At the end of May 2019, Russian President passed a law establishing the third capital amnesty from June 01, 2019 to February 29, 2020 (“Amnesty 3.0”).
We have decided to answer the most frequently asked questions related to Amnesty 3.0.
1. To what and to whom does Amnesty 3.0 apply?
Amnesty 3.0 applies to individuals who have:
- controlled foreign companies (“CFC”);
- accounts in foreign banks.
Moreover, Amnesty 3.0 does not deprive participants of the first two capital amnesties of the right to declare their assets.
2. Why do you need to declare foreign assets?
You will be entitled to rely on the guarantees of exemption:
- from criminal liability for certain types of crimes (for example, tax evasion, concealment of funds, etc.);
- from administrative liability for certain offenses (for example, failure to notify about the opening of accounts, illegal operations with undeclared accounts, etc.);
The guarantees of exemption from liability apply to acts committed before January 01, 2019.
In addition, with respect to the information provided under Amnesty 3.0, a tax secret regime will come into force. This means that other governmental bodies will not be able to access this information.
3. If I have a CFC, should I comply with any conditions when declaring it under Amnesty 3.0?
Yes, it is necessary to transfer the CFC from foreign jurisdiction to Russia. Earlier in Russia, special administrative districts were created, where international companies with the status of an “internal offshore” can be registered. These districts are:
- Oktyabrsky Island (Kaliningrad Region);
- Russky Island (Primorsky Krai).
After the CFC is transferred from foreign jurisdiction to Russia, the CFC receives the status of an international company in accordance with the provisions of the Federal Law “On International Companies”.1
Such international company or person included in the same group with this company must invest at least 50 million rubles through capital investments or contribution to the authorized capital/fund or contribution to the property of Russian business entities.
4. What shall you do with a foreign account?
To declare an account, you need to transfer all funds from foreign accounts to accounts in Russian banks before submitting a special declaration.
As a confirmation, you submit to the tax authority along with a special declaration:
- an account cash flow statement. It should contain information for the period from January 01, 2019 to the date of closing the account or from January 01, 2019 to the date within 15 calendar days prior to the date of filing the declaration.
- statements issued by Russian banks confirming the funds credited from foreign accounts to Russian accounts.
5. Information sources report tougher conditions of Amnesty 3.0, is this true?
Yes, this is true.
Amnesty 3.0 implies the necessity to return assets to Russia. This makes it less attractive for declarants.
As part of Amnesty 3.0, it is impossible to be exempted from the obligation to pay tax on CFC profits as well as from being prosecuted for committing such crimes as legalisation (laundering) money obtained by criminal means, fraud, misappropriation or embezzlement, bribery and some other types of economic crimes. Also Amnesty 3.0 does not provide for the right to a “tax-free” liquidation of a CFC.
If you need our assistance in assessing the need to declare your assets or in preparing all the necessary documents for submitting a special declaration under Amnesty 3.0, we are ready to provide you with comprehensive legal assistance and support.
1Federal Law dd. August 03, 2018 No 290-ФЗ(ed. dd. December 25, 2018) “On International Companies”.
