Tax and Legal News Digest for Investors for December 2024

Mark Gindileev

Jan 27, 2025

Exclusion of EU countries from the Russian Federal Tax Service's 'white list'

On December 20, 2024, the Order of the Russian Federal Tax Service dated October 30, 2024 No. ED-7-17/916@ was published. This order approved an updated list of countries and territories with which automatic exchange of financial information is carried out. EU countries were excluded from the new list, while Armenia, Cameroon, Rwanda, Jamaica, and Niue were added. The document came into force on December 31, 2024.

Let us remind you that for Russian citizens, the procedure for working with foreign bank accounts depends on whether the country where the account is opened is included in the above-mentioned list of countries for automatic information exchange:

• If the country is included in the list, funds can be received into such accounts with virtually no restrictions.
• If the country is not on the list, receiving funds is only possible on strictly established legal grounds specified in Article 12 of Federal Law No. 173-FZ dated 10.12.2003 'On Currency Regulation and Currency Control'.

The exclusion of EU countries from the list as of December 31, 2024, means that Russian residents will have to revise the rules for working with accounts in these countries. For example, it will be prohibited to credit dividends, income from the sale of securities and property, as well as from trust management, to such accounts.

To avoid violations, Russian residents need to carefully check receipts to accounts in the EU and consider the permissible grounds for credits. Portfolio securities holders are advised to transfer payments to countries included in the Russian Federal Tax Service's 'white list'. This will help avoid difficulties with banks and fines for illegal currency operations. Fines for violating currency legislation range from 20% to 40% of the transaction amount.

Possible ways to reduce risks:

• Reside abroad for more than 183 days a year when funds are credited to the account.
• Transfer funds from an EU country to an account in Russia within 45 days from the date of credit (note 7 of Article 15.25 of the Code of Administrative Offenses of the Russian Federation).
• Use non-bank accounts (e.g., with brokers).
• Credit funds to accounts in Russia, EAEU countries, or countries with automatic exchange (considering the updated list of countries).
• Look for opportunities to transfer credits to CFC accounts instead of personal accounts.

Tax calendar for 2025

The year 2025 has begun, and we have compiled a calendar with key dates by which individuals need to report to tax authorities. January 2025 This month, you need to count the number of days spent outside the territory of Russia. If there are more than 183, individual reporting is not required (if there is no income in Russia). However, it is worth compiling a table of days spent outside Russia, with passport stamps and tickets attached, as well as confirmation of accommodation payments abroad. This table will need to be sent to the tax authority upon its request or in advance, at the initiative of the taxpayer (in case the taxpayer previously reported foreign accounts or CFCs).

March 3, 2025.

-Notification of participation in foreign organizations for individuals who became tax residents of the Russian Federation in 2024 (deadline moved from March 1).

April 30, 2025.

-3-NDFL declaration for 2024

For tax residents of the Russian Federation: income in Russia and abroad subject to self-declaration

For non-tax residents of the Russian Federation: income in Russia

-Notification of CFC for individuals for 2024 with reporting for 2023.

June 2, 2025

-Report on the movement of funds and other assets in accounts outside the Russian Federation for 2024 (deadline moved from June 1).

-Notification of opening an account in a bank outside the Russian Federation for persons who spent more than 183 days abroad in the year the account was opened but became residents of the Russian Federation by the end of 2024.

July 15, 2025 -Deadline for payment of personal income tax for 2024.

December 1, 2025 -Deadline for payment of property tax and personal income tax on interest income from deposits in Russian banks for 2024.

Clarifications by the Russian Federal Tax Service on the criteria for substituting employment relationships when working with self-employed individuals

The Federal Tax Service reminded that self-employed individuals are prohibited from accounting for income received within the framework of employment relationships. In the published letter the Federal Tax Service provided a list of signs that may indicate the substitution of employment relationships when interacting with self-employed individuals. Among them:

• Regular payments of approximately the same amount in different months.
• A significant portion of income from one customer.
• Continuous cooperation with one organization.
• Connection of current customers with former employers and the presence of self-employed individuals' work experience in these same organizations.

The Federal Tax Service recommends that organizations independently assess the risks when engaging self-employed individuals to perform work to avoid violations of the law.

Approval by the State Duma of the possibility of withdrawing dividends from IIS-3

On December 28, 2024, a Federal Law was published, granting the right to withdraw dividends received on third-type individual investment accounts (IIS-3) to external accounts. Unfortunately, the possibility of withdrawing bond coupons was not provided for by the amendments.

Let us remind you that in early December, the President of Russia proposed allowing the withdrawal of dividends from IIS-3 to other accounts. Previously, the professional industry and its service recipients unanimously cited the main disadvantage of IIS-3 as the prohibition on withdrawing coupons and dividends to bank accounts.

New personal income tax rules from 2025

From 2025, a law came into effect, introducing the taxation of Russian personal income tax on payments under civil law contracts if the individual or the work/services performed are related to Russia. The remuneration will be considered received in Russia if the work or services were performed using:

• internet resources from the Russian national domain zone,
• information systems, the technical means of which are located in Russia,
• Russian software and hardware complexes.

Also, at least one of the following conditions must be met:

• the individual is a tax resident of the Russian Federation,
• the individual received income to an account in a bank located in Russia,
• the source of income is Russian organizations or individual entrepreneurs.

Previously, if a remote worker under a civil law contract was a non-resident and the contract stated that they worked abroad, income under such a contract was not subject to personal income tax. Let us remind you that for employees under an employment contract, similar norms have already come into force since 2024. For contractors under a civil law contract, these norms came into force only from 2025.

In Kazakhstan, the validity period of payment cards is being reduced

The Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market adopted a resolution on amendments to certain regulatory legal acts on the regulation of financial organizations' activities, reports Kazpravda.kz citing the press service of the state body.

It is reported that amendments have been made to the internal control rules of Kazakhstani banks to minimize the risks of using banking services in the field of illegal drug trafficking and digital assets, as well as online casinos. Among other things, restrictions (12 months) have been established on the validity period of payment cards for non-residents of Kazakhstan. Kazakhstani bank cards were popular among Russians for paying for purchases while traveling and booking the trips themselves. According to RBC, the new norm will not affect already issued cards.

Mark Gindileev, tax lawyer

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