Amendments to the legislation on currency regulation and currency control will be entered into force on July 1, 2024. They establish the obligation of certain Russian resident legal entities belonging to the same international group of companies with non-resident legal entities to notify the Russian tax authorities of foreign accounts (deposits) of such non-residents. We also inform of the approval of documents defining the procedure for the fulfillment of this obligation.
What are Russian resident legal entities belonging to the same international group of companies with non-resident legal entities obliged to notify on?
I. On the opening / closing / change of details of accounts (deposits) of such non-resident legal entities in foreign banks and other financial market organizations.
Notification period — within 1 month from the date of opening (closing) or changing the details of such accounts (deposits).
On May 28, 2024 the Order of the Federal Tax Service of Russia dated April 26, 2024 № SD-7-14/349@ "On approval of the forms, formats, method of submission by the resident to the tax authority of notifications provided for by part 2 of article 12 of the Federal Law dated December 10, 2003 No. 173-FZ "On Currency Regulation and Currency Control", as well as the form of notification provided for by part 10 of article 28 of the Federal Law dated December 10, 2003 No. 173-FZ "On Currency Regulation and Currency Control" was published.
This Order of the Federal Tax Service establishes new notification forms which may be completed by residents who report on accounts (deposits) of non-residents with whom the residents are members of the same international group of companies.
The Order comes into force on July 1, 2024.
II. On the movement of funds and other financial assets on accounts (deposits) of the non-resident legal entities in foreign banks and other financial market organizations, as well as on transfers by such non-resident legal entities of funds without opening a bank account using electronic means of payment provided by foreign payment service providers.
On May 22, 2024, the Russian Government adopted Resolution No. 633 "On Amendments to Resolution of the Government of the Russian Federation dated December 28, 2005 No. 819 ", which approved the rules for the submission by legal entities — residents of Russia of reports on foreign accounts of non-residents belonging to the same international group of companies. The document comes into force on July 1, 2024.
According to the document, the obligation must be fulfilled by:
- the parent company of an international group of companies (if it is a resident of Russia);
- an authorized member of an international group of companies (if the parent company of an international group of companies is a non-resident that has imposed on a resident member of an international group of companies the obligation to report to the tax authorities);
- a resident legal entity — member of an international group of companies, if the requirements are not fulfilled by the parent company or the foreign parent company has not delegated authority to the authorized member.
The obligation must be fulfilled as follows:
- reporting period — calendar half-year;
- term for submitting the statement of funds movement and other financial assets on accounts (deposits) — within 30 days from the end of the reporting half-year period;
- term for submitting the report on funds transfers without opening a bank account using electronic means of payment — within 30 days from the end of the reporting half-year period in which the amount credited exceeded 600,000 RUB (or equivalent amount in foreign currency), starting from the first day of the reporting year. In this case, the report and supporting documents shall be submitted for the period from the beginning of the reporting year or from the date of obtaining the right to use an electronic means of payment to the last date of the reporting half-year period in which such an excess occurred. In the next reporting half-year period, the report shall be submitted for the period from the first to the last day of the reporting half-year period irrespective of the amount of credited funds.
Documents to be provided to the tax authorities as part of the fulfillment of the obligation:
- a report in the approved form (separately for each account and/or electronic means of payment);
- documents confirming transactions for the period from the first to the last day of the reporting half-year period (statements or other documents issued by a bank or other financial market organization, foreign payment service provider, with translation into Russian);
- a document confirming the authority of an authorized member of an international group of companies (in the approved form), if the obligation is fulfilled by this person.
The Resolution also defines the grounds for exempting a resident member of the international group of companies from the obligation to provide information and documents:
- more than 50% of the assets of the international group of companies are located outside the territory of Russia;
- the resident does not participate directly or indirectly in the capital or otherwise control non-residents that are members of the same international group of companies as the resident; non-residents do not participate directly or indirectly in the resident's capital or otherwise exercise control over the resident's activities.
However, the text of the Resolution is worded in such a way as to raise questions as to the practical application of the above provisions. We expect that the application in practice will be supported by official clarifications of the authorities.
Marillion experts have extensive experience in advising clients on the application of currency legislation and are ready to provide you prompt support on the matter.
