Readers will recall, in 2014 Russian lawmakers amended RF Law No. 173-FZ On Currency Regulations and Currency Control dated 10 December 2003 (the CCL) to require Russian resident individuals (RRIs) to report on the movements of funds on their foreign bank accounts (the Foreign Accounts).
On 12 December 2015 the RF Government also published Decree No. 1365, introducing the Rules on Submission to Tax Authorities by Resident Individuals of Reports on Movement of Funds in Accounts (Deposits) with Banks outside the Russian Federation (the Rules). The Rules provide three possible types of reporting:
- online (using a personal account at the official web-page of the Russian Federal Tax Service);
- paper-based (either by the relevant RRIs themselves or their authorised representative); and
The first report (for 2015) must be submitted before 1 June 2016.
Going forward, RRIs shall submit reports for each calendar year (the few exceptions noted below) before 1 June of the year immediately following the reporting period.
Penalties will apply with regard to noncompliance with the Rules:
- up to 3,000 Rubles for the first violation; and
- 20,000 Rubles for any repeated violation.
In case a Foreign Account is opened midyear, the reporting period shall start with the account opening date and end on 31 December of the relevant year. In case a Foreign Account is closed midyear, the reporting period starts on 1 January (or the date of account opening if the account has been opened after 1 January of that year) of the year when the Foreign Account has been closed and ends on the date of the closure of the Foreign Account. In this case the report shall be submitted together with the notice of account closure within one month of the closure of the Foreign Account as set forth in Article 12(2) of the CCL. However, a specific carve out is made for those RRIs who close their Foreign Accounts during 2015. In such case, the report must be submitted before 1 June 2016.
While we strongly advise that RRIs show full compliance with provisions of the laws applying to them, including the requirement to submit the reports, it should be noted that administrative penalties for late/non-submission can be extremely modest compared to the administrative penalty of 75-100% of a currency transaction amount which applies when a currency transaction is deemed to be an illegal currency transaction.
Considering the narrow ambit of permitted sources of income for Foreign Accounts, the risk of performing an illegal currency transaction when using a Foreign Account is more than likely. RRIs are strongly advised therefore strictly to follow the permitted source rules in order to avoid these harsh penalties.
1. RF Law No. 218-FZ On Amending Various RF Legislative Acts dated 21 July 2014.
2. The procedure for submitting the report was supposed to be established by the Federal Tax Service of the Russian Federation, but to the best of our knowledge, to date the Tax Service does not offer such service on its web-page.
3. Article 15.25(6) of the Russian Code of Administrative Offences.
4. Which, for the avoidance of doubt, does not necessarily mean that the transaction itself is forbidden by the law; performing a perfectly allowed currency transaction with violation of procedure for its performance will also lead to the illegality of such currency transaction.
5. Dentons has published a number of newsletters relating to permitted sources of income for Foreign Accounts. We can provide you with copies of these upon request.
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