The Bank of Russia revises rules for paying a contribution to capital of a non-resident
Decision No. ПРГ-12-3/534 of the Working Group of the Bank of Russia dated March 6, 2024 has revised the conditions, on which Russian residents may, without individual authorizations from the Bank of Russia, pay for:
a) shares, contributions, and units in the property (share or pooled capital, cooperative unit fund) of non-residents;
b) contributions to non-residents under simple partnership agreements with investments made in the form of capital investments (joint venture agreements).
According to the rules previously established by the Bank of Russia[1], Russian residents were allowed to make these payments without individual authorizations from the Bank of Russia, subject to the following conditions:
- a transaction had to be carried out in Russian Rubles or in the currency of a so-called ‘friendly’ state; or
- a transaction might be carried out in the currency of a so-called ‘unfriendly’ state, but in the amount that would not exceed an equivalent of RUB 15 million at the exchange rate of the Bank of Russia in effect on the date of payment.
Effective from April 1, 2024, these transactions will no longer require individual authorizations from the Bank of Russia, if the following conditions are simultaneously met:
- The value of a transaction does not exceed an equivalent of RUB 15 million at the exchange rate of the Bank of Russia in effect on the date of payment and may, inter alia, be carried out in the currency of a so-called ‘unfriendly’ state; and
- The total value of transactions carried out by a Russian resident with a single non-Russian resident starting from April 1, 2024 must not exceed the limit established in para. 1 above.
In any other cases, similar transactions will require an individual authorization from the Bank of Russia.
We believe that, even though the Bank of Russia has relaxed the terms of payment on the above grounds (now payment may also be made in the currency of a so-called ‘unfriendly’ state), there are still restrictions in place that make it considerably more difficult for Russian residents to set up foreign entities and participate in joint business activities outside Russia.
We would be pleased to assist you in developing ways to structure your business and obtaining necessary authorizations from the Bank of Russia.
If you have any questions or you would like to discuss this further, please feel free to email Julia Talagaeva or Artem Eretenko.
Sincerely,
[1] Decision No. ПРГ-12-4/1383 of the Working Group of the Bank of Russia dated June 23, 2022