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Directions

By metro

The closest stations to Naberezhnaya Tower are Delovoy’ Tsentr (yellow line, MCC), Mezhdunarodnaya and Vystavochnaya (light blue line).

From 10:00am to 22:00pm you may get to our building through Afimall without going out into the street (From metro stations Vystavochnaya and Delovoy Tsentr).

MCC station Delovoy Tsentr is approximately 5 minute walk from Block C.

Parking

The parking of the building may be used for guests if ordered prior to the visit, but not longer than 3 hours per day (if used longer a car will be put into a black list).

The scheme of the parking is attached, parking spaces are marked as grey rectangles and cars. Could you please advise whether we should order a parking entry pass for your car? If so, please send us the car plate number.

Please take your passport with you to receive your entry pass at reception in first floor of Block C. Our office is located on the 56-th floor.

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Location

CMS Russia
Naberezhnaya Tower, block C
10 Presnenskaya Naberezhnaya
123112 Moscow
Russia
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23/05/2022
Rus­sia sanc­tions 31 for­eign com­pan­ies
On 11 May 2022, the Rus­si­an Gov­ern­ment sanc­tioned 31 en­tit­ies from the EU, US, UK, Singa­pore and Switzer­land and their con­trolled en­tit­ies (the “Sanc­tioned Per­sons”) pur­su­ant to De­cree of the Rus­si­an Pres­id­ent No. 252* dated 3 May 2022 (the “De­cree”). The list of the above men­tioned en­tit­ies is set out in Rus­si­an Gov­ern­ment Reg­u­la­tion No. 851* (the “Reg­u­la­tion”). The Rus­si­an Min­istry of Fin­ance may sub­mit pro­pos­als to the Gov­ern­ment to amend this list.Un­der the De­cree, fed­er­al state au­thor­it­ies, state au­thor­it­ies of con­stitu­ent en­tit­ies of the Rus­si­an Fed­er­a­tion, oth­er state au­thor­it­ies, mu­ni­cip­al au­thor­it­ies, as well as leg­al en­tit­ies and in­di­vidu­als un­der the jur­is­dic­tion of the Rus­si­an Fed­er­a­tion (the “Reg­u­lated Per­sons”) are pro­hib­ited from:lower-al­phaper­form­ing trans­ac­tions (in­clud­ing for­eign trade con­tracts) with Sanc­tioned Per­sons;dis­char­ging out­stand­ing ob­lig­a­tions to Sanc­tioned Per­sons (in­clud­ing ob­lig­a­tions un­der for­eign trade con­tracts); an­d­car­ry­ing out fin­an­cial op­er­a­tions with Sanc­tioned Per­sons as be­ne­fi­ciar­ies. The Rus­si­an Min­istry of Fin­ance is en­titled to is­sue of­fi­cial cla­ri­fic­a­tions for para­graphs a) and b) above, and the Bank of Rus­sia may give cla­ri­fic­a­tions for para­graph c) above.The Reg­u­la­tion also sets out ad­di­tion­al cri­ter­ia for qual­i­fy­ing the fol­low­ing trans­ac­tions as re­stric­ted un­der para­graphs a) and b) above:trans­ac­tions to the be­ne­fit of Sanc­tioned Per­sons; trans­ac­tions provid­ing for the call at Rus­si­an ports of ves­sels owned and/or chartered by, for or on be­half of Sanc­tioned Per­sons; an­dtrans­ac­tions provid­ing for pay­ments or se­cur­it­ies trans­ac­tions in­volving and/or to the be­ne­fit of Sanc­tioned Per­sons.The re­stric­tions lis­ted above will ap­ply if Reg­u­lated Per­sons are aware that the ac­tions are taken to the be­ne­fit of Sanc­tioned Per­sons.The De­cree also im­poses a ban on the ex­port out­side of the Rus­si­an Fed­er­a­tion of products and/or raw ma­ter­i­als pro­duced and/or ex­trac­ted in the Rus­si­an Fed­er­a­tion if they are sup­plied to (i) Sanc­tioned Per­sons, and/or (ii) oth­er per­sons by Sanc­tioned Per­sons.Al­though the Reg­u­la­tion pro­hib­its trans­ac­tions with Sanc­tioned Per­sons only in the case of per­form­ance of the trans­ac­tions and op­er­a­tions un­der para­graphs a) to c) above, we be­lieve that, based on the De­cree, the list of Sanc­tioned Per­sons should also ap­ply for the pur­pose of pro­hib­it­ing rel­ev­ant ex­port op­er­a­tions (un­less oth­er­wise provided for in reg­u­la­tions or of­fi­cial cla­ri­fic­a­tions).Cer­tain trans­ac­tions with Sanc­tioned Per­sons may be al­lowed on the basis of spe­cial per­mits as may be pro­posed to the Gov­ern­ment by the Rus­si­an Min­istry of Fin­ance.We will con­tin­ue to mon­it­or these de­vel­op­ments and keep you in­formed of changes.* In Rus­si­an
19/05/2022
The In­tel­lec­tu­al Prop­erty Law Re­view 2022
The coronavir­us pan­dem­ic has con­tin­ued to im­pact all as­pects of life over the past year, re­quir­ing gov­ern­ments, busi­nesses and in­di­vidu­als to ad­just and ad­apt. Now that bor­der re­stric­tions and shut­downs due to the vir­us are lessen­ing and in­ter­na­tion­al trade re­mains high, the need to main­tain the world’s in­ter­con­nec­ted­ness and re­li­ance on in­ter­na­tion­al trade is en­hanced and, at the same time, the stakes in­volved with that trade have in­creased con­sid­er­ably. Against this back­drop, in­tel­lec­tu­al prop­erty prac­ti­tion­ers must nav­ig­ate a vari­ety of leg­al sys­tems and in­tel­lec­tu­al prop­erty laws in which many dif­fer­ences re­main, des­pite some move­ments to­ward har­mon­isa­tion. Read the Rus­sia chapter in the In­tel­lec­tu­al Prop­erty Law Re­view 2022, pre­pared by Ant­on Bankovskiy in early Feb­ru­ary 2022. The chapter provides an over­view of the Rus­si­an reg­u­la­tions in the in­tel­lec­tu­al prop­erty in­dustry.This art­icle was pre­pared for and first pub­lished by The Law Re­views in April 2022. 
13/05/2022
Morator­i­um on bank­ruptcy in Rus­sia un­til 1 Oc­to­ber 2022 already im­pact­ing...
The Rus­si­an Gov­ern­ment has in­tro­duced* a morator­i­um on cred­it­ors fil­ing bank­ruptcy cases from 1 April 2022 and un­til 1 Oc­to­ber 2022. The new morator­i­um (un­like the COV­ID-re­lated morator­i­um of 2020) ap­plies by de­fault to all in­di­vidu­als, in­di­vidu­al en­tre­pren­eurs and leg­al en­tit­ies (ex­cept for cer­tain real es­tate de­velopers who are debt­ors that have already been in­cluded on the Re­gister of Prob­lem­at­ic Prop­er­ties).How does the morator­i­um af­fect cred­it­ors’ rights?Cred­it­ors can­not file a new bank­ruptcy pe­ti­tion against any debt­or un­til 1 Oc­to­ber 2022 un­less such a debt­or has de­clared a waiver of the morator­i­um. Cred­it­ors’ ap­plic­a­tions filed dur­ing the morator­i­um peri­od with a com­mer­cial court will be re­turned. A cred­it­or’s no­tice of in­ten­tion to ap­ply for bank­ruptcy of a debt­or is also not sub­ject to pub­lic­a­tion in the pub­lic re­gister un­til the end of the morator­i­um.The morator­i­um does not ap­ply to bank­ruptcy cases that have already been ini­ti­ated. Thus, courts will hear as usu­al cases in which the courts have ruled on the ac­cept­ance of a bank­ruptcy pe­ti­tion be­fore 1 April.Debt­ors will have the dis­cre­tion to waive ap­plic­a­tion of the morator­i­um, which will mean that bank­ruptcy pro­ceed­ings can be ini­ti­ated against them and oth­er en­vis­aged re­stric­tions can be lif­ted (see sec­tion be­low). To waive the morator­i­um, the rel­ev­ant in­form­a­tion must be entered in the Uni­fied Fed­er­al Re­gister of Bank­ruptcy In­form­a­tion.Hav­ing said that, the morator­i­um does not pre­vent debt­ors from fil­ing for their own bank­ruptcy on their own ini­ti­at­ive. However, as a gen­er­al rule, dur­ing the morator­i­um peri­od, the fail­ure of man­age­ment to file a bank­ruptcy pe­ti­tion – if there are signs of bank­ruptcy or in­solv­ency – does not res­ult in man­age­ment be­ing held sub­si­di­ar­ily li­able for the debt­or’s ob­lig­a­tions (un­less signs had already oc­curred be­fore the morator­i­um was in­tro­duced).How does a morator­i­um af­fect on­go­ing busi­ness op­er­a­tions?The morator­i­um already af­fects busi­nesses by im­pos­ing cer­tain re­stric­tions not re­lated to bank­ruptcy pro­ceed­ings, such as:Par­ti­cipants and share­hold­ers are not al­lowed to exit the com­pany, and debt­ors can­not buy back out­stand­ing shares or par­ti­cip­at­ory in­terests.It is not per­mit­ted to ter­min­ate the debt­or’s ob­lig­a­tions by set-off if this would vi­ol­ate the or­der of pri­or­ity of cred­it­ors’ claims.It is not per­mit­ted to pay di­vidends or in­come on par­ti­cip­at­ory in­terests or to dis­trib­ute profits among the debt­or’s par­ti­cipants.No for­feits, fines, pen­al­ties and oth­er fin­an­cial sanc­tions will be ap­plied for fail­ure to ful­fil mon­et­ary ob­lig­a­tions and ob­lig­at­ory pay­ments.No fore­clos­ure of pledged prop­erty, wheth­er through court or out-of-court pro­ceed­ings, is al­lowed.En­force­ment pro­ceed­ings on prop­erty claims arising pri­or to the morator­i­um are sus­pen­ded (in this case, seizures on the debt­or’s prop­erty and oth­er re­stric­tions on the dis­pos­al of the debt­or’s prop­erty are not lif­ted).What can cred­it­ors do be­fore the morator­i­um ex­pires?The morator­i­um sig­ni­fic­antly af­fects the cred­it­or’s means for en­for­cing the debt­or’s ob­lig­a­tions. Dur­ing the morator­i­um peri­od, we re­com­mend that cred­it­ors:file a law­suit to col­lect the ex­ist­ing debt from the debt­or in or­der to be able to col­lect the debt through en­force­ment pro­ceed­ings or to ini­ti­ate bank­ruptcy pro­ceed­ings after the end of the morator­i­um;ob­tain writs of ex­e­cu­tion and ap­ply to bailiffs or a bank to col­lect the debt in the fu­ture. Al­though en­force­ment pro­ceed­ings are sus­pen­ded for the dur­a­tion of the morator­i­um, this does not de­prive the cred­it­or of the right to ob­tain a writ of ex­e­cu­tion. Courts con­tin­ue to is­sue writs of ex­e­cu­tion and en­force­ment pro­ceed­ings may be ini­ti­ated on their basis. No en­force­ment is car­ried out by bailiffs dur­ing the morator­i­um peri­od. If the cred­it­or ap­plies to a bank (or cred­it or­gan­isa­tion), the bank will ac­cept the writ of ex­e­cu­tion, but will leave it un­ex­ecuted un­til the end of the morator­i­um. However, dur­ing the sus­pen­ded en­force­ment pro­ceed­ings, the bailiff is still en­titled to seize or pro­hib­it the dis­pos­al of the debt­or’s prop­erty in or­der to pre­serve the pos­sib­il­ity of fore­clos­ure after the morator­i­um has been can­celled;mon­it­or the debt­or’s fin­an­cial situ­ation and the pre­ser­va­tion of its prop­erty. The morator­i­um does not im­pose a ban on cred­it­or chal­len­ging the debt­or’s di­vest­ment trans­ac­tions or the ap­plic­a­tion of in­ter­im meas­ures in court dis­putes and en­force­ment pro­ceed­ings in re­la­tion to the debt­or’s as­sets (pro­hib­i­tions on the dis­pos­al of prop­erty or seizure);take great care in gath­er­ing and pre­par­ing evid­ence of losses to suc­cess­fully prove these losses. Since no pen­al­ties for the debt­or’s fail­ure to ful­fil its mon­et­ary ob­lig­a­tions are pay­able from the be­gin­ning of the morator­i­um, the cred­it­or is en­titled to re­cov­er dam­ages from the debt­or without hav­ing to wait un­til the end of the morator­i­um to com­pensate for its losses.* In Rus­si­an
13/05/2022
What will hap­pen to for­eign in­tel­lec­tu­al prop­erty in Rus­sia?
In re­sponse to in­ter­na­tion­al sanc­tions, Rus­sia is­sued a series of reg­u­la­tions in the area of in­tel­lec­tu­al prop­erty.Dur­ing the last two months, there have been alarm­ing sig­nals that the in­tel­lec­tu­al prop­erty of for­eign right­shold­ers could be threatened or lose pro­tec­tion in Rus­sia. However, these con­clu­sions ap­pear pre­ma­ture.In re­sponse to the cur­rent de­vel­op­ments, the at­ten­tion of vari­ous mar­ket play­ers and stake­hold­ers has been drawn to the fol­low­ing is­sues:• Can Rus­si­an com­pan­ies use for­eign pat­en­ted in­ven­tions, util­ity mod­els or in­dus­tri­al designs without ob­tain­ing con­sent or without the need to pay the right­shold­ers?• Do the same rules ap­ply to oth­er types of in­tel­lec­tu­al prop­erty?• What does the in­tro­duc­tion of par­al­lel im­port­a­tion in Rus­sia mean for for­eign com­pan­ies?• Is trade­mark squat­ting now al­lowed in Rus­sia?• Fol­low­ing the so-called “Peppa Pig” case, will the rights of for­eign com­pan­ies be pro­tec­ted be­fore the Rus­si­an courts?Based on ex­ist­ing le­gis­la­tion and case-law, the fol­low­ing an­swers to these ques­tions con­firm that in­tel­lec­tu­al prop­erty will re­main pro­tec­ted in Rus­sia.Use of for­eign pat­en­ted in­ven­tions or in­dus­tri­al design­sOn 6 March 2022, the Rus­si­an Gov­ern­ment (the “Gov­ern­ment”) is­sued De­cree No. 299*, which amended the meth­od for de­term­in­ing the amount of com­pens­a­tion to a right­shold­er for the use of its pat­ent-pro­tec­ted ob­ject without con­sent (“Com­puls­ory Li­cens­ing”). For pat­enthold­ers from for­eign states that com­mit “un­friendly acts” against Rus­sia (“Un­friendly States”), this com­pens­a­tion was re­duced to zero.It is im­port­ant to note that this pro­ced­ure only ap­plies when the Gov­ern­ment trig­gers the mech­an­ism of Com­puls­ory Li­cens­ing set out in Art­icle 1360 of the Rus­si­an Civil Code.The art­icle al­lows for the use of an in­ven­tion, util­ity mod­el or in­dus­tri­al design without the con­sent of the pat­entee, sub­ject to the fol­low­ing lim­it­a­tions:•  the pro­vi­sions may only be ap­plied in the lim­ited cases strictly laid down in the art­icle;•  this de­cision is taken by a sep­ar­ate Gov­ern­ment de­cree and ex­tends solely to the spe­cif­ic pat­ent held by a par­tic­u­lar right­shold­er for a lim­ited peri­od of time;•  such a de­cision gives this pat­ent use to a spe­cified com­pany, not to any per­son or en­tity;•  the pat­entee must be provided with the com­pens­a­tion es­tab­lished by Gov­ern­ment de­cree (for com­pan­ies from “Un­friendly States” – zero, for com­pan­ies from oth­er coun­tries – a 0.5% roy­alty, as has been the case since 2021);•  this de­cision does not lim­it the right­shold­er’s abil­ity to ex­er­cise its rights with­in the Rus­si­an Fed­er­a­tion or to li­cense these rights to someone else.An­swer­ing the ques­tion of wheth­er Rus­si­an com­pan­ies are ob­liged to pay com­pens­a­tion to pat­ent own­ers from “Un­friendly States” when us­ing their pat­ent-pro­tec­ted ob­jects, the an­swer is yes, they do. The Gov­ern­ment can make ex­cep­tions for a par­tic­u­lar Rus­si­an com­pany and a par­tic­u­lar pat­ent.As for ex­cep­tions, Art­icle 1360 of the Rus­si­an Civil Code has been used only twice for the peri­od of its ex­ist­ence since 2008, and in both cases it was re­lated to vi­tal drugs.In ad­di­tion, it should be re­called that Art­icle 1360 of the Rus­si­an Civil Code was ad­op­ted in ac­cord­ance with the pro­vi­sions of Art­icle 31 of the TRIPS Agree­ment and it is sim­il­ar to the same leg­al pro­vi­sions in oth­er coun­tries.Can Com­puls­ory Li­cens­ing be ap­plied to oth­er types of in­tel­lec­tu­al prop­erty?Art­icle 1360 of the Rus­si­an Civil Code (the rule on Com­puls­ory Li­cens­ing) ap­plies only to in­ven­tions, util­ity mod­els or in­dus­tri­al designs and can­not be ap­plied to oth­er in­tel­lec­tu­al prop­erty, in­clud­ing soft­ware or trade­marks.Fur­ther­more, there is no oth­er sim­il­ar reg­u­la­tion for oth­er in­tel­lec­tu­al prop­erty ob­jects in Rus­sia.Par­al­lel im­port­a­tion in Rus­siaOn 29 March 2022, the Gov­ern­ment is­sued De­cree No. 506*, which partly leg­al­ised par­al­lel im­port­a­tion, by es­tab­lish­ing the in­ter­na­tion­al prin­ciple of ex­haus­tion of rights to in­ven­tions, util­ity mod­els, in­dus­tri­al designs and trade­marks.This means that if genu­ine goods have been leg­ally put on the mar­ket by the right­shold­er in any part of the world, these goods can then be freely sold in the ter­rit­ory of Rus­sia without the ad­di­tion­al con­sent of the right­shold­er. This prin­ciple will not ap­ply to all goods, but only to those lis­ted in a spe­cial list* pre­pared by the Rus­si­an Min­istry of In­dustry and Trade. The De­cree is meant for products of com­pan­ies that de­clared their exit from the Rus­si­an mar­ket and do not im­port their products to Rus­sia.The Rus­si­an Min­is­ter of In­dustry and Trade noted* that the list of goods al­lowed for par­al­lel im­ports will be nar­rowed (goods will be ex­cluded from the list) if for­eign com­pan­ies de­cide to con­tin­ue op­er­at­ing in Rus­sia and sup­ply their products to the Rus­si­an mar­ket.A sim­il­ar sys­tem with cer­tain spe­cif­ic fea­tures also ap­plies in the US.Is trade­mark squat­ting now al­lowed in Rus­sia?Over the past few weeks, amid news of for­eign com­pan­ies leav­ing the coun­try, sev­er­al dozen trade­mark ap­plic­a­tions have been sub­mit­ted to the Rus­si­an Trade­mark Of­fice, “Rospat­ent”, that were identic­al or con­fus­ingly sim­il­ar to well-known for­eign brands.However, the pro­ced­ure for re­gis­ter­ing a trade­mark at Rospat­ent, as in any oth­er pat­ent of­fice around the world, gen­er­ally con­sists of the fol­low­ing steps:•  sub­mis­sion of a trade­mark ap­plic­a­tion to the pat­ent of­fice for re­gis­tra­tion;•  a trade­mark ex­am­in­a­tion (in­clud­ing check­ing wheth­er the re­gis­tra­tion in­fringes someone else’s rights on their trade­marks);•  a trade­mark re­gis­tra­tion.Any­one is en­titled to ap­ply for the re­gis­tra­tion of a trade­mark, but this does not mean that any mark will be re­gistered. In fact, Rospat­ent has con­sist­ently denied re­gis­ter­ing des­ig­na­tions even dis­tantly re­sem­bling re­gistered trade­marks.Moreover, on 1 April 2022, as the is­sue be­came highly pub­li­cised, Rospat­ent re­leased its po­s­i­tion* re­gard­ing trade­marks sim­il­ar to well-known for­eign brands, not­ing that a pre­vi­ously re­gistered identic­al or sim­il­ar trade­mark known in Rus­sia pre­vents the re­gis­tra­tion of the trade­mark in ques­tion.Will the rights of for­eign com­pan­ies be pro­tec­ted be­fore Rus­si­an courts?The dis­cus­sion about the in­ab­il­ity of for­eign com­pan­ies to de­fend their rights be­fore Rus­si­an courts began with the “Peppa Pig” case*.On 3 March 2022, the Com­mer­cial Court of the Kirov Re­gion dis­missed the law­suit of a UK com­pany for the trade­mark in­fringe­ment of the Peppa Pig char­ac­ters, call­ing the very fact of go­ing to court an ab­use of rights, be­cause the com­pany is re­gistered in a state that has im­posed sanc­tions against Rus­sia.The case has been strongly cri­ti­cised by the Rus­si­an busi­ness com­munity. The de­cision is not cur­rently in force and is be­ing re­viewed by the court of ap­peal.In oth­er words, as of today, no judg­ments in Rus­sia have been fi­nal­ised that would deny a for­eign com­pany pro­tec­tion of its rights on the grounds that it is re­gistered in an “Un­friendly State”.Moreover, later judg­ments rais­ing the is­sue of the “un­friendly” ori­gin of com­pan­ies have not fol­lowed this ap­proach. The courts reasoned that the ori­gin of an en­tity does not in it­self in­dic­ate an ab­use of rights by that en­tity. This reas­on­ing has been re­flec­ted in the fol­low­ing judg­ments:•  De­cision* of the Com­mer­cial Court of the Chelyab­insk Re­gion dated 29 March 2022 in case No. A76-42835/2021;•  De­cision* of the Com­mer­cial Court of Mo­scow dated 31 March 2022 in case No. A40-162262/2020;•  De­cision* of the Fifth Com­mer­cial Court of Ap­peal dated 1 April 2022 in case No. A51-20464/2021;•  De­cision* of the Com­mer­cial Court of the Krasnodar Ter­rit­ory dated 4 April 2022 in case No. A32-4335/2022;•  De­cision* of the Com­mer­cial Court of the Re­pub­lic of Al­tai dated 4 April 2022 in case No. A02-31/2022;•  De­cision* of the Com­mer­cial Court of the Re­pub­lic of Ud­mur­tia dated 8 April 2022 in case No. A71-16168/2021.Con­clu­sion­Due to re­cent events, Rus­si­an in­tel­lec­tu­al prop­erty law has un­der­gone changes, but these al­ter­a­tions have not un­der­mined the pro­tec­tion of in­tel­lec­tu­al prop­erty rights for for­eign com­pan­ies. Mean­while, many fea­tures of the new laws have been taken out of con­text and mis­rep­res­en­ted.In es­sence, all counter-sanc­tions taken by the Gov­ern­ment are primar­ily eco­nom­ic in nature, aimed at sup­port­ing the eco­nomy (e.g. lim­it­ing the with­draw­al of cur­rency) and de­liv­er­ing prop­er coun­ter­meas­ures (e.g. re­stric­tions on flights or trans­port). Meas­ures in the area of in­tel­lec­tu­al prop­erty are pin­pointed and aimed at pro­tect­ing spe­cif­ic in­terests as is the case with Com­puls­ory Li­cens­ing, which was only used in the past in cases of vi­tally needed drugs.Thus, in­tel­lec­tu­al prop­erty is still pro­tec­ted by law and leg­al prac­tices, both for Rus­si­an and for­eign com­pan­ies.* In Rus­si­an
12/05/2022
En­sur­ing the sus­tain­able op­er­a­tion of air­craft and sup­port­ing Rus­si­an civil...
Re­cently ad­op­ted acts amend the pro­ced­ure for the re­gis­tra­tion of rights to and trans­ac­tions with air­craft, as well as the pro­ced­ure for per­form­ing agree­ments on the lease of for­eign air­craft and air­craft en­gines. The amend­ments were ad­op­ted as meas­ures to counter the ef­fects of in­ter­na­tion­al sanc­tions on Rus­si­an civil avi­ation.Amend­ments re­gard­ing the pro­ced­ure for re­gis­ter­ing air­craft and trans­ac­tions with such as­set­sOn 14 March 2022, Fed­er­al Law* No. 56-FZ amended the Rus­si­an Air Code and oth­er Rus­si­an le­gis­lat­ive acts (the “Law”).The Law has ves­ted the Rus­si­an Gov­ern­ment with the powers in 2022 to de­term­ine the pro­ced­ure of state re­gis­tra­tion of civil air­craft in the Rus­si­an State Re­gister of Civil Air­craft, the rights to and trans­ac­tions with air­craft. To im­ple­ment these powers, on 19 March 2022 the Gov­ern­ment ad­op­ted Reg­u­la­tion* 411.Reg­u­la­tion 411 es­tab­lishes the fea­tures of re­gis­tra­tion for civil air­craft owned by lessors from “un­friendly” for­eign states, the list of which is com­piled by the Gov­ern­ment, and op­er­ated by Rus­si­an less­ees. The list of the “un­friendly” states is com­prised of, in par­tic­u­lar, EU mem­ber states (in­clud­ing Ire­land), US, UK and Singa­pore.Thus it is no longer re­quired to provide for the pur­poses of re­gis­tra­tion of air­craft:doc­u­ments evid­en­cing the own­er­ship of the op­er­ated air­craft (the ap­plic­ants should only sub­mit cop­ies of the lease agree­ments); an­da doc­u­ment evid­en­cing the ex­clu­sion of the op­er­ated air­craft from the for­eign re­gister of the civil air­craft, provided that the ap­plic­ant sub­mits a no­tice or let­ter from the com­pet­ent au­thor­ity of the coun­try in which the air­wor­thi­ness cer­ti­fic­ate of the op­er­ated air­craft was can­celled or sus­pen­ded.In ad­di­tion, the Law has re­duced the term of state re­gis­tra­tion of rights to air­craft in Rus­sia from one month to ten days.Pro­ced­ure for per­form­ing ob­lig­a­tions un­der con­tracts on lease of air­craft and air­craft en­ginesPur­su­ant to the Law, on 19 March 2022 the Gov­ern­ment ad­op­ted Reg­u­la­tion* 412 spe­cify­ing the fea­tures of the per­form­ance of agree­ments on lease of the op­er­ated air­craft and air­craft en­gines op­er­ated by Rus­si­an less­ees and owned by lessors of the “un­friendly” states (the “Lease Agree­ments”). The pro­vi­sions of Reg­u­la­tion 412 ap­ply to Lease Agree­ments entered in­to be­fore 24 Feb­ru­ary 2022.Set­tle­ments un­der the Lease Agree­ments must be made in a spe­cial man­ner, namely Rus­si­an res­id­ents must make lease and oth­er pay­ments un­der the con­tracts provid­ing for the ac­quis­i­tion of, lease of air­craft, aux­il­i­ary power units and/or air­craft en­gines (the “Ob­lig­a­tions”) to for­eign per­sons (and their con­trolled per­sons, ex­cept for those re­gistered in Rus­sia) con­nec­ted with the “un­friendly” states (the “Re­stric­ted Per­sons”) by cred­it­ing funds in roubles to a type “S” ac­count opened with a Rus­si­an bank in the name of a lessor that is a Re­stric­ted Per­son.(For more de­tails, see our pre­vi­ous eAl­ert: “Rus­si­an Pres­id­ent signs de­cree on the tem­por­ary pro­ced­ure for pay­ments to cer­tain cred­it­ors”.)The Ob­lig­a­tions to com­pan­ies which are Re­stric­ted Per­sons will be deemed duly per­formed in 2022 if they are dis­charged to:some of their af­fil­i­ated res­id­ent com­pan­ies by trans­fer­ring funds to such a com­pany’s ac­count with a Rus­si­an bank or VEB.RF state cor­por­a­tion in roubles (re­gard­less of the cur­rency of the Ob­lig­a­tion) in the amount of the rouble equi­val­ent at the Bank of Rus­sia’s of­fi­cial ex­change rate as of the pay­ment date; and­some of their af­fil­i­ated non-res­id­ent com­pan­ies which are not Re­stric­ted Per­sons by trans­fer­ring funds in the na­tion­al cur­rency of the state of in­cor­por­a­tion of such com­pan­ies or in roubles (re­gard­less of the cur­rency of the Ob­lig­a­tion) in the amount of the rouble equi­val­ent at the Bank of Rus­sia’s of­fi­cial ex­change rate as of the pay­ment date.A de­tailed pro­ced­ure for mak­ing set­tle­ments un­der the Ob­lig­a­tions to the per­sons spe­cified above is set out in the rules es­tab­lished by Gov­ern­ment Reg­u­la­tion* No. 635 dated 11 April 2022.Oth­er pro­ced­ures for dis­char­ging ob­lig­a­tion­sThe Rus­si­an Gov­ern­ment Com­mis­sion for Con­trol over For­eign In­vest­ments is en­titled to is­sue per­mis­sions to dis­charge the Ob­lig­a­tions to Re­stric­ted Per­sons not in the spe­cial man­ner de­scribed above, but in ac­cord­ance with the pro­vi­sions of the con­tract or oth­er­wise.Ad­di­tion­al pro­vi­sions­Less­ees are ob­liged to en­sure the op­er­a­tion, main­ten­ance and re­pair of the op­er­ated air­craft, air­craft en­gines, in­sur­ance of the op­er­ated air­craft and re­in­sur­ance of the risks con­nec­ted with in­sur­ing the op­er­ated air­craft.The less­ee’s ex­port of the op­er­ated air­craft and air­craft en­gines out­side of Rus­sia is gen­er­ally pro­hib­ited sub­ject to cer­tain ex­cep­tions.We will con­tin­ue to mon­it­or these de­vel­op­ments and keep you in­formed of any changes.* In Rus­si­an
20/05/2022
Rus­si­an tax meas­ures to sup­port busi­ness and latest tax trends for for­eign...
The Rus­si­an Tax Code is un­der­go­ing sig­ni­fic­ant changes to help busi­nesses ad­apt and stay afloat.In their turn, for­eign busi­nesses, act­ive in Rus­sia, cur­rently face un­pre­ced­en­ted chal­lenges and are seek­ing...
12/04/2022
Rus­si­an Pres­id­ent signs de­cree on ad­di­tion­al counter sanc­tions meas­ures
On 18 March 2022, De­cree of the Rus­si­an Pres­id­ent No. 126* “On Ad­di­tion­al Tem­por­ary Eco­nom­ic Meas­ures to En­sure Fin­an­cial Sta­bil­ity of the Rus­si­an Fed­er­a­tion in the Sphere of Cur­rency Reg­u­la­tion” (the “De­cree”) entered in­to force.Ad­di­tion­al powers of the Cent­ral Bank of the Rus­si­an Fed­er­a­tion (the “CBR”)Un­der the De­cree, the Board of Dir­ect­ors of the CBR may lim­it the amount of:•       pre­pay­ments or ad­vance pay­ments made by non-res­id­ent leg­al en­tit­ies (oth­er than cred­it in­sti­tu­tions) un­der cer­tain con­tracts with for­eign res­id­ents: from 1 April 2022*, such pay­ment may not ex­ceed 30% of the amount of ob­lig­a­tions un­der con­tracts for the pro­vi­sion by a non-res­id­ent of ser­vices, per­form­ance of works, trans­fer of in­form­a­tion and res­ults of in­tel­lec­tu­al activ­it­ies, if the amount of ob­lig­a­tions un­der the con­tract ex­ceeds USD 15,000;   •    funds trans­fers from non-res­id­ent leg­al en­tit­ies re­gistered in the states lis­ted in Rus­si­an Gov­ern­ment De­cree No. 430-r dated 5 March 2022 (the “Un­friendly States”) or to ac­counts or banks and oth­er fin­an­cial mar­ket or­gan­isa­tions in the Un­friendly States; and   •    for­eign cur­rency that can be pur­chased by non-res­id­ent leg­al en­tit­ies in the do­mest­ic for­eign ex­change mar­ket: from 1 April 2022*, such en­tit­ies can­not pur­chase for­eign cur­rency.Any trans­ac­tions in ex­cess of such lim­its must be ap­proved by the Gov­ern­ment Com­mis­sion for the Con­trol over For­eign In­vest­ments in the Rus­si­an Fed­er­a­tion (the “Com­mis­sion”).Ad­di­tion­ally, un­til 31 Decem­ber 2022*, res­id­ents will have to ob­tain per­mis­sions from the CBR to pay for a share, con­tri­bu­tion, or unit in the as­sets of a non-res­id­ent leg­al en­tity or a con­tri­bu­tion to a non-res­id­ent un­der a simple part­ner­ship agree­ment with in­vest­ments in the form of cap­it­al con­tri­bu­tions (a joint ven­ture agree­ment).The CBR may also al­low* res­id­ents to sell for­eign cur­rency pro­ceeds with­in more than three busi­ness days or not to sell for­eign cur­rency pro­ceeds that will be ap­plied for the dis­charge of ob­lig­a­tions in for­eign cur­rency un­der fa­cil­ity agree­ments with Rus­si­an banks (it is also pos­sible to sell less than 80% of the total amount of for­eign cur­rency pro­ceeds on the basis of the Com­mis­sion’s per­mis­sion).Dis­charge of ob­lig­a­tions un­der bank ac­count (de­pos­it) agree­ments entered in­to with cer­tain bank­sUntil 1 Septem­ber 2022, ob­lig­a­tions in for­eign cur­rency un­der bank ac­count (de­pos­it) agree­ments entered in­to by res­id­ent leg­al en­tit­ies with cred­it in­sti­tu­tions in re­spect of which re­strict­ive meas­ures have been in­tro­duced by the Un­friendly States after the oc­cur­rence of such ob­lig­a­tions are deemed duly per­formed if they are dis­charged in Roubles.Cla­ri­fic­a­tions of pre­vi­ous de­creesThe De­cree also con­tains some cla­ri­fic­a­tions on the ap­plic­a­tion of De­crees 79* and 81*.The De­cree per­mits cred­it­ing for­eign cur­rency to ac­counts or de­pos­its of of­fi­cial rep­res­ent­at­ive of­fices of the Rus­si­an Fed­er­a­tion, rep­res­ent­at­ive of­fices of fed­er­al ex­ec­ut­ive bod­ies, for­eign rep­res­ent­at­ive of­fices and branches of res­id­ent leg­al en­tit­ies, and their em­ploy­ees that are opened with for­eign banks and fin­an­cial in­sti­tu­tions without ob­tain­ing the Com­mis­sion’s per­mis­sion, which is re­quired un­der De­crees 79 and 81 for cred­it­ing by res­id­ents of for­eign cur­rency to their ac­counts (de­pos­its) opened with for­eign banks and oth­er fin­an­cial or­gan­isa­tions.Also, the re­quire­ments of De­cree 79 on the sale of for­eign cur­rency pro­ceeds do not ap­ply to for­eign cur­rency cred­ited in con­nec­tion with im­ple­ment­ing pro­jects re­lated to the pro­duc­tion of li­que­fied nat­ur­al gas in the Rus­si­an Arc­tic to the ac­counts of or­gan­isa­tions that im­ple­ment such pro­jects.In ad­di­tion, not­with­stand­ing the re­quire­ments of De­cree 81, it is now pos­sible to grant loans and cred­its to res­id­ents who are con­trolled by per­sons from the Un­friendly States without ob­tain­ing the Com­mis­sion’s per­mis­sion.Ex­emp­tions for per­sons con­trolled by Rus­si­an be­ne­fi­ciar­ies­For the pur­poses of the De­cree, per­sons con­trolled by Rus­si­an be­ne­fi­ciar­ies (leg­al and nat­ur­al per­sons), in­clud­ing through for­eign per­sons, are not re­cog­nised as per­sons re­lated to the Un­friendly States, if in­form­a­tion on such con­trol is dis­closed to the Rus­si­an tax au­thor­it­ies.We will con­tin­ue to mon­it­or these de­vel­op­ments and keep you in­formed of any fur­ther changes.* In Rus­si­an
11/04/2022
Rus­si­an Fed­er­al Tax Ser­vice gives re­com­mend­a­tions on pay­ing VAT on elec­tron­ic...
As we pre­vi­ously re­por­ted, for­eign pro­viders of elec­tron­ic ser­vices may face prac­tic­al dif­fi­culties with pay­ing VAT to the Rus­si­an budget.As a solu­tion to this prob­lem, in its Let­ter No. SD-4-3/[email protected]* dated 30 March 2022 the Fed­er­al Tax Ser­vice of Rus­sia (the “FTS”) gave a num­ber of re­com­mend­a­tions on pay­ing VAT for elec­tron­ic ser­vices provided by for­eign en­tit­ies.The FTS re­com­mends that Rus­si­an cus­tom­ers of elec­tron­ic ser­vices cal­cu­late, with­hold and pay VAT them­selves as tax agents. It is also re­com­men­ded that Rus­si­an cus­tom­ers (i.e. leg­al en­tit­ies and self-em­ployed en­tre­pren­eurs) in­form for­eign ser­vice pro­viders that they act as tax agents and pay VAT to the Rus­si­an budget.It is cla­ri­fied that in such a case, Rus­si­an tax au­thor­it­ies will have no grounds to re­quire that the for­eign en­tity re­peatedly pay VAT to the budget and re­cog­nise the rel­ev­ant trans­ac­tions in its VAT tax re­turns. By vol­un­tar­ily with­hold­ing VAT, Rus­si­an cus­tom­ers re­tain the right to de­duct the in­put VAT. This po­s­i­tion is in line with the stand­ard ap­proach pre­vi­ously set out by the FTS in its Let­ter No. SD-4-3/[email protected]* dated 24 April 2019.   At the same time, this re­com­mend­a­tion of the FTS seems to be more rel­ev­ant for fu­ture pay­ments for elec­tron­ic ser­vices to for­eign ser­vice pro­viders and does not re­solve the prob­lem with pay­ing VAT for the first quarter of 2022, if the cus­tom­er failed to vol­un­tar­ily pay VAT to the budget due from pay­ments made to the for­eign ser­vice pro­vider.Fur­ther­more, this re­com­mend­a­tion will not ap­ply to for­eign ser­vice pro­viders if elec­tron­ic ser­vices are provided to cus­tom­ers who are in­di­vidu­als.Fi­nally, in its new let­ter the FTS does not cla­ri­fy wheth­er pro­vi­sions re­gard­ing the vol­un­tary pay­ment of VAT to the budget and the eli­gib­il­ity of Rus­si­an cus­tom­ers for VAT de­duc­tion ap­ply if the for­eign pro­vider of elec­tron­ic ser­vices is not re­gistered with Rus­si­an tax au­thor­it­ies. Ac­cord­ing to the lit­er­al in­ter­pret­a­tion of Art­icle 171 (2.1) of the Rus­si­an Tax Code, VAT de­duc­tion is pos­sible only sub­ject to sup­port­ing doc­u­ments show­ing the iden­ti­fic­a­tion de­tails of a for­eign e-ser­vices pro­vider as be­ing tax-re­gistered in Rus­sia.Thus, the new cla­ri­fic­a­tions provided by the FTS demon­strate the com­mit­ment of Rus­si­an tax au­thor­it­ies to ad­dress­ing the prob­lems that for­eign busi­nesses cur­rently face. However, they do not solve all chal­lenges in pay­ing VAT to the Rus­si­an budget, in­clud­ing for the first quarter of 2022. Giv­en the above, for­eign pro­viders of elec­tron­ic ser­vices should dis­cuss with their for­eign banks in ad­vance wheth­er it is pos­sible to pay VAT to the Rus­si­an budget, and to con­sider al­tern­at­ive pay­ment op­tions (e.g. via in­ter­me­di­ar­ies).We will con­tin­ue to mon­it­or the situ­ation and keep you in­formed of any fur­ther changes.* In Rus­si­an
08/04/2022
UK halts co­oper­a­tion with Rus­sia on tax in­form­a­tion ex­changes
On 17 March 2022, the UK Treas­ury an­nounced the sus­pen­sion of the ex­change of tax in­form­a­tion with Rus­sia.The sus­pen­sion of the ex­change of tax in­form­a­tion means that Rus­sia will not re­ceive in­form­a­tion un­der any of the cur­rent ex­change of in­form­a­tion mech­an­isms with the UK, in­clud­ing the Ex­change of In­form­a­tion on Re­quest (EoIR) and Coun­try-by-Coun­try Re­port­ing (Cb­CR).Fol­low­ing the UK, the Chan­nel Is­lands (Jer­sey and Guern­sey) and the Isle of Man are also sus­pend­ing ex­change of tax in­form­a­tion with Rus­sia.Com­ment­sIt is worth not­ing that the UK sus­pen­ded the ex­change of fin­an­cial in­form­a­tion un­der the Com­mon Re­port­ing Stand­ard (CRS) with Rus­sia in 2019. There­fore, the cur­rent de­cision does not en­tail any sig­ni­fic­ant changes for Rus­si­an tax­pay­ers in terms of is­sues re­lated to the ex­change of in­form­a­tion un­der the CRS.The ter­min­a­tion of the ex­change of in­form­a­tion on re­quest (EoIR) could have a neg­at­ive im­pact on the con­firm­a­tion of eli­gib­il­ity for tax re­lief un­der the cur­rent double tax­a­tion treaty. More gen­er­ally, it lim­its ac­cess to in­form­a­tion on UK coun­ter­parties of Rus­si­an tax­pay­ers, which is in­form­a­tion that can be re­ques­ted as part of audits in Rus­sia.In the ab­sence of the pos­sib­il­ity to re­quest in­form­a­tion from for­eign tax au­thor­it­ies, Rus­si­an tax au­thor­it­ies will have for the pur­pose of audits only those doc­u­ments and in­form­a­tion avail­able to the tax­pay­er, which the tax­pay­er was able to ob­tain from for­eign coun­ter­parties or from pub­lic sources. As prac­tice shows, tax au­thor­it­ies may refer to the fact that such in­form­a­tion is in­suf­fi­cient, and, as a res­ult, tax be­ne­fits will be denied. At the same time, in some cases a lack of ac­cess to for­eign in­form­a­tion may, on the con­trary, pre­vent tax au­thor­it­ies from mak­ing ad­di­tion­al tax as­sess­ments, which has been en­vis­aged as one of the pur­poses of sus­pend­ing the data ex­change.The ces­sa­tion of the ex­change of coun­try-by-coun­try re­ports (Cb­CR) will res­ult in Rus­si­an tax au­thor­it­ies not be­ing able to ob­tain a re­port from the UK side, re­quir­ing the au­thor­it­ies to re­quest it dir­ectly from Rus­si­an tax­pay­ers be­long­ing to UK-led mul­tina­tion­al groups of com­pan­ies (MGCs, a Rus­si­an equi­val­ent of MNE). At the same time, the right not to sub­mit a coun­try re­port at the re­quest of tax au­thor­it­ies with ref­er­ence to Art­icle 105.16-3(6) of the Rus­si­an Tax Code will be lost. In prac­tice, this could lead to an in­crease in the ad­min­is­trat­ive bur­den on Rus­si­an tax­pay­ers and the pos­sible im­pos­i­tion of pen­al­ties in the event of fail­ure to provide the re­ques­ted in­form­a­tion, giv­en the ex­ist­ing prac­tic­al dif­fi­culties with the ex­change of in­form­a­tion in an MGC with Rus­si­an par­ti­cip­a­tion.Rus­sia may an­nounce mir­ror meas­ures in the near fu­ture.For ex­ample, in re­sponse to the UK’s ac­tions, Rus­si­an tax au­thor­it­ies may in­clude the UK in the List of States (Ter­rit­or­ies) that do not ex­change in­form­a­tion for tax pur­poses with the Rus­si­an Fed­er­a­tion, ap­proved by Or­der No. MMV-7-17/[email protected] of the Fed­er­al Tax Ser­vice dated 11 Oc­to­ber 2019 (the “List”).The in­clu­sion of the UK in this List will have im­plic­a­tions for the tax­a­tion of con­trolled for­eign com­pan­ies (CFCs).Thus, on the basis of Art­icle 25.13(4)(2) of the Rus­si­an Tax Code, Brit­ish com­pan­ies whose shares are traded on stock ex­changes will be re­cog­nised as CFCs.In ad­di­tion, with­in the mean­ing of Art­icle 25.13-1(7) of the Rus­si­an Tax Code, the in­clu­sion of a coun­try in the List means that the ex­emp­tion of profits of the CFC will not be avail­able ac­cord­ing to the fol­low­ing cri­ter­ia:   In or­der to de­term­ine the profits of a CFC us­ing fin­an­cial state­ments, the fin­an­cial state­ments must be audited.As a res­ult, the sus­pen­sion of the ex­change of tax in­form­a­tion will af­fect the at­tract­ive­ness of the UK as a jur­is­dic­tion to host hold­ing com­pan­ies and CFCs. If the cur­rent re­stric­tions re­main in place over the longer term, Rus­si­an groups with UK ele­ments may need to re­con­sider their struc­ture, in­clud­ing tak­ing in­to ac­count the pos­sible re­lo­ca­tion of UK com­pan­ies to oth­er jur­is­dic­tions.In prac­tice, how­ever, this trend could also be ex­ten­ded to oth­er European jur­is­dic­tions. Ac­cord­ing to me­dia re­ports, Ger­many* and the US* have also an­nounced the sus­pen­sion of the ex­change of tax in­form­a­tion.We will con­tin­ue to mon­it­or de­vel­op­ments and keep you in­formed of fur­ther changes.* In Rus­si­an
08/04/2022
Bill in­tro­duced in Rus­si­an State Duma al­low­ing sus­pen­sion and ter­min­a­tion...
On 22 March 2022, Pavel Krashe­n­in­nikov, Head of the State-build­ing and Le­gis­la­tion Com­mit­tee of the Rus­si­an State Duma, sub­mit­ted a bill*, which makes it pos­sible to ter­min­ate and sus­pend ob­lig­a­tions due to sanc­tions im­posed on Rus­sia. The bill also es­tab­lishes the pos­sib­il­ity for parties to be re­leased from li­ab­il­ity for breach of con­tract.The fol­low­ing de­scribes this le­gis­lat­ive ini­ti­at­ive in more de­tail:Ter­min­a­tion of ob­lig­a­tion­sAc­cord­ing to the bill, an ob­lig­a­tion is ter­min­ated in full or in part if its per­form­ance “ob­ject­ively be­comes defin­it­ively im­possible” “in the con­text of ‘un­friendly’ ac­tions of for­eign states and in­ter­na­tion­al or­gan­isa­tions as­so­ci­ated with the im­pos­i­tion of re­strict­ive meas­ures” against Rus­si­an in­di­vidu­als and com­pan­ies (i.e. for­eign sanc­tions).Ex­emp­tion of li­ab­il­ity for breach of ob­lig­a­tion­sThe bill provides an ex­emp­tion from li­ab­il­ity for a breach of ob­lig­a­tion for a per­son who proves that prop­er per­form­ance has “ob­ject­ively proved to be tem­por­ar­ily im­possible” in the con­text of for­eign sanc­tions. In this case, the ob­lig­a­tions se­cur­ing the de­faul­ted trans­ac­tion are also un­en­force­able un­less the parties agree oth­er­wise after the bill comes in­to force.Ter­min­a­tion of con­tractThe bill in­tro­duces the right to uni­lat­er­ally ter­min­ate a con­tract if the oth­er party to the con­tract has not per­formed, or per­formed im­prop­erly, its ob­lig­a­tion be­cause such per­form­ance is tem­por­ar­ily im­possible in the con­text of sanc­tions. The party au­thor­ised to do so must give a ter­min­a­tion no­tice to the oth­er party with­in a reas­on­able time. The col­lat­er­al se­cur­ing the ob­lig­a­tions of the parties, which shall sur­vive the uni­lat­er­al ter­min­a­tion of the con­tract or are con­nec­ted with the ter­min­a­tion, shall con­tin­ue to ex­ist, un­less oth­er­wise provided for by law or the con­tract.Se­cur­ity de­positThe bill sub­stan­tially mod­i­fies the treat­ment of se­cur­ity pay­ments.  Un­der this draft law, after 23 Feb­ru­ary 2022, the parties may enter in­to an agree­ment for a se­cur­ity pay­ment to se­cure oth­er ob­lig­a­tions. The pay­ment could con­sist of the de­pos­it of shares, bonds, oth­er se­cur­it­ies or gen­er­ic items.Re­pay­ment by Rus­si­an joint-stock com­pan­ies of loans is­sued by their for­eign con­trolling per­son­sThe bill en­titles Rus­si­an joint-stock com­pan­ies, in­stead of re­pay­ing a loan to lenders who are for­eign con­trolling per­sons of such com­pan­ies, to place ad­di­tion­al shares of a cer­tain cat­egory or type in fa­vour of such lenders. At the same time, joint-stock com­pan­ies are al­lowed to is­sue pref­er­en­tial shares whose nom­in­al value may ex­ceed 25% of the share cap­it­al.The bill does not re­quire proof of a caus­al link between the im­pos­i­tion of sanc­tions and the de­cision to place ad­di­tion­al shares in fa­vour of a lender in­stead of re­pay­ing the loan and pay­ing in­terest on it.Pro­tec­tion not for al­lAc­cord­ing to the bill, the above sup­port meas­ures do not ap­ply to per­sons who “con­trib­uted to the ‘un­friendly’ ac­tions of for­eign states and in­ter­na­tion­al or­gan­isa­tions re­lated to the im­pos­i­tion of re­strict­ive meas­ures” against Rus­si­an in­di­vidu­als and or­gan­isa­tions. The bill does not cla­ri­fy ex­actly what is meant by “con­trib­ut­ing”.Let­ter from the Cham­ber of Com­merce and In­dustry of the Rus­si­an Fed­er­a­tion­In con­nec­tion with the bill, the Cham­ber of Com­merce and In­dustry of the Rus­si­an Fed­er­a­tion has sus­pen­ded its re­view of ap­plic­a­tions for the is­su­ance of find­ings of force ma­jeure un­der con­tracts that were con­cluded with­in the frame­work of do­mest­ic eco­nom­ic activ­ity in con­nec­tion with sanc­tions on for­eign com­pon­ents and equip­ment (Let­ter No. PR/0181* of the Cham­ber of Com­merce and In­dustry of the Rus­si­an Fed­er­a­tion dated 22 March 2022).* In Rus­si­an
06/04/2022
Rus­si­an Fed­er­al Tax Ser­vice sets morator­i­um on tax audits of IT com­pan­ies
On 24 March 2022, the Rus­si­an Fed­er­al Tax Ser­vice is­sued Let­ter No. CD-4-2/[email protected]*, which (the “Let­ter”) es­tab­lishes a vir­tu­al morator­i­um for on-site tax audits, in­clud­ing re­peat audits, of ac­cred­ited IT com­pan­ies un­til 3 March 2025 in­clus­ively.The only ex­cep­tion is where an audit is sched­uled with the con­sent of the head or deputy head of a high­er tax au­thor­ity or the Rus­si­an Fed­er­al Tax Ser­vice. The lower tax au­thor­ity must sub­mit a reasoned re­quest in or­der to sched­ule an on-site audit.At the same time, any on-site audits launched be­fore the Let­ter was is­sued are sub­ject to com­ple­tion in the pre­scribed man­ner. No ex­ten­sion or sus­pen­sion of these audits ac­cord­ing to Art­icle 89 of the Rus­si­an Tax Code should oc­cur.   Fur­ther­more, the audit sus­pen­sion is tem­por­ary in or­der to re­duce the ad­min­is­trat­ive bur­den on IT com­pan­ies in the peri­od between 2022 and 2024, and does not mean that this peri­od will not be audited in prin­ciple. In prac­tice, by schedul­ing an audit in March 2025 after the morator­i­um ex­pires, the tax au­thor­it­ies will have the right to audit the 2022-2024 peri­od as well.The Let­ter con­tains no ad­di­tion­al cri­ter­ia for the morator­i­um, apart from re­quir­ing an IT com­pany to have a state ac­cred­it­a­tion cer­ti­fic­ate. In oth­er words, the morator­i­um will also form­ally ap­ply to ac­cred­ited IT com­pan­ies that are not eli­gible for cor­por­ate profits tax or in­sur­ance con­tri­bu­tion in­cent­ives un­der Rus­si­an law.The chosen leg­al form of the doc­u­ment in­tro­du­cing the morator­i­um is also note­worthy: the Let­ter is of an in­tern­al nature and ad­dressed to lower tax au­thor­it­ies. To date, we are not aware of any fur­ther le­gis­lat­ive ini­ti­at­ives in this area.The Let­ter im­ple­ments one more tax sup­port meas­ure for the IT in­dustry an­nounced in Rus­si­an Pres­id­ent De­cree No. 83 dated 2 March 2022, on which we pre­vi­ously re­por­ted. Also, in pur­su­ance of that De­cree, Law No. 67-FZ dated 26 March 2022 has set the cor­por­ate profits tax rate at 0% for the peri­od between 2022 and 2024. The Min­istry of Fin­ance and the Min­istry of Di­git­al De­vel­op­ment are cur­rently ne­go­ti­at­ing the de­tails of an­oth­er meas­ure an­nounced in the De­cree: ex­tend­ing the list of IT activ­it­ies sub­ject to pref­er­en­tial treat­ment where fur­ther de­vel­op­ments can also be ex­pec­ted.Our ex­perts con­tin­ue to closely mon­it­or this is­sue and will keep you in­formed of any fur­ther changes.* In Rus­si­an
05/04/2022
New tax in­cent­ives: anti-crisis tax pack­age for in­di­vidu­als
On 26 March 2022, Rus­sia’s Pres­id­ent signed Fed­er­al Law 67-FZ* in­tro­du­cing an anti-crisis pack­age of tax sup­port meas­ures for busi­nesses and in­di­vidu­als.Be­low is our over­view of the main changes rel­ev­ant to in­di­vidu­als. Earli­er, we have cir­cu­lated our over­view of cor­por­ate tax changes.Per­son­al in­come tax­Tax­a­tion of in­terest on bank de­pos­it­sThe new Law ex­empts in­di­vidu­als from tax­a­tion on in­come re­ceived in 2021 and 2022 in the form of in­terest on de­pos­its (i.e. ac­count bal­ances) with banks loc­ated in Rus­sia.The Law also ad­justs the pro­ced­ure for cal­cu­lat­ing the amount of in­terest sub­ject to per­son­al in­come tax in fu­ture peri­ods. For in­stance, the highest of the key rates of the Cent­ral Bank of the Rus­si­an Fed­er­a­tion (CBR) set on the first day of each month in a tax peri­od will be used to cal­cu­late the non-tax­able threshold for each tax peri­od, rather than the CBR key rate set on the first day of such a tax peri­od as ap­plic­able be­fore ad­op­tion of the Law.These meas­ures are aimed at re­du­cing the tax bur­den on in­di­vidu­als due to a sig­ni­fic­ant in­crease in the CBR key rate in 2022 and are also de­signed to en­cour­age the pub­lic to hold their mon­ies on bank de­pos­its with Rus­si­an banks. Ma­ter­i­al gain­In­come in the form of ma­ter­i­al gain re­ceived in 2021-2023 is now ex­empt from per­son­al in­come tax.Note that this refers to any ma­ter­i­al gain, al­though in its ori­gin­al ver­sion the bill ex­emp­ted only ma­ter­i­al gain from sav­ings on in­terest for us­ing funds bor­rowed from em­ploy­ers. Re­ceiv­ing as­sets from con­trolled for­eign com­pan­ies (CFCs)Per­son­al in­come tax will not ap­ply to in­come in the form of as­sets (ex­clud­ing cash) and/or prop­erty rights re­ceived in 2022 from a for­eign com­pany or un­in­cor­por­ated en­tity in re­la­tion to which the tax­pay­er is a con­trolling per­son and/or par­ti­cipant as of 31 Decem­ber 2021. The ex­emp­tion will ap­ply to the as­sets or prop­erty rights that were owned by a for­eign com­pany (en­tity) as of 1 March 2022.In­di­vidu­als are there­fore giv­en the op­por­tun­ity for a tax-free trans­fer of as­sets from CFCs. When trans­act­ing in the re­ceived as­sets at a later stage, an in­di­vidu­al will be able to re­cog­nise the ex­penses for re­ceiv­ing such as­sets ac­cord­ing to their CFC’s ac­count­ing data, but up to the mar­ket value of the as­sets re­ceived.Oth­er taxesThe fol­low­ing meas­ures re­lated to prop­erty tax, land tax, trans­port tax and tax ad­min­is­tra­tion are identic­al to those ap­plied to com­pan­ies:Prop­erty tax and land tax­Ca­das­tral value as of 1 Janu­ary 2022 will be used to cal­cu­late per­son­al prop­erty tax and land tax for the 2023 tax peri­od.However, this rule will not ap­ply if the ca­das­tral value de­creases in 2023, or if the in­crease in the ca­das­tral value is due to a change in the char­ac­ter­ist­ics of a prop­erty. There­fore, the ef­fect of in­fla­tion on the tax base is elim­in­ated.Trans­port taxThe Law has ab­ol­ished the mul­ti­pli­ers 1.1 and 2 where trans­port tax is cal­cu­lated for 2022 for vehicles worth between RUB 3m (EUR 32,472**) and RUB 10m (EUR 108,240).There­fore, the mul­ti­pli­ers will only ap­ply to vehicles worth over RUB 10m (EUR 108,240).Tax ad­min­is­tra­tion­Ac­cord­ing to the Law, there will be no fines for fail­ure to provide doc­u­ments con­firm­ing the amount of CFC profits, or for provid­ing doc­u­ments con­tain­ing false in­form­a­tion for the 2020 and 2021 fin­an­cial years (i.e. the 2021 and 2022 tax peri­ods).Note that fines for fail­ure to provide such doc­u­ments un­der the gen­er­al pro­ced­ure or at the tax au­thor­it­ies’ re­quest amount to RUB 500,000 (EUR 5,412) and RUB 1m (EUR 10,824), re­spect­ively. It is likely that the can­cel­la­tion of fines for the 2021-2022 tax peri­ods is at­trib­ut­able to the po­ten­tial dif­fi­culties that con­trolling per­sons may face in ob­tain­ing fin­an­cial state­ments due to the re­stric­tions im­posed.* In Rus­si­an** As of 5 April 2022