” by increasing the supply of products within the Russian Federation. However, like the recently introduced “windfall tax”, this measure will help replenish the deficit Russian budget at the expense of exporters.

Duties will be imposed on a wide range of goods, from fertilizers, metals and precious stones to alcohol and foodstuffs. Products with a high share of imported components in the cost price, in particular oil and oil products, gas, grain and timber, are exempted from the duties. A number of machineries, equipment, weapons and ammunition (codes 84-96) are also exempted from duties.

The duties will change monthly depending on the exchange rate of the U.S. dollar to the Russian ruble and will be published on the website of the Ministry of Economic Development of the Russian Federation. Thus, if the dollar falls below 80 rubles, the duties will not be levied, and with the growth of the exchange rate they will increase: the minimum amount of duties will be 4% of the customs value of goods (at a dollar value of 80 to 85 rubles), and the maximum – 7% (if the dollar rate exceeds 95 rubles). Higher duties are envisaged for exporters of fertilizers.

Apparently, the measure will also affect products exported under previously concluded contracts. Thus, if goods have already been placed under customs procedures and are intended to be exported outside the EAEU after October 1, 2023, declarations for them will have to be drawn up anew (exceptions are goods already accepted for rail and sea transportation).

Thus, Russian exporters are advised to analyse the nomenclature of exported goods for changes in export customs duties, as well as to take into account the risks of increasing the time of release of goods due to customs control. One should not forget about the right of the Russian customs authorities to conduct inspections within three years after the release of such goods for export purposes.


Source: Decree of the Government of the Russian Federation of September 21, 2023 Nu. 1538 “On the rates of export customs duties on goods exported from the Russian Federation outside the customs territory of the Eurasian Economic Union, and on amendments to the rates of export customs duties on goods exported from the Russian Federation outside the customs territory of the Eurasian Economic Union”.

Federal Law No. 389-FZ from July 31, 2023 introduced a number of amendments to the Russian Tax Code.

As a result, the long-awaited benefit for forgiven foreign debts was extended. The period of validity of the income tax exemption for forgiveness of debt by a foreign creditor has been extended until the end of 2023^[1].

According to the original version of the Tax Code, in 2022 the taxpayer had the right not to take into account for taxation purposes income from the forgiveness of obligations under a loan (credit) agreement, the lender (creditor) under which as of March 1, 2022 was a foreign organization (foreign citizen).

Contracts for the sale and purchase of shares and stakes in Russian organizations were added to the list of obligations for which the profit exemption is applicable, subject to certain conditions: the contract was concluded after March 1, 2022; the seller is a foreign person; the decision to forgive the debt was made before December 31, 2023.


 [1] subpar. 21.5, par.1, Art. 251, subpar. 2.1, par. 1, Art. 268 of the Russian Tax Code

According to the Russian media, an initiative has been launched to improve the institution of collective actions. This legal mechanism allows to bring claims on behalf of a group of persons and this possibility is provided for both by arbitration (since 2009) and civil (since 2019) procedural legislation of the Russian Federation.

Due to the high cost of litigation, the institution of class (collective) actions is most widespread in the USA. Despite the implementation of this legal construct in Russian law, class actions have not become a mass phenomenon in the Russian Federation. The main reasons for this are the lack of developed normative regulation, difficulties in finding representatives and forming a group of plaintiffs: thus, according to the Russian Arbitration Procedure Code (APC RF), their number cannot be less than 5 (part 5 art. 225.10 of the APC RF), in civil proceedings there shall be at least 20 persons (part 5 art. 244.20 of the Russian Civil Procedure Code), and the subject of the dispute must be their “common or homogeneous rights and legitimate interests” (par. 2 part 1 art. 225.10 of the APC RF, par. 2 part 1 art. 244.20 of the CPC RF).

Nevertheless, the number of collective actions in Russia increased in 2022, primarily due to massive leaks of personal data (several such lawsuits were filed against the food delivery service Yandex.Eda and the courier service SDEK) and the imposition of sanctions restrictions (lawsuits against Apple, Meta, Netflix and the Russian legal entity of the streaming platform). However, so far there are no precedents of satisfaction of such claims.

In this regard, the Russian parliamentarian addressed the Minister of Justice with a proposal to improve the institution of class actions. Thus, he suggested to ease the conditions for concluding an agreement on court costs and to regulate the procedure for concluding settlement agreements, as well as to simplify the procedure for pre-trial settlement of this category of disputes and to improve the mechanism for enforcing court decisions taken as a result of class actions. In addition, the senator sent a letter to the head of Rospotrebnadzor, an organization that advocates for the protection of consumer rights, asking for an opinion on the advisability of regulating the institute of collective actions and specific proposals to improve its legal framework.

However, at present, no relevant drafts have yet appeared in the Russian database of draft regulations at regulation.gov.ru.

On September 15, 2023, the Bank of Russia raised the key rate by 100 basis points, from 12% to 13%.

This is the third increase in the last six months. In July this year, the Central Bank raised the rate from 7.5% to 8.5%. In August, apparently against the background of a weakening of the ruble, the regulator sharply raised the rate by 350 basis points at once – from 8.5% to 12%

This measure, according to the regulator, is aimed at "limiting the risks to price stability". In other words, in this way, the Central Bank is trying to avoid an increase in inflation rates due to a sharp depreciation of the ruble.

The target inflation rate was set at 4%. However, despite the sharp increase in the key rate, by the end of August, annual inflation rose to 5.15%. Thus, in August it was not possible to reduce the growth of consumer demand, which automatically leads to higher prices.

In September, the Ministry of Economic Development set the inflation forecast in Russia for 2023 at 7.5%. The Central Bank was also forced to adjust its forecast, the new year-end inflation figures are set at 6-7%.

However, the regulator hopes that in 2024 the inflation rate will return to the planned 4-4.5%.

The President of the Russian Federation has signed a decree on changing the procedure for the fulfillment of obligations under Eurobonds of the Russian Ministry of Finance, which will mature on September 16, 2023.

A special procedure for the fulfilment of obligations under Eurobonds was established back in the summer of 2022 and provided for the opening of ruble accounts of “I”-type in Russian banks in the name of foreign depositaries. The holders of Eurobonds were recognized as beneficiaries of these accounts. Payments on government debt to non-residents were transferred there, while the possibility of foreign currency payments from these accounts was not envisaged.

Now the regime of “I”–accounts is changing. The Ministry of Finance and the Central Bank of the Russian Federation have worked out a scheme according to which from December 15, 2023 the funds from these accounts will be used for payments to Russian investors whose income on foreign securities turned out to be frozen on foreign accounts of the National Settlement Depository (NSD).

Payments to holders of Eurobonds

If Eurobonds are registered by Russian depositories, investors will continue to receive payments from “I”–type accounts in roubles at the Central Bank of Russia's exchange rate. The changes will affect those investors whose rights to these securities are accounted for by foreign depositories.

The Ministry of Finance of the Russian Federation will continue to transfer Eurobond proceeds to the accounts of the Russian central depository (i.e., NSD), which, in turn, will continue to make payments to foreign holders. They will be able to receive payments from the “I”–type accounts in rubles within 90 days from the date of the next Eurobond payment.

Thus, payments from “I”–type accounts will be made at the exchange rate of the domestic currency market until November 24, 2023 inclusive, and the funds credited to these accounts until September 15, 2023 will be indexed. In the period from November 25 to December 14 of this year, payments will be suspended, and the funds credited to the “I”–type accounts from September 16, 2023 will be indexed at the CBRF exchange rate on the 91st day after the date of the next Eurobond payment.

Starting from December 15, 2023, income on Eurobonds will be paid to non-residents in foreign currency. This will be done using blocked funds in the foreign accounts of the National Settlement Depository by transferring information on holders of Russian Eurobonds and the amounts due to them to foreign depositories. Upon submission of the relevant order, NSD will be deemed to have duly fulfilled its obligations to transfer payments to non-resident holders of Eurobonds.

It should be understood that under the European sanctions foreign depositories, such as Euroclear and Clearstream, are not entitled to make payments from „frozen” foreign accounts of the National Settlement Depository, at least until the relevant regulatory approvals are issued.

What about Russian “frozen” assets?

After December 15, 2023, the funds transferred by the Ministry of Finance of the Russian Federation to "“I”–type accounts in favour of foreign holders of Eurobonds will be used for payments in rubles to Russian owners of assets blocked abroad.

Russian owners of foreign securities will receive the money in the following order:

1. First, payments will be made on stocks of foreign issuers and foreign securities certifying rights to such stocks in favour of individuals and management companies of open-end and exchange-traded unit investment funds.
2. Then payments on foreign bonds and Eurobonds of the Russian Federation will be transferred to individuals;
3. Payments on stocks of foreign issuers and foreign securities certifying rights to such stocks will then be received by other owners (except for individuals and management companies of unit investment funds that received cash in the first turn);
4. Other obligations of NSD to its customers will be discharged in the fourth priority;
5. Finally, other persons (except for individuals who received funds in the second turn) will receive income on foreign bonds and Eurobonds of the Russian Federation.

Peer obligations will be fulfilled in the calendar priority, and in case of insufficiency of funds on “I”–type accounts their partial fulfilment in proportion to the number of securities is envisaged.

Thus, there will be a kind of forced exchange of “frozen” Russian assets abroad for funds from “I”–type accounts belonging to non-residents.

Russian mass media have earlier reported on the development of projects for the exchange of blocked assets of Russian and foreign investors, but initially it was about the use of non-residents' funds on “C”–type accounts.

Source: Decree of the President of the Russian Federation No. 665 from 09.09.2023 “On the Temporary Procedure for the Execution to Residents and Foreign Creditors of State Debt Obligations of the Russian Federation Expressed in State Securities, the Nominal Value of Which is Specified in Foreign Currency, and Other Obligations on Foreign Securities”

On September 7, 2023, the Central Bank of Russia extended the existing currency restrictions for another six months. These restrictions will remain in force until March 2024.

For legal entities:

• non-resident legal entities cannot withdraw cash in US dollars, euros, pounds sterling, Japanese yen. There are no restrictions for other currencies.
• resident legal entities will be able to receive cash in US dollars, euros, pounds sterling and Japanese yen from their accounts only for travel expenses, based on the payment norms established in accordance with the legislation. There are no restrictions for other currencies.

For individuals:

• for Russian citizens whose foreign currency account or deposit was opened before March 9, 2022, the limit on currency withdrawals of 10 thousand US dollars or the equivalent amount in euros, but no more, provided that they have not previously realized such an opportunity. Thus, it is still impossible to receive money in US dollars or euros.
• amounts over the limit of 10,000 dollars can be received in rubles at the official exchange rate of the Central Bank of Russia on the day of payment.

For financial organizations:

• for banks, the ban on charging citizens a commission when issuing currency from accounts or deposits has been extended for six months;
• banks will be able to sell dollars and euros to individuals without restrictions.

The head of the Russian Ministry of Economic Development commented on the results of the last strategic session on the development of small and medium-sized businesses.

He said that within the framework of the national project "Small and Medium Entrepreneurship and Support for Entrepreneurial Initiative" the key task set by the Russian President, namely, to increase the number of people employed in this sector, is being solved.

One of the initiatives under discussion is the creation of a new category of SME+ entrepreneurs. Thus, from 2024 a pilot project will be launched, which will allow entrepreneurs to move from medium-sized enterprises to large ones without losing the usual support measures.

During the St. Petersburg International Economic Forum held on June 14-17, 2023, the President of the Russian Federation Vladimir Putin announced that the moratorium on administrative liability for sanctions-related violations of currency legislation will be extended for the next year of 2024.

The moratorium on fines has been in effect since February 2022. It is applied in case of non-compliance with currency control requirements due to the anti-Russian sanctions. Before the moratorium, legal entities-violators faced a fine of 75-100% of the amount of the illegal currency transaction, officials – from 20 thousand to 30 thousand rubles.

Also, the President of Russia instructed the government together with the Central Bank to make decisions on declaring an amnesty for businesses on forced violations with currency. The amnesty should exclude the application of punishment against residents who failed to fulfil the requirements of the currency legislation of the Russian Federation during the moratorium period, if such violations were caused by anti-Russian sanctions. A report on this topic was to be submitted by September 1, 2023.

On September 4, 2023, a new Federal Law № 470-FZ "On the specifics of the regulation of corporate legal relations in corporations that are economically significant companies" (hereinafter – the law) came into force.

This law allows:

• to exclude foreigners from the shareholders of economically significant companies;
• to obtain direct ownership of stocks (shares) of economically significant companies under the control of a foreign holding company by Russian beneficiaries from foreign holding companies from unfriendly countries.
• to receive direct payment of dividends (profit) of economically significant enterprises by Russian beneficiaries from the foreign holding companies.

A foreign holding company is a foreign legal entity associated with a foreign state that commits unfriendly actions against the Russian Federation and owns at least 50% of the stocks (shares) in the charter capital capital of the economically significant company.

An economically significant company is a corporation that is essential for ensuring the economic sovereignty and security of the Russian Federation. Thus, the turnover of the group of companies should exceed 75 billion rubles, the number of employees should exceed 4000, the value of assets should exceed 150 billion rubles, and the amount of taxes paid should exceed at least 10 billion rubles.

The law was adopted in connection with the refusal of foreign participants who don’t fulfill their duties to the economically significant company, recalling the restrictions related to the sanctions introduced against the Russian Federation. According to this law, foreigners have the right to receive compensation on market conditions when leaving the Russian market. Previously, it was envisaged that foreign beneficiaries leaving Russia should receive compensation at a discount.

If a foreign holding company performs unfriendly actions, that is, it hinders the management of the economically significant company or refuses to fulfill the duties of shareholders, their rights may be suspended by the arbitration court. In this case, a foreign holding company may apply for compensation. According to the law, it is entitled to had in an application for suspension of the exercise of rights:

• the federal executive authority authorized by the Government of the Russian Federation;
• shareholders (participants) of an economically significant company regardless of the number of shares owned by them (the amount of the shares in the charter capital);
• the individual executive organ or member of the Board of Directors (board of supervisory directors) of an economically significant company;
• persons who indirectly own stocks (shares in the charter capital) of an economically significant company, who belong to a foreign holding company and are citizens of the Russian Federation and (or) residents of the Russian Federation, provided that the share of their direct and (or) indirect participation in a foreign holding company is more than 50%, or more than 30%, if at the last meeting of the supreme management body of the foreign holding company, before submitting the application for suspension of the exercise of rights, such persons had the opportunity to determine the decision of the supreme management body of a foreign holding company, or more than 20% (paragraph 5 part 4 Article 2 of the Law).

A foreign holding company at any time during the period of suspension of the exercise of rights has the right to apply to an economically significant company with a claim for compensation in the amount of the market value of the stocks (shares in the chapter capital) of an economically significant company that haven’t been apportioned persons who have entered into direct ownership of the relevant stocks (shares in the chapter capital). The procedure for determining the amount and payment of such compensation is established by the Government of the Russian Federation.

The stocks (shares in the chapter capital) of an economically significant company owned by a foreign holding company and transferred to an economically significant company are apportioned to persons who have the right to take direct ownership of the stocks (shares in the chapter capital) of an economically significant company, in proportion to the share of their indirect ownership in the chapter capital of an economically significant company.

To implement the procedure for determining the amount and payment of compensation to a foreign holding company in case of the suspension of the exercise by a foreign holding company of corporate rights in respect of an economically significant company was established a draft of the decree of the Government of the Russian Federation "On approval of the procedure for determining the amount and payment of compensation to a foreign holding company in connection with the suspension of the exercise by a foreign holding company of corporate rights in respect of an economically significant company" (prepared by the Ministry of Economic Development of the Russian Federation on August 10, 2023).

In fact, the beneficiaries (in particular from unfriendly countries) have the right to leave the economically significant company on market conditions.

Earlier in 2022, the State Commission for the Control of Foreign Investments established a condition for companies from unfriendly countries for leaving from Russian assets – a sale with a discount of at least 50% of their market value.

At the end of July 2023, a bill was submitted to the State Duma of the Russian Federation establishing additional obligations and restrictions with respect to the so-called “organizers of consumer market structure research”. These are Russian legal entities providing services for the collection, processing and analysis of data on the structure of the commodity market in the Russian Federation (including information on the level of supply and demand, cost of goods, production volumes, generalized data on consumers, producers and importers of goods), the aggregate revenue of which for the last calendar year is at least 30 million rubles.

In accordance with the bill, at least 80% of the authorized capital of such research companies must be owned by Russian legal entities (individuals), and the systematization, analysis and storage of data obtained by such companies must be carried out on technical facilities located in the territory of the Russian Federation.

Moreover, it is planned to include such research companies in a special register of the Federal Antimonopoly Service, and the ownership structure of these legal entities, according to the idea of the developers of the bill, will be determined by a specially created Commission. If a research company fails to bring its structure in line with the Commission's decision, the shares (stock) of such an organization may be forcibly sold in court. The companies that are not included in the register will not be allowed to conduct market research, and counterparties will be prohibited from entering into relevant contracts with them.

Despite the fact that the bill has not even been considered in the first reading yet, Russian media reported that members of the lower house of the Russian parliament are already working on amendments to it. Thus, there is a proposal to include foreign research companies studying Russian commodity markets in the list of organizations whose activities are undesirable on the territory of Russia and to grant their Russian subsidiaries the status of foreign agents. The initiators of the amendments explain the adoption of such measures by the desire to “prevent and eliminate threats of uncontrolled collection of data of Russian citizens, and in fact - the ongoing economic espionage by Western research companies”. Also members of the Federation Council, the upper house of the Russian parliament, point to the forced protective nature of these changes to the legislation, and emphasize that such measures will remain in effect “until negative economic, political and military pressure on Russia ceases”.

In Letter No. KV-4-17/10219@ from August 9, 2023, the Federal Tax Service clarified its position concerning the payment of wages to employees in currency.

Where employees of foreign branches and representative offices of a Russian legal entity are located outside of the Russian Federation, the Federal Tax Service considers it possible:

• the transfer of wages to such employees (both residents and non-residents) from the entity’s accounts in a foreign bank;
• the payment of salaries in cash where Russian resident employees are concerned.

Russian residents have the right to credit these payments to their foreign accounts.

However, the above norms do not allow the payment of wages to employees of another Russian legal entity, even if there is a corresponding agency agreement between the organizations.

Russian President has signed a law on the possibility of blocking the money and property of persons taking unfriendly actions against Russia. Interestingly, the bill was submitted to the State Duma and considered in the first reading back in July 2020. It was only in the spring of 2023 that work on the document resumed.

This legal act introduces the concept of “blocked persons” into the Law on Special Economic Measures (SEM), which includes foreign states, organizations, citizens and stateless persons, as well as legal entities controlled by them. In this case, control means the possibility of direct or indirect disposal of more than 50% of votes in the supreme governing body of a company (including if the share/stock package exceeding the threshold is owned by several foreign persons).

Previously, SEMs could also be aimed at prohibiting or imposing restrictions on financial or foreign economic transactions with respect to persons under Russian sanctions. Now this law provision has been specified with regard to the possibility of freezing (blocking) both monetary funds and (or) other property belonging to the blocked persons and financial transactions carried out in their interests and in their favour, including cross-border transfers.

At the same time, blocked persons are entitled to receive funds to their Russian bank accounts and interest on the deposits, may use pensions, scholarships, allowances and other social payments and make payments of taxes, fees, insurance premiums and penalties under the laws of the Russian Federation. In addition, it is allowed to receive and spend wages up to 10 thousand rubles (the equivalent of this amount in foreign currency) per month, as well as to pay for medical services provided to the blocked person himself and his family members (also within the limits of 10 thousand rubles monthly for each). The payment of wages to employees in the amount not exceeding the subsistence minimum, as well as severance and social severance payments in the minimum amount is not prohibited either.

The decision to apply special economic measures to specific individuals and the period of their application will be made by the President of the Russian Federation on the basis of proposals by the Russian Security Council, but the legislation does not provide for specific criteria for freezing funds and transactions. In all likelihood, each situation will be considered on a case-by-case basis. A decision of the Russian head of state will also be required to lift the restrictive measures.

Blocking of funds, property and financial transactions will be carried out by banks, insurance and microfinance companies, professional participants of the securities market, pawnshops and credit cooperatives and a number of other entities that will not be subject to civil liability for violation of the terms of relevant contracts with foreign clients and companies controlled by them.

The Bank of Russia is charged with ensuring the implementation of the SEMs. In case of repeated non-compliance with special economic measures, the Central Bank has the right to suspend the work of violators or revoke their license, as well as to apply to non-credit financial institutions such measures as sending instructions, restricting their activities and imposing fines.

The law will come into force in February 2024. This deadline is expected to allow those affected by the regulation to implement the procedures necessary to comply with the new requirements.


Source: Federal Law No. 422-FZ “On Amendments to Certain Legislative Acts of the Russian Federation” from August 4, 2023

The Bank of Russia has reported on the preparation of a draft presidential decree on the exchange of frozen assets of Russian and foreign investors. As a result of the sanctions, a significant part of Russian investments are blocked on the accounts of Russian brokers and other securities market participants in foreign depositories: for example, funds on the accounts of the National Settlement Depository (NSD) in Euroclear and Clearstream have been immobilized. If they wish, foreign investors will be able to purchase such assets at the expense of "frozen" funds on "C" accounts in Russian banks.

According to the Russian Minister of Finance, at the initial stage it is planned to unblock investments of small (up to 100 thousand rubles) portfolios of Russian retail investors totaling 100 billion rubles. For comparison, the total amount of blocked assets of Russian citizens reaches 1.5 trillion rubles while another 4 trillion of the “frozen” assets belong to Russian legal entities.

The details of this procedure have not been disclosed yet, but there are assumptions that foreigners will buy out securities from Russian investors at a below-market price, since the volume of funds in the “C” accounts is much smaller than the amount of blocked assets of Russians. Besides, unless otherwise stipulated by the decree of the President of the Russian Federation, “unfriendly” foreigners will also need the permission of the Government Commission for the transaction, which means the necessity to make a contribution to the budget.

However, the main problem for foreign investors may be the fact that the assets they receive as a result of the exchange will still be held in the accounts of sanctioned entities (e.g., the same NSD). Thus, actions with these assets will be possible only with the authorisation of the relevant European regulators. However, there are precedents of obtaining such individual licenses, including by Russian persons: for example, at the end of August 2023, the Russian media published information about a Russian investor, who does not have a residence permit in the European Union, obtaining permission from the Belgian Ministry of Finance to "unfreeze" assets worth 10 million euros. The number of refusals to grant such licenses, however, far exceeds the number of successful cases.

All of the above makes it doubtful how willing foreign investors will be to purchase “frozen” Russian assets. On the other hand, in the absence of alternatives and with the prospect of indefinite blocking of funds on “C” accounts, a number of foreigners are likely to agree to the exchange, albeit at a discount.

However, the scheme proposed by the Central Bank and the Russian Ministry of Finance can only be implemented with the consent of European regulators, and their position on this issue still remains unknown.

Federal Law Nu. 389-FZ¹ from July 31, 2023, amended paragraph 2.1 of Article 283 of the Russian Tax Code governing the recognition of a tax loss.

In the periods 2017-2024 there is a limitation on the amount of recognition of tax losses received in previous years. Thus, the tax base in the periods 2017-2024 may be reduced by no more than 50% by the amount of losses recognized in previous tax periods.

Federal Law Nu. 389-FZ extended this restrictive rule until December 31, 2026.


[1] Federal Law on Amendments to Parts One and Two of the Tax Code of the Russian Federation, Certain Legislative Acts of the Russian Federation and on the Suspension of the Effect of the second paragraph of Article 78 of Part One of the Tax Code of the Russian Federation.

Companies operating in the IT field according to the list of the Ministry of Digital Development, Communications and Mass Media are entitled to reduced profit tax and insurance contributions, namely:

• profit tax rate of 0% in 2022-2024;
• profit tax rate of 3% – for the other period duration;
• reduced rate of 7.6% for insurance contributions.

Also IT companies from this list have a right to:

• credit for business goals with a rate of 3% per annum with the condition of conservation 85% of jobs, and an annual wage indexation;
• exemption from scheduled inspections of state and municipal control until the end of 2024;
• military deferment and a preferential mortgage for employees.

According to the decree of the Ministry of Digital Development, Communications and Mass Media № 449 dated May 11, 2023, the list was supplemented by the following activities:

• installation, maintenance, repair of information security equipment;
• repair, service and installation of protected telecommunication systems;
• service of encrypted or cryptographic means;
• conformity assessment to the requirements of data protection;
• repair of computer and peripheral devices;
• providing programs for scientific research in the fields of information security, bioinformatics and nanotechnology.

This list will enter into force on August 26, 2023. To obtain a preferential status, companies must meet certain conditions, the basic of which are:

• to be a russian company;
• carry out IT activities from the list and have relevant OKVED activities;
• have at least 30% of the total income of IT services.

According to the decision of the President of the Russian Federation, the issuance of electronic visas for foreign citizens was started from August 1, 2023.

Now an electronic visa can be obtained by citizens of states whose list has been established by the Government of the Russian Federation, namely:

• Austria, Andorra,
• Bahrain, Belgium, Bulgaria,
• Cambodia, China, Croatia, Cyprus, Czech Republic,
• Denmark,
• Estonia,
• Finland, France,
• Germany, Greece,
• Hungary,
• India, Indonesia, Iran, Ireland, Iceland, Italy,
• Japan,
• Democratic People's Republic of Korea, Kuwait,
• Latvia, Lithuania, Liechtenstein, Luxembourg,
• Malaysia, Malta, North Macedonia, Mexico, Monaco, Myanmar,
• the Netherlands, Norway,
• Oman,
• the Philippines, Poland, Portugal,
• Romania,
• San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, Spain, Switzerland, Sweden,
• Taiwan (China), Turkey,
• Vatican, Vietnam.

A unified electronic visa will allow foreigners to visit Russia for tourist purposes, for visiting or business visits, as well as for participation in socio-political, economic, scientific, cultural and sports activities.

To obtain a visa, you need to fill out an application form either on the website of the Ministry of Foreign Affairs of the Russian Federation or fill it out on a mobile app. To the application it is necessary to attach a digital photo of the applicant and a scanned copy from the pages with passport data.

Article 5 of the Federal Law No. 255-FZ of 14 July 14, 2022 “On control over the activities of persons under foreign influence” has been amended to regulate compliance with the restrictions imposed on foreign agents, which entered into force on August 4, 2023.

According to these additions, public authorities, organisations of all legal forms, as well as their officials and individuals, regardless of their citizenship or in the absence thereof, in carrying out their activities must take into account the restrictions related to the status of a foreign agent specified in Article 11 of this Federal Law, in particular:

• a foreign agent may not take part in the procurement of goods, work and services to meet state and municipal needs, in the procurement of goods, work and services in accordance with Federal Law No. 223-FZ of July 18, 2011 “On the Procurement of Goods, Work and Services by Certain Types of Legal Entities" and also won’t be able to participate in the selection of service providers in accordance with Federal Law No. 189-FZ of July 13, 2020 "On the State (Municipal) Social Order for the Provision of State (Municipal) Services in the Social Sphere";
• a foreign agent does not have the right to apply simplified accounting methods, including simplified accounting (financial) reporting;
• foreign agents are subject to the restrictions and prohibitions provided for in Federal Act No. 57 of April 29, 2008 “Procedures for Foreign Investments in the Business Entities of Strategic Importance for Russian National Defence and State Security”.

In fact, this innovation means the need to check clients on the unified list of foreign agents published and updated on the official website of the Russian Ministry of Justice.

Since August 4, 2023, part 42 of Article 19.5 of the Code of Administrative Offences establishes administrative liability for failure to comply within the prescribed time limit with a lawful order or warning of the body exercising state control over compliance with the legislation of the Russian Federation on foreign agents to eliminate violations of the legislation in the form of a monetary fine, in particular, for officials – up to 100 thousand rubles, for legal entities – up to 300 thousand rubles.

From April 1, 2024, legal entities and individual entrepreneurs are obliged to notify the public oversight authorities (supervisory authority) about the termination of certain activities. The changes concern only those who were previously obliged to notify about the beginning of such activities.

It should be remembered that companies and individual entrepreneurs are obliged to inform the competent authority about the commencement of certain business activities^[1]. These rules, as well as the list of works and services, which beginning is a notification, were approved by the Order of the Government of the Russian Federation № 584^[2].

Until now, the legislation didn’t provide the possibility of excluding information from the register of notifications of termination of previously requested activities from the legal entity or from the individual entrepreneur, because it was impossible to update the register of notifications.

From April 1, 2024, such notifications can be submitted through the portal of Public Services ("Gosuslugi") or through regional portals of public and municipal services in the form of an electronic document signed with an advanced qualified electronic signature. If the notification hasn’t been submitted, a fine will be imposed: for public officials (executives) – from up to 5, 000 rubles, and for legal entities – from 10, 000 to 20, 000 rubles.

It is also new that there is no obligation to inform about the notification of the supervisory authorities about the change of the registered office, the place of actual activity, the place of residence of the independent entrepreneur, and the reorganization of the legal entity.


[1] Federal Law No. 294-FZ of December 26, 2008 "On the Protection of the Rights of Legal Entities and Individual Entrepreneurs in the Exercise of State Control (Supervision) and Municipal Control";
[2] Decree of the Government of the Russian Federation No. 584 of July 16, 2009.

On July 28, 2023, the State Duma of the Russian Federation adopted the Law "On the Tax on Excess Profit", which will enter into force on January 1, 2024.

The taxpayers are:

• Russian legal entities, foreign legal entities that carry on business through their permanent representation in the Russian Federation, and foreign legal entities that are tax residents in accordance with Article 246.2 of the Tax Code of the Russian Federation;
• Russian legal entities who are responsible members of the Consolidated Group of Taxpayers (KGN) as of December 31, 2022.

According to the law, the new tax is a one-time fee in the amount of 10% of the excess profit that the company has received over the previous two years. About the excess profit is understood a positive difference between the average arithmetic profit for 2021-2022 and the same value for 2018-2019. The calculation of profit before tax payment is taken into account.

If the average arithmetic profit for 2021-2022 corresponds to the same value for 2018-2019, the tax base is corresponded to zero. Also, the tax base will be corresponded to zero if the average arithmetic profit for 2021-2022 is not more than one billion rubles.

The tax must be paid no later than January 28, 2024.

However, the law provides a discount for early tax payment. For such companies that will make the payment in the period from October 1 to November 30, 2023 inclusive, the tax deduction will be provided in the amount of the tax paid, but not more than half of this amount. In fact, a 50% discount is provided for early payment. At the same time, this discount can be less if the company will not pay the total amount from the tax, but a part of it.

Example. The company will have to pay the tax for excess profit in the amount of 10 billion rubles. In October 2023, this company will transfer 4 billion rubles to the budget. This is less than half of the total amount from the tax. This means that the payment is completely counted as a tax refund.

From January 1 to January 28, 2024, the company will have to pay:
10 billion rubles (total amount from tax) minus 4 billion rubles (amount during the discount) minus 4 billion rubles (amount from tax refund) = 2 billion rubles.

In this case, the total amount from the tax will be reduced from 10 to 6 billion rubles.

The tax will not concern small or medium-sized enterprises, ESHN payers (Unified Agricultural Tax), enterprises established after 2020, as well as those enterprises whose average pre-tax profit for the years 2021-2022 does not exceed 1 billion rubles.

Moreover, for the purposes of the application of the law, such companies will be excluded from the Consolidated Group of Taxpayers (KGN) in 2023:

• who in the course of 2022 extracted raw hydrocarbon on the property with mineral resources, which, in accordance with the legislation of the Russian Federation, was handed over to enterprises for use;
• who in the course of 2022 extracted coal on the property with mineral resources, which, in accordance with the legislation of the Russian Federation, was handed over to enterprises for use;
• who, as of December 31, 2022, had a certificate of registration of a person who processed petroleum and calculated the value of the damping coefficient for at least six tax periods of excise duties for 2022 more than zero.

The Sub–Commission of the Government Commission for the Control of Foreign Investments (hereinafter referred to as the Sub-Commission) has determined the conditions for payments on Eurobonds of Russian companies instead of their mandatory substitution.

Earlier, on May 22, 2023, a Decree of the President of the Russian Federation № 364 was adopted, which prescribed the mandatory substitution of Eurobonds with local bonds by January 1, 2024.

On July 27, 2023, the extract from the decision of the Sub–Commission of July 24, 2023 № 176/3 was published on the website of the Ministry of Finance, according to which it is still possible to pay the Eurobonds without their substitution, subject to obtaining the permission of the Sub–Commission.

When deciding by the Sub-Commission whether it is viable to allow such a permission, the sub-commission will respect the following conditions:

1. There are no overdue debts for Eurobonds.
2. The obligations to the resident holder, whose rights are considered in a foreign depository, are fulfilled. In addition, the Decree of the President of the Russian Federation № 529 of August 8, 2022 gives Russian legal entities the right to fulfill the obligations for Eurobonds to the resident or the "friendly" non-resident in rubles to their bank accounts in the Russian banks, provided that the information confirming the existence of obligations and their size is sufficient.
3. The issuer has received an approval from the holder of Eurobonds for separate payments of bonds that are considered in Russian and foreign depositories.
4. The euro bonds are admitted to trading on the Moscow Stock Exchange (MOEX).
5. The issuer has received the "confirmation of the will" from holders of Eurobonds who have the right to dispose of more than 75% of the votes of the total number of Eurobonds considered in Russian depositary for the receipt of cash payments, and not for substitution by the local bonds.

For bonds whose repayment is due by December 31, 2024, the payment permission can be granted without taking into account the above conditions (points 3-5).

On July 24, 2023, the President of the Russian Federation signed a new law on the digital ruble, which will come into force as early as August 1, 2023. In addition to cash payment and non-cash settlement, a new form of settlement in the form of a digital ruble is added.

The digital ruble is an individual digital code stored in an electronic wallet on a special platform of the Central Bank of Russia. The law establishes the status of the operator of the digital ruble platform for the Central Bank of Russia. That is, the Central Bank of Russia will issue the digital money, and will be responsible for its security and for conduct transactions. The banks will function as financial intermediaries in transactions between the digital ruble, the Central Bank of Russia and the end users.

The digital ruble can be used almost in the same way as "normal" money – you can pay with the digital ruble, you can transfer the digital ruble, as well as accept payments with the digital ruble. The digital ruble can be converted into non-cash forms and back. After converting the ruble to a non-cash form, you can receive cash.

But the digital ruble will also have some specificities. In particular, there will be no interest income for it. In the form of the digital ruble, you can’t open a bank deposit or get a credit.

An account with digital rubles can be only one and only on one platform of the Central Bank of Russia.

Unified tariffs for all users are established by the Central Bank of Russia as the sole operator of the platform. It is known that transactions and payments in the digital ruble will be free for individuals, and tariffs for legal entities accepting payment in the digital ruble will be 0.3% of the payment. At the same time, the law provides for the possibility of changing tariffs.

On July 21, 2023, in its third reading, the State Duma has adopted a law that establishes the flat personal income tax rate for employees working remotely at home and abroad, regardless of the tax residence. The relevant changes were added to the Russian Tax Code.

The flat personal income tax rate is 13-15%. From 2024, the new introductions for employees working remotely at Russian companies will come into force. For freelancers – from 2025.

The flat personal income tax rate in the amount of 15% will concern those whose income is more than 5 million rubles for the year. For the payment of the tax it is necessary to observe at least one of the conditions:

• the recipient of the income must be a Russian tax resident, whose salary is transferred to an Russian bank account;
• the income is transferred by Russian companies, individual entrepreneurs or separate division of foreign companies in the Russian Federation.

The current Decree of the President of the Russian Federation № 520 of August 5, 2022, "On the application of special economic measures in the financial, fuel and energy sphere in connection with the unfriendly actions of some foreign states and international companies" is amended in accordance with a new presidential decree. According to this new decree, the state will be given priority in the purchase of shares of foreigners in Russian companies who is leaving Russia. It is important to take into account that the priority right is applied to one of the companies from the List of strategic companies (The Decree of the President of the Russian Federation of August 4, 2004, № 1009 (issued from May 10, 2023) "On approval of the list of strategic companies and strategic joint stock companies"). The pre-emption right to the shares to be sold by foreigners is granted to the Federal Agency for State Property Management (“Rosimushchestvo”) at a significant discount for resale at the market price and for further transfer of funds to the federal budget.

The Russian State Duma has adopted a law on so-called "economic seizure of property" facilitating the acquisition of direct control by Russian beneficiaries and the transfer of economically significant Russian organisations to Russian jurisdiction. Such exemptions are not aimed at unjustified infringement of the rights and legitimate interests of foreign holding companies, their participants (shareholders) and other persons.

An "economically significant organisation" means a Russian business entity of significant importance for ensuring Russian economic sovereignty and economic security that is included in a list approved by the Government of the Russian Federation. For inclusion in such a list, a number of criteria are established, applied individually or cumulatively, namely: the total revenue and assets of a group of persons (worldwide) of such an economic entity, the number of employees in such Russian organisations, the amount of taxes (fees) paid to the Russian budget for the previous calendar year. Inclusion in the list is carried out on the proposal of the relevant ministry.

A foreign holding company is a foreign legal entity which is related to foreign states committing “unfriendly” actions against the Russian Federation, Russian legal entities and individuals, and which owns at least 50 per cent of the voting shares (stocks in the charter capital) of an economically significant organisation.

A circumstance for the suspension of the corporate rights of a foreign holding company, in particular, is the actual cessation of termination of the management of the activities of an economically significant organisation by its management bodies, which among other things, may be evidenced, by public statements, termination of essential contracts, and sending of redundancy notices to employees.

Cases involving the suspension of the corporate rights of a foreign holding company fall within the competence of the Arbitration Court of the Moscow Region. Authorized state bodies, other participants (shareholders), and other management bodies of an economically significant organisation may apply to the court. The application shall be considered by the court for a maximum period of one month. The suspension of the corporate rights is carried out for a period no more than until December 31,2024. A court decision is subject to immediate execution, and an appeal of the court decision does not suspend its execution.

From the date of the court's decision, a foreign holding company has no right to participate in meetings, vote, receive dividends, dispose of its participation rights and exercise its other corporate rights. The shares of a foreign holding company are transferred to economically significant organisation itself. The registering authority must reflect in the Unified State Register of Legal Entities the transfer of a share in an LLC no later than one week from the date of the court decision. The actual value of a holding company's share is not paid. Russian beneficiaries have an obligation to purchase such shares. The right of acquisition may be transferred to a business company established in court.

After the expiration of the suspension of corporate rights, a foreign holding company may claim its undistributed shares, provided that it has not received market value compensation for them. In this case, it also has the right to claim the distributed but unpaid dividends.

After signing by the President of the Russian Federation, the law will enter into force 30 days after the date of its official publication.

As part of the work on the draft law on amendments to the Tax Code of the Russian Federation on July 19, 2023, amendments were adopted for consideration, which will have a positive effect for many taxpayers.

Thus, as a result of the amendments, the norms of paragraph 25.1 clause 1 of Article 251 of the Tax Code of the Russian Federation will be extended until the end of 2023. According to the original version, the taxpayer had the right not to take into account for taxation purposes income from the forgiveness of obligations under a loan (credit) agreement, the lender (creditor) under which as of March 1, 2022 was a foreign company (foreign citizen).

The amendments also expand the provisions of this article by adding the possibility of "tax-free" forgiveness under the sale-purchase agreements of shares (stakes) of Russian companies concluded after March 1, 2022, where the seller is a foreign organization (foreign citizen). Similar rules will apply if the above-mentioned obligations were received under assignment agreements and under obligations related to the payment to a foreign shareholder of a limited liability company of the actual value of a share upon withdrawal from such company in 2022-2023.

The norm will be mirrored for individuals (clause 60.3 of Article 217 of the Tax Code of the Russian Federation). The value of such shares (stakes) will be deemed to be equal to zero upon further realization (clause 2.1 of Article 268 of the Tax Code of the Russian Federation).

Source: Bill No. 369931-8 "On Amending Parts One and Two of the Tax Code of the Russian Federation and Certain Legislative Acts of the Russian Federation and on Suspending Paragraph Two of Clause 1 of Article 78 of Part One of the Tax Code of the Russian Federation"

The conditions which are recommended to be taken into account by the Government Commission for Control over Foreign Investments in the Russian Federation when issuing permits for transactions involving the alienation of shares (stocks) in Russian companies by “unfriendly” foreigners and for the payment of dividends (profits) from the activities of Russian companies to such persons have been updated.

Some of the criteria were known before: for example, assessment of the market value of the alienated assets by an independent appraiser and the provision of an expert opinion to the report by an SRO, while both the appraiser and the self-regulatory organization should be included in the lists recommended by the Government Commission; sale of assets at a discount of at least 50% of the market value indicated in the report.

The obligation to make a 10% voluntary contribution to the budget also remains. If the price of the alienated asset is less than 90% of its market value, 10% is calculated from half of the market value of the asset; when selling shares (stocks) at a discount of more than 90% of their market value, 10% of their whole market value must be paid to the budget. In both cases, data on the market value of the asset from the aforementioned report of an independent appraiser are used.

Key performance indicators must still be established for the new owner and the acquired company, but now they must include the preservation of technological potential and the main economic activity of the company, preservation of jobs and fulfilment of obligations under concluded contracts. The relevant ministry monitors the achievement of the established KPIs.

The recommended criteria are set with regard to the price and term for the buy-back of stocks (shares): it should be made at the market value as of the date of exercise of the respective option with economic benefit for the former owner. In addition, the Commission’s permission for repurchase of the said assets will generally not exceed two years from the date of the original transaction.

The changes also affect the payment procedure, for which there are now 3 options. Funds may be transferred to the “unfriendly” seller to a C-type account in a Russian bank; it is also possible to make payments in rubles without transferring money outside the Russian Federation. Finally, the share purchase price can be paid to the seller's foreign account, but in this case the contract will need to include an instalment payment clause.

Additional conditions are also introduced for public joint stock companies (PAO). Thus, not later than one year from the date of purchase of stocks up to 20% of the acquired securities will have to be placed on the stock exchange, and the term of the placement should not exceed three years from the date of its commencement. Similar rules are provided for the termination of public status or liquidation of a public company, as well as in case of absorption by the PAO of another company.

As for the payment of profits (dividends) to “unfriendly” foreigners, the main requirements have not changed. As before, the amount of such payments should not exceed 50% of the net profit of a Russian company for the previous year, while the amounts of dividends paid for previous periods and the willingness of foreign shareholders to continue commercial activities in Russia are taken into account. However, whereas previously the relevant ministry independently established KPIs for Russian organizations, now this state body will only confirm that applicants fulfil their obligations to meet KPIs. The Government Commission may also authorize the payment of dividends on a quarterly basis, provided that these indicators are achieved.

Source: "Extract from the decision of the subcommission of the Government Commission for Control over Foreign Investments in the Russian Federation of July 7, 2023 N 171/5" (communicated by the Ministry of Finance of Russia on 11.07.2023 N 05-06-10/VN-32671)

Starting from July 1, 2023 by the order of the Ministry of Finance No. 86-n from June 5, 2023 49 countries were included to the list of countries providing preferential tax treatment and / or not requiring the disclosure and provision of information about financial transactions.

The main difference of the new List from the previous one is that it more than doubled the number of states and territories recognized as offshore zones (from 42 to 91), mainly due to inclusion of the so-called “unfriendly” jurisdictions (UK, EU member countries, Canada, USA, Ukraine, South Korea, Japan, etc.).

Under these circumstances, the suspension of the Double Taxation Agreements with “unfriendly” countries is quite probable. This means that after July 1, 2023, foreign organizations - tax residents of the countries on the list will lose the right to apply a 10% rate of income tax on dividends, interest and royalties paid by international holding companies that are not public companies.

Problems will also arise for Russian businesses.

Firstly, with regard to the taxation of profit of controlled foreign companies whose permanent location (place of tax residence) is a state included in the List, the exemptions established by the Tax Code for active holding and sub-holding companies will no longer apply. Since the conditions for the application of exemptions for profits of CFC are determined in relation to the financial year of foreign companies, it can be assumed that in the absence of special regulation in this respect, profits of active holding and sub-holding companies from jurisdictions on the new List will not be exempt from taxation under Russian rules for CFC in relation to the financial years of such companies that began or ended after 1 June.

Also, Russian holdings will not be exempt from taxation for the sale of shares in foreign subsidiaries. In addition, there will be no benefits for dividends. Now the payment of dividends to Russian businesses from subsidiaries in countries not included in the blacklist is not taxed, if the company owns the shares for more than 365 days. From July 1, dividends from “unfriendly” countries will be taxed at the full rate of 13%.

In the dispute concerning the Sberbank’s claim against Deutsche Bank AG, the Arbitration Court of Moscow has sided with the claimant not only satisfying the request for recovery of funds, but also recognizing its exclusive competence to consider the dispute.

Sberbank has filed a claim against Deutsche Bank AG to recover EUR 7,224,534.89 plus interest on the debt.

Deutsche Bank AG notified the plaintiff of the closure of its correspondent account on March 10, 2022. Despite the closure of the account, the defendant did not remit the amount in the account to the plaintiff, citing EU Regulation No. 269/2014, which prohibits the defendant from returning the funds to the plaintiff. The defendant's position was that it now simply had no obligation to the plaintiff to return the funds and that the plaintiff had no right to claim them back.

The case was complicated by the fact that all issues arising in connection with the use of the account and/or service were governed by German law. At the same time, the agreement did not limit the right of either party to initiate legal action against the other party in the courts at its location.

Since the basis of the dispute was the restrictive measures imposed by the European Union on Sberbank and Russian legal entities, the court applied the provisions of Article 248.1 of the Arbitration Procedure Code of the Russian Federation, which established the exclusive jurisdiction of Russian arbitration courts with regard to these disputes. Pursuant to the said article, the plaintiff is entitled to apply for resolution of the dispute to the arbitration court of the subject of the Russian Federation at its location or place of residence, if the grounds for such disputes are restrictive measures imposed by a foreign state.

The court thus protected the rights and legitimate interests of the Russian organization in respect of which restrictive measures were imposed, effectively depriving it of the opportunity to defend its rights in court outside the Russian Federation.

Interestingly that having found no legitimate grounds for non-fulfilment of the plaintiff's claims, the Court nevertheless agreed with Deutsche Bank's objections of improper calculation of interest and reduced the penalty claimed by the plaintiff from EUR 308,199.09 to EUR 188,409.30.

Source: Resolution of the Moscow Arbitration Court of 23.06.2023 in case No. A40-84574/2023-83-488.

The Criminal Procedural Code of the Russian Federation has been amended to restrict the arrest of businessmen and members of commercial organizations' management bodies. The amendments are motivated by the fact that entrepreneurs under arrest cannot continue to run their businesses, and the company is often taken over by competitors. So, even if the results of the investigation prove the businessman to be innocent, he risks losing his business.

Now, when choosing a preventive measure for those involved in cases of economic crimes, the courts will have to take into account whether the defendants will be able to continue their business activities. Preference will be given to such measures as travel ban, bail, house arrest or personal guarantee.

Arrest will be applied only if the businessman has no place of residence in Russia, has violated previously selected preventive measures, or if there is evidence that the entrepreneur has been hiding from the court and investigation. In addition, the petition for arrest must specify if the crime was not committed in connection with the performance of business activities.

The extension of a businessman’s arrest in two to six months is allowed only with the consent of the head of the regional investigative body, and the need for further investigative actions cannot be the only and sufficient reason for this measure. This norm will allow to exclude cases of extension of arrest if there is an ineffective organization of the investigation in a criminal case.

As of March 1, 2023, amendments to the Russian law on non-profit organizations came into force providing that NPOs may act on the basis of a model charter.

In this connection Russian Ministry of Justice has prepared 8 model charters for non-commercial organizations covered by special state registration procedure which, according to the ministry, are the most common legal forms: local and regional public organizations and public movements, association (union), private establishment, autonomous non-commercial organization, public benefit fund and community of indigenous minorities.

The draft of the Ministry of Justice eliminated the need to specify in the charters of NGOs a list of branches and representative offices (because such information is contained in the Unified State Register of Legal Entities), the sources of formation of property and the procedure for amending the constituent documents, and for public organizations - the procedure for reorganization and liquidation.

These standard forms of charters are expected to help to optimize the preparation of constituent documents of non-profit organizations to avoid unnecessary duplication of provisions of the law.

The bill “On excess profits tax” has been submitted to the State Duma. As stressed in the explanatory note, the document "was developed to generate additional revenues for the federal budget".

The tax rate will be 10% of the amount of excess profits for the years 2021-2022 over the same figure for the years 2018-2019. It will not take into account the profit received from the implementation of the agreement on the protection and promotion of capital investments. The tax is payable no later than January 28, 2024, and its amount is calculated by taxpayers themselves. The amount of the tax can be reduced by remitting a security payment payable by November 30, 2023 and not exceeding half of the tax. Funds from the tax will be used to support and develop the social sphere.

Excess profits tax will be credited exclusively to the federal budget and will be of a one-time nature. A number of organizations are excluded from paying this tax. These are, for example, companies of small and medium-sized businesses, organizations paying the single agricultural tax, Russian companies established after January 1, 2021 (except for organizations established as a result of reorganization), foreign companies which began their activities in Russia through permanent establishments after that date, as well as companies in the oil and gas sector and coal mining.

From July 1, 2023 voluntary liquidation of small and medium-sized businesses will be possible in a simplified form by submitting the shareholders’ application. This way they will confirm that settlements with creditors have been completed, the dismissed employees have received all due payments, and the company will submit the necessary statements no later than one working day before being excluded from the Unified State Register of Legal Entities (EGRUL). Simplified liquidation will significantly reduce the time and money costs of small and medium-sized businesses for the termination of their activities. Besides, this procedure will allow to avoid negative consequences for the shareholders who sometimes abandon the company without submitting reports and going through statutory liquidation procedures due to their complexity and duration.

Organizations that can be liquidated under a simplified procedure should:

• be included in the small and medium-sized businesses register;
• not records of inaccurate information in the EGRUL;
• not be VAT payers or be exempt from its calculation and payment;
• complete settlements with creditors and employees;
• pay all tax and other obligatory payments debts;
• not own real estate or vehicles;
• not be in the process of liquidation, reorganization, bankruptcy or exclusion from the EGRUL by decision of the registration authority.

Within 5 days of filing the application, the Federal Tax Service will verify whether the company has obstacles to simplified exclusion from the EGRUL and will publish the resolution on the upcoming liquidation in the State Registration Bulletin. Within the next 3 months persons objecting to the termination of the activities of the organization may declare it. If there are objections, the company will be obliged to carry out the procedure of voluntary liquidation established by law in full by itself. In the absence of objections, the company will be excluded from the EGRUL. The resolution on company’s exclusion may be appealed by its creditors or other interested persons whose rights are violated by this act within one year from the date when they became aware or should have become aware of the violation of their rights.

If the advance payment was received before the sanctions were imposed, but the fulfilment of the contract is no longer possible due to relevant sanction prohibitions, the repayment of such advance payment violates the EU Sanctions Regulation, the German Federal Ministry of Economy and Climate Protection has clarified.

The ministry pointed to the prohibition on the fulfilment of all claims related to transactions that have since been sanctioned. Against this background, the repayment of an advance payment aimed at restoring a legal relationship to the state it was in before sanctions were imposed is legally impermissible. This also applies to payment claims arising from advance payment guarantees (or the counter-guarantees related thereto), which follows from the prohibition on the provision of financing or financial assistance in connection with sector-specific export and import bans.

Previously, the Ministry had allowed the refunding of advance payments, but after consultation with the relevant working unit of the EU Commission has changed its mind.

Source: BMWK - Fragen und Antworten zu Russland-Sanktionen

In April 2022 a Russian court for the first time recognized a foreign company Pandora consulting LC registered on the island of Nevis and engaged in debt collection on the territory of the Russian Federation as bankrupt.

A Russian creditor of the company had filed the relevant application seeking to recover the fees for the bankruptcy trustee services and referring to the decisions of the Russian courts which had come into force.

The sole shareholder and the company's chief executive (a Russian citizen) stated that it was necessary to terminate bankruptcy proceedings because the company had been removed from the foreign commercial register and deregistered from tax registration in Russia at the end of 2021.

It was pointed out that based on a literal reading of the law, a Russian court is not entitled to initiate bankruptcy proceedings against a foreign legal entity. However, the size and nature of Pandora consulting LC's outstanding obligations would allow the institution of insolvency to be applied if the company were Russian, and a refusal to satisfy the applicant's claims in the case at hand would limit the creditor's right to obtain effective judicial protection.

In this connection, the court considered it possible to apply the analogy of law and to introduce insolvency proceedings with regard to the debtor's property located in or closely connected with the Russian Federation. It was also taken into account that under Nevis law, a liquidated company continued to exist for three years from the date of liquidation to assert possible claims and, if such claims were asserted, the period was extended until full discharge of obligations and settlement of disputes.

The appellate and district courts upheld the position of the court of first instance. The Supreme Court of the Russian Federation also found no grounds for reviewing the case.

According to the media, Bank Saint Petersburg has received a license from the Belgian Treasury to unblock its assets worth about $110 million frozen on the account of the National Settlement Depository (NSD) in the Belgian depository Euroclear Bank. However, the license concerns only the bank's own funds but not those of its clients.

At the end of January 2023, the Moscow Arbitration Court satisfied in full the claim of the Bank "Saint Petersburg" to recover from Euroclear 107 million dollars and 489 million euro in losses and court expenses. The Bank's funds were credited to NSD's account with Euroclear. However, the Bank wasn’t able to receive these assets because Euroclear imposed restrictions on the disposal of funds in the National Settlement Depository’s accounts. The Russian court found that the suspension of transactions was solely at the initiative of Euroclear before the official ban on cooperation with NSD was imposed.

The court ruling may have influenced the Belgian Treasury's decision to issue a license. However, there is an opinion that the Russian bank will be able to use it only after receiving approvals from the British and American agencies, since the US and the UK have imposed sanctions on the credit institution.

Until July 24, 2023, Russian investors who have not fallen under the European sanctions may submit requests to the Ministries of Finance of Belgium and Luxembourg (in respect of funds in the accounts of another major European depositary, Clearstream) to unblock their assets. It is reported that over a thousand applications have been filed to the Belgian authority alone. Previously, positive decisions have already been made with respect to certain individuals, but the issuance of a license to Bank Saint Petersburg is the first publicly confirmed case of unblocking of assets of a securities trader.

In 2022 many Russian companies were faced with the fact that their currency transfers in favour of foreign counterparties were blocked in the accounts of foreign correspondent banks.

One of such companies filed a lawsuit to the Arbitration Court of the Moscow District against its servicing bank, Alfa-Bank JSC, claiming damages. The company justified its claim by the fact that the bank had written off money from the foreign currency account, but the claimant's foreign counterparty had never received it.

The courts of the first and appellate instances allowed the claim and recovered the losses from the bank. The cassation court, however, overturned their decisions and remitted the case for reconsideration. The Court of Cassation indicated that the plaintiff itself should have asked the OFAC for the license to unblock the funds. The actions of the intermediary banks were beyond Alfa-Bank's reasonable control.

In practice, Russian companies which are not under sanctions normally manage to obtain OFAC licenses and return the funds blocked in the accounts of intermediary foreign banks. However, the waiting time might amount up to one year from the date of submission of the relevant application to OFAC.

On April 25, 2023, a Presidential Decree was published allowing to introduce a provisional administration in respect of property and property rights of foreign “unfriendly” entities located in Russia. According to the text of the document, this measure can be applied in response to the seizure of Russian assets abroad and restrictions on property rights.

The external manager of foreign assets will be the Federal agency for state property management (Rosimuschestvo) or another person appointed by the Russian President. The temporary manager will exercise ownership powers, conduct an inventory of the property and ensure its safety, but will not have the right to dispose of it. The decision on the termination of temporary management will also be made by the head of state.

Currently, external management has been imposed on the shares of two energy companies, Unipro and Fortum. The foreign owners of these PJSCs announced their intention to leave the Russian market back in the spring of 2022, but later these companies were included in the list of fuel and energy companies, transactions with shares of which require a special order.

According to Rosimuschestvo, external management is imposed on assets that are of paramount importance for the stable functioning of the Russian energy sector to ensure the uninterrupted operation of companies that are significant to the national economy. Besides, this measure helps to preserve the investment climate in Russia and reduce capital outflow from the country.

The agency stressed that the decree “does not concern ownership issues and does not deprive owners of their assets”, but only means that “the original owner has no right to make management decisions” on a temporary basis. In addition, Rosimuschestvo does not rule out the expansion of the list of externally managed enterprises.

The Bank of Russia will consider a proposal by deputies to pay off exiting foreign companies with special Central Bank bonds tied to frozen reserves instead of currency.

According to the initiative, the special bonds should be issued in the amount of Russian assets frozen in the West (approximately $300 billion). This measure should stabilize the exchange rate and help to protect frozen assets; however, on the other hand, it would mean the disclosure of information about Russian reserves, as well as the structure of the Central Bank's assets abroad, which is undesirable, according to the Head of the Bank of Russia Mrs. Nabiullina ^[1]. First of all, such option is considered as an alternative to type "C" accounts.

[1] www.rbc.ru

Lately, Russian authorities have been discussing the introduction of a windfall tax to supplement the budget. The bill “On the tax on excess profits of previous years” is currently not publicly available, although it has been sent to major taxpayers for comment.
According to the media, the obligation to pay this one-time tax will fall on companies whose profits in 2021-2022 exceeded those for 2018-2019, and the difference was more than 1 billion rubles. The rate of windfall tax will amount to 5% of the difference.

The taxpayers are expected to be both Russian and foreign companies with permanent representation in Russia, including foreign firms leaving the Russian market. Alternatively, the latter will be able to take this fee into account in the price of the exit transaction, although they will still need to pay a contribution to the budget of at least 5% of the value of the shares or stock.

Small and medium-sized businesses, as well as enterprises of the oil, gas and coal industries will be exempt from windfall tax. In addition, investments under capital investment protection and promotion agreements (CIPA) can be deducted from the new tax base.

The relevant amendments to the Tax Code of the Russian Federation are supposed to enter into force in 2024. However, companies will be entitled to transfer to the budget half of the amount of tax already in 2023, in which case the amount of tax to be paid the following year will be reduced by the previously made payment.

The Office of Foreign Assets Control (OFAC) of the USA has clarified that the contribution to the Russian budget paid by foreigners from unfriendly countries making transactions with regard to shares and stocks of Russian legal entities, can be made only after obtaining a license.

The U.S. Treasury Department has reminded that the U.S. persons are prohibited from carrying out any direct and indirect transactions with the Russian Central Bank or the Ministry of Finance of Russia. Under this description also falls the so called “exit tax” (budget contribution in the amount of 5 to 10 percent of the assets value to be sold, established by the Russian Governmental Commission).

Thus, in order to pay it, U.S. companies and individuals will have to obtain a license, providing the OFAC with the information regarding the amount of the payment and the amount of taxes that would be paid to the Russian budget if the business continued in the Russian Federation. In addition, while requesting the license, one will have to assess how the company's exit from the Russian market would affect the employees and the Russian economy as a whole.

The OFAC promises to consider such requests on an expedited individual basis.

Recently, the District Court of Frankfurt am Main considered a case of illegal import of cash euros into Russia ^[1].

A citizen of Kyrgyzstan flew from Frankfurt am Main via Istanbul and Moscow to Kaliningrad for medical treatment. To this end, he was carrying 11,000 euros in cash. During customs control at the airport almost all the money was confiscated, leaving only 500 euros for personal needs of the accused.

The court confirmed the lawfulness of the customs' actions and explained that the exception allowing cash to be brought into Russia for personal needs should be interpreted narrowly and covers only transportation and food expenses during the trip according to the average standard, so an amount of 500 euros is quite sufficient. Money for medical treatment does not belong to personal needs. In addition to the confiscation of the money, the offender was also fined 4,500 euro.

As a reminder, it is currently prohibited to export cash in euros from the European Union to the territory of the Russian Federation. The exception is money for personal use of citizens travelling to Russia or members of their families travelling with them ^[2].

At the same time, the EU legislation does not regulate the amount of currency allowed for export. According to the Ministry of Foreign Affairs of Germany, in case of doubt, travellers must convincingly justify (for example, on the basis of hotel reservations) the need to export a specific amount of cash at the EU external border. Polish and Lithuanian border guards check very careful, though not systematically, the validity of euro currency exports when crossing the border with Kaliningrad. Thus, some time ago Lithuanian border guards limited export of euro to Russia to 60 euro per person.

[1] District court of Frankfurt am Main, judgment of 31.01.2023, file number 943 Ds 7140 Js 235012/22; Keine Ausnahme vom Bargeld-Ausfuhrverbot nach Russland für geplante medizinische Behandlungen | Ordentliche Gerichtsbarkeit Hessen

[2] Art. 5i of Council Regulation (EU) No 833/2014 of 31 July 2014

Starting January 1, 2024, administrative liability may be established for violations of Russian counter-sanctions measures. Anti-sanctions legislation (counter-sanctions measures) refers to prohibitions and restrictions established by the President, the Government, and the Central Bank of Russia to “influence (counteract) unfriendly actions of the USA and other foreign states” and ensure the financial stability of the country.

In particular, a new article 15.25 “Failure to comply with measures of influence (counter-measures) aimed at ensuring financial stability of the Russian Federation” may appear in the Code on Administrative Offences. The corresponding bill was published on the federal portal of projects of legal acts.

The bill establishes fines for individuals, individual entrepreneurs and legal entities ranging from 20 to 40 percent of the amount of the transaction (operation) carried out in violation of countermeasures or the amount of transaction (operation) not carried out in accordance with the established measures. The penalty for the officials is from 20 to 40 percent of the amount of the transaction (operation) but no more than 30,000 rubles.

If non-compliance with the established measures has no monetary value (for example, performance of gratuitous transactions, opening of special accounts, etc.), the penalty is from 4.000 to 5.000 rubles for individuals; from 40.000 to 50.000 rubles for officials; from 800.000 to 1.000.000 rubles for legal entities.

If a company eliminates violations within a certain period of time, no liability measures are applied.

Administrative cases will be considered by the Federal Tax Service and the Federal Customs Service, and in relation to officials of credit and insurance organizations - by the Bank of Russia. These bodies may request documents and information on compliance with counter-sanctions measures.

The limitation period for bringing to liability amounts to two years from the date on which the offence was committed.