How does one rent out immovable property abroad without violating currency control rules in the Russian Federation?

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.