Greek citizen setting up in Cyprus – The checklist! All Russian citizens with bank accounts outside Russia must russian foreign currency restrictions, by 1 June 2016, a special report to the Federal Tax Service providing information about fund movements and closing bank account balances, as at the reported date. Such kind of obligations for Russians is growing, following the newly approved amendments to Federal Law about currency regulation and currency control, which was enforced at the end of 2015. The reporting form is made of two pages.
The first one records the information of the declarant and the second one records the information relating to the bank account balances and movements. For individuals who own more than one account abroad, the second page needs to be filled in for each account they have. Upon receipt and review of the form, the Federal Tax Service might request further explanations, information or evidence, confirming for example particular fund movements. In such case, the taxpayer is obliged to submit the requested information within a week. Some experts have voiced their concerns about such a tight deadline. Often, information for transactions are received from the banks via emails.
Failing to meet the reporting requirements can result in rather serious consequences. Profits include interest income, rental payments, proceeds from sales of securities, etc. Starting from 2016, profit tax must be paid on the interest accrued on account balances. However, the taxpayer should submit their tax declaration to the Federal Tax Service of Russia confirming the amount of tax paid to the foreign country. The recent declaration campaign concluded on 30 April 2016 with declarants submitting 3-NDFL form to the Federal Tax Service. In order to avoid trouble or tax claims for previous years, taxpayers shall submit a special declaration before 1 July 2016, indicating the balance of the bank account held abroad. The declaration can be amended, if necessary, to provide the date of account opening.
Most Russian citizens are not just Russian tax residents, but also currency residents. The definition of currency resident first appeared in 2012, right after the Federal Law about currency controls and currency regulation was approved by the Russian government. According to the currency legislation, a Russian currency resident is a person who has Russian passport and citizenship. If an exempt Russian visits Russia, for even one day, they automatically become currency residents in the year of visit. Having said that, it is of course rather complicated to police this, especially for people that don’t own any property in Russia.
As it is stated in Article 12 of the Federal Law about currency control and currency regulation, Russian currency residents have a number of restrictions with relation to operations of foreign bank accounts: they may transfer funds from other banks, their account can be debited by any interest earned, they may enroll cash and get a profit on currency exchange. But it is not possible, for example, to debit such accounts with loans. The number of restrictions may be decreased in case funds are placed in a trust and such a trust is managed by a Russian non-resident. In this case foreign bank accounts can be debited loans and rental profits. Such exclusions are only possible if the country involved is neither OECD nor FATF member, i. As a result of the currency control regulation, foreign bank accounts and their treatment need close consideration with regards to currency residency as well. The rest of this article will concentrate on the penalties resulting from currency control regulation violation.
