New rules for foreign account holders
From 2020, it will be easier for Russian residents to receive income from real estate to their foreign accounts. Tranio lawyers explain what this means, how to submit reports to the tax service under the new rules, and what to do for owners of foreign accounts.
From the first of January 2020, under the new rules on currency transactions, it does not matter in which country the property is located, and in which country the account is opened. The most important thing is that the account is in a “transparent” country: a member of the EEU or in a country with which Russia has an automatic exchange of financial information.A resident can receive money from renting and selling real estate:
In the EEU member States: Armenia, Belarus, Kazakhstan, Kyrgyzstan.
In countries with which Russia automatically exchanges financial information. The most popular among Russian investors: Spain, Greece, Germany, Belgium, France, Switzerland, UAE, Portugal, Italy.
A resident cannot receive money from renting and selling real estate:
in the United States
in the UK;
Who is comfortable with this: a Russian resident who has an account in Cyprus, Croatia, or Malta.
Who is inconvenient: a resident of Russia, with an open account in the UK or another country that does not exchange financial information with Russia.
The list of countries that exchange financial information with Russia is being updated. The country where you have an account can be removed from this list or added to it at any time.
Feature of the new rules
The new rules apply to income received by the owner of a foreign account from the first of January 2018.
Reports on foreign accounts
As a General rule, resident individuals who have spent less than 183 days abroad must submit reports to the tax service on their foreign accounts. New laws soften this rule.
From January 1, 2020, residents must not submit a report to the tax service if two conditions are met:
a foreign account is opened in a Bank located in a member state of the EEU or in a country with which Russia has an automatic exchange of financial information;
in total, no more than 600 thousand rubles were transferred to the account and debited during the year. If no money has been credited to the account during the year, and the balance is no more than 600 thousand rubles, you also do not need to submit the report.
For example, an investor rents an apartment in the Central district of Athens for 700 euros per month. Within a year, about 600 thousand rubles will be credited to his foreign account. In this case, the investor does not need to submit a report.
What should the owner of a foreign account do now
We recommend that individuals who are residents of the Russian Federation check their foreign accounts and follow the list of “transparent” countries on the website of the Federal tax service of Russia, because the list is updated.
Countries where accounts are opened must be included in the list of “transparent” countries:
countries with which Russia automatically exchanges financial information;
EEU member States.