Moderation of Russian currency legislation
Russian currency legislation prohibits numerous transactions, with violations being punishable by fines. The rules have now been partially moderated once again. This concerns the obligation to repatriate – in other words, return – foreign currency amounts, i.e., the obligation that foreign currency amounts (EUR, USD, etc.) from legal transactions must be transferred to accounts at banks in Russia. Until now, violations were subject to horrendous fines. As of January 1st, 2020, the repatriation obligation for Russian rubles has already been largely lifted and residents (i.e., Russian companies, among others) are allowed to open any number of accounts in Russian and foreign currency at banks in Russia and abroad.
The repatriation requirement has now largely been lifted for foreign currency as well since July 1st, 2021, and is applicable to contracts concluded before that date (Law of 28.06.2021 No. 223-FZ). In particular, the repatriation obligation has been abolished for the following transactions:
- Transfer of goods to non-residents;
- Provision of services/performance of work to non-residents;
- Transfer of intellectual property and exclusive rights thereto to non-residents.
However, residents are now required to ensure proper performance of contractual obligations or their termination in the case of transactions not subject to repatriation. If this requirement is violated, heavy fines are still provided for. Therefore, even after the entry into force, increased diligence is required when conducting foreign trade transactions.
However, a number of repatriation obligations remain in force, such as for advance payments made by residents under foreign trade contracts that have not been fulfilled (goods not delivered, services not provided, etc.), the transfer of raw materials to non-residents and the granting of loans to non-residents.
This clearly positive change is a continuation of the trend toward liberalization of Russian currency legislation, which greatly facilitates cross-border trade in Russia, partly because residents now have the option to regulate and modify payment obligations more flexibly without risking significant fines.
