Currency regulation: new rules of the game for Russian nationals
Amendments to the Federal Law “On currency regulation and currency control” (the ‘Federal Law’) change the concept of currency residency with respect to Russian nationals: on the one hand, the amendments simplify the procedure for determining the status of such nationals for currency control purposes, while, on the other, they limit the list of permitted transactions for those Russian nationals who spend most of their time outside Russia.
Starting from 1 January 2018, all Russian nationals will be deemed currency residents irrespective of their place of residence. This means that from now on, under the general rule, currency transactions between Russian nationals will be prohibited, except in cases provided for by law.
In previous versions of the law, currency residency was determined according to the period of a person’s stay within Russia. If the person resided outside Russia continuously for a year, this divested him of the status of a currency resident, lifted restrictions on currency transactions and allowed him to avoid the obligation to report such transactions. Further, no requirements applied to a Russian national who was a currency non-resident regarding the notification of foreign accounts that were opened and the filing of reports about the transactions on such foreign accounts.
The former regulation has been replaced with what is referred to as the status of a ‘special resident’ for Russian nationals whose period of stay outside Russia during a calendar year amounts in total to more than 183 days. These persons are also currency residents and, under the general rule, do not enjoy any benefit of performing currency transactions without restrictions. Such persons, however, are not subject to the requirements regarding the procedure for opening accounts with banks outside Russia, performing currency transactions on such accounts and submitting cash flow statements, as stipulated by article 12 of the Federal Law. In addition, ‘special residents’ are allowed to perform any currency transactions outside Russia with their fellow ‘special residents’.
‘Special resident’ status will be established based on the results of the calendar year, rather than when a currency transaction is consummated or an account is opened abroad. If, based on the tally at year-end, a Russian national has stayed in Russia for over 183 days, but failed to report his opened accounts, thinking he would stay in Russia for a lesser number of days (and, accordingly, become a ‘special resident’), he is permitted to submit the information to the tax authority before 1 June of the year following the one which has ended.
Moreover, starting from 1 January 2018, all Russian nationals are permitted:
- to pay for goods and services in Russia using their accounts in foreign banks;
- not to submit to an authorized bank a copy of the notification of the tax authority with an acceptance stamp when they first transfer funds from their Russian accounts to their accounts opened with foreign banks;
- to receive, on their accounts in foreign banks, income from the sale of vehicles to a non-resident or income from the sale of real estate registered in an OECD/FATF country.