The new Federal Law No. 265-FZ dated 2 August 2019 (the “Law 265-FZ”) provides for notable changes in the Russian currency control legislation. The changes include exemptions from repatriation obligations, reporting on accounts opened with foreign non-banking organisations and the less restrictive regime of use of foreign accounts by Russian residents.

Exemption from Repatriation Obligations

One of the changes provided for by Law 265-FZ is the exemption from the repatriation rules for cross-border trade contracts on supply of goods, provision of works, services, intellectual property or information from Russian residents to non-residents. The exemption comes into effect on 1 January 2020 and applies to rouble payments only.

Law 265-FZ provides for a multi-step exemption from the repatriation rules for specific supply contracts. In particular, contracts of supply of raw products (e.g. oil, gas) will be exempt from the repatriation rules on a phase basis: from 1 January 2020 – not more than 10% of the contract’s amount will be exempted; from 1 January 2022 – not more than 50% of the contract’s amount; from 1 January 2024 – 100% of the contract’s amount.

Accounts at Foreign Finance Organisations

Law 265-FZ expressly permits Russian residents to open accounts at foreign finance institutions other than banks. The residents must declare such accounts to Russian tax authorities, and are generally obliged to report on payments through such accounts.

Law 265-FZ permits using such accounts only in the instances established by the Bank of Russia. However, no relevant regulation issued by the Bank of Russia appears to be in place yet.

The amendments will be effective from 1 January 2020.

Crediting to Foreign Accounts

According to Law 265-FZ, individuals that are Russian residents from the perspective of Russian currency control laws are entitled to credit money received from non-residents to their accounts opened with foreign banks located in the territory of a member state of OECD or FATF, provided that this foreign state performs the exchange of information pursuant to the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information dated 29 October 2014 (the “Information Exchange Treaty”) or another international treaty of the Russian Federation. The parties to the Information Exchange Treaty include such countries as Austria, China, France, Germany, Japan, United Kingdom, etc.

The amendments will be effective from 1 January 2020.

Reports on Movements of Money

Law 265-FZ provides for an exemption from the general obligation to report movements on foreign accounts. The law states that an individual that is a Russian currency resident shall not be obliged to provide Russian tax authorities with reports on movement of money through his/her account (deposit) opened at a bank or another finance organisation located in the territory of a member state of OECD or FATF, provided that (i) this foreign state performs the exchange of information pursuant to the Information Exchange Treaty or another international treaty of the Russian Federation, and (ii) the total amount of money credited to/debited from the account (deposit) does not exceed RUB 600,000 (or its equivalent) during the reporting year, or the balance of the money on such account (deposit) does not exceed RUB 600,000 (or its equivalent) as of the end of the reporting year, if no crediting operations took place during the reporting year.

Currency Operations between Residents

Law 265-FZ provides for additional permitted currency operations between residents. In particular, the law permits transfers of the foreign currency from accounts of individuals that are Russian currency residents opened with Russian banks to accounts of individuals that are Russian currency residents opened abroad as the payment for supply of goods, works, services, information or intellectual property, provided that the recipient has been residing outside Russia more than 183 days in aggregate, and conducts entrepreneurial activities in accordance with the legislation of the foreign state of his/her residence.

The amendments will be effective from 1 January 2020.