Difficulties with income operations for Russians

The amendments, entering into force 13 February, to the Russian Code of Administrative Offences may cause a loss of the accruals in Russian nationals accounts with foreign banks. As an example, if the revenue was not transferred via a Russian bank, the interest from savings or rental income may be lost.

Now the law also expands the definition of currency transactions. The definition deals with prohibited transactions and transactions which violate the procedure stipulated in the legislation on currency.

“In practical terms, it means that all residents, including corporate entities and private individuals, will be punished for violating the rules for using their accounts abroad,” an expert on administrative and financial law at the Pepeliaev Group law firm Ms. Yelena Ovcharova, told the Prime business news agency.

She also said that punishment is stipulated for using funds, which were directly transferred to a foreign account by another person rather than from the given resident’s account in an authorized bank in Russia. “This provision concerns the receipt and the use of interest from savings accounts with foreign banks and income from renting property abroad,” Ms. Ovcharova said.

The fines start at 75% and goes to 100% of the prohibited currency transaction.

The Russian financial authorities will receive information about these transactions from the taxpayers themselves: Russian residents are bound by law to notify tax agencies about opening or closing accounts with foreign banks and also about changes in their bank details. The fine for failing to notify is between 4k and 5k rubles (approx. $130 to $160) for private individuals, 40k-50k rubles (approx. $1,3k to $1,6k) for officials, and 800k to 1 mln rubles (approx. $26k to $33k) for legal entities.