Restrictions on Crediting Funds to the EU: new Rules for Currency Residents of the Russian Federation

Starting from 31 December 2024, restrictions will be introduced on the crediting of funds in bank accounts of individuals currency residents opened in EU countries.

On 31 December 2024, the Order of the Federal Tax Service of Russia dd. 30.10.2024 No. ED-7-17/916@ "On approval of the list of states (territories), with which automatic exchange of financial information is conducted" came into force. In the new version of the Order, EU countries are excluded from the list of countries, with which automatic exchange of financial information is carried out.

Due to the cessation of the exchange of financial information with the EU, from 31 December 2024, restrictions will be introduced on the crediting of funds from non-residents to the accounts of currency residents of the Russian Federation opened in EU countries. Now the crediting of funds is permitted only on a limited list of grounds (crediting the interest on the balance of funds in such accounts, the deposit of cash into the account, salary payments to accounts under employment contracts that provide for the performance by individuals of their work duties outside of Russia, social payments, including pensions, scholarships, etc.), as outlined in art. 12 of Federal Law No. 173. Other transfers, not specified in art. 12, are prohibited, including crediting income in the form of dividends on securities, interest on loans and credits, income from the sale (redemption) of securities, etc.

In addition, individuals currency residents of the Russian Federation who have accounts in banks in the EU will be required to submit annual reports on the movement of funds and other financial assets on accounts (deposits) opened in banks located in the territory of EU member states, regardless of the amount of credits, withdrawals or the balance of funds in these accounts.

Reference

Currency residents of the Russian Federation are individuals who are citizens of the Russian Federation, as well as foreign citizens and stateless persons permanently residing in the Russian Federation on the basis of a residence permit (Vid na Zhitelstvo) under the legislation of the Russian Federation.

Risks for clients:

For performing transactions not listed in the list of permitted ones, administrative liability will be applied - a fine for citizens in the amount of 20% to 40% of the amount of the illegal currency transaction (cl. 1 art. 15.25 of the Code of Administrative Offenses of the Russian Federation).

However, administrative liability will not apply, if a resident transfers funds within 45 days from his foreign account in a EU bank to a bank account opened in Russia.

Failure to comply with the established procedure for submitting reports on the movement of funds on accounts (deposits) in banks and other financial market organizations located outside the territory of Russia entails the imposition of an administrative fine in the amount of RUB 2-3 thousand (repeated violation - a fine of RUB 20 thousand).