Tax and Law News Digest for Investors for February 2025
Mark Gindileev
Mar 27, 2025Financial Institutions Required to Verify Clients' Tax Residency with Frequent Use of Apps Abroad
Financial market organizations (FMOs) will be required to request tax residency data from clients who primarily used remote service channels, including mobile apps, while abroad for six months. It is assumed that the client predominantly uses FMO electronic services from foreign territories if this is confirmed by geolocation in more than 50% of cases for at least 6 months. FMOs include banks, insurers, brokers, and non-state pension funds.
"The Russian Ministry of Finance, together with Rosfinmonitoring, the Bank of Russia, and the Federal Tax Service of Russia, have finalized the draft of the relevant government decree, which clarifies the procedure for updating information on tax residency previously obtained by FMOs from their clients," — says the ministry's press service statement.
The development of the relevant document became known in the spring of 2024. It was then reported that financial organizations would be required to send requests to clients after determining their location, established using technical means, including geolocation by internet network address, geolocation by cellular networks, and satellite geolocation.
At the same time, the Ministry of Finance emphasizes that FMO remote service channel data will not be considered grounds for automatic recognition or non-recognition of a client as a tax resident of a particular state. However, after a request and provision of the relevant information, they may be recognized as a non-resident.
The measure is likely aimed at ensuring that Russian tax non-residents cannot continue to use reduced rates provided for Russian tax residents regarding income, for example, from operations on a Russian brokerage account.
Earlier, in June 2024, the Federal Tax Service of Russia announced a plan to create an automated system for determining the status of tax and currency residency. It is based on data on border crossings from passports and information from the automated migration accounting system "Mir." Two approaches to determining residency — activity data and migration data — will be used in parallel.
EU Disconnects 13 More Russian Banks from SWIFT
The European Union, from March 17, 2025, disconnects 13 regional banks from the international financial messaging system SWIFT, which are "considered important for the Russian financial and banking system." These banks include "Ak Bars," "Uralsib," "Sinara," "Tochka" bank, and several others. This became known on February 24.
Banks use SWIFT for international transactions, so disconnection from this system may complicate cross-border transfers. However, more than half of the credit institutions against which the EU imposed restrictions were already under US blocking sanctions, meaning they could have difficulties with international currency operations.
The EU also imposed sanctions against three foreign credit institutions for using the Russian SWIFT analogue — the Financial Message Transfer System (SPFS) of the Bank of Russia. The restrictions affected Belarusian "BelVEB Bank" and "Belgazprombank" (a subsidiary of Gazprombank), as well as "VTB Shanghai" (a branch of VTB Bank in China) — they are now prohibited from conducting operations with EU banks.
Russian Federal Tax Service Clarified from Which Period the New List of States Not Ensuring Tax Information Exchange Applies
The Federal Tax Service of Russia clarified that the new list of states (territories) not ensuring information exchange for taxation purposes with the Russian Federation applies starting from the 2025 tax period when determining the tax base for the tax on the profit of CFCs, determined for the financial year ending in 2024.
The order approving the new list came into force on December 31, 2024 — it included EU countries, Japan, Australia, and others. Recall that this list is also used for taxation purposes of controlled foreign companies (CFCs) profits. For example, to determine the profit of a CFC located in a country from the list, based on its financial statements rather than the rules of Chapter 25 of the Russian Tax Code, an audit report is required (subparagraph 1, paragraph 1.1, Article 309.1 of the Russian Tax Code).
When determining the taxpayer's tax base for the 2024 tax period for the tax on the profit of CFCs, determined for the financial year ending in 2023, the previous list should be used.
Ministry of Finance Proposed to Simplify Tax Registration for Foreign Companies Entering Russia
The Ministry of Finance proposed to accelerate and simplify the registration of foreign companies with the tax authorities of Russia. The proposed amendments to the Tax Code are published on the portal of draft regulatory legal acts.
According to these documents, representatives of foreign businesses will no longer have to independently submit documents to the Federal Tax Service when opening an account in a Russian bank. Instead, the bank where the company opens an account will submit the application in electronic form. The service will take 5 days, resulting in the company receiving a certificate in electronic form.
Registration with the Federal Tax Service in connection with opening an account is often necessary for a foreign company to open a bank account in Russia. In many cases, these are foreign companies controlled by Russians, who expect to receive payments on Russian securities in rubles, as receiving such payments in foreign currency abroad is impossible due to sanctions.
Authorities Working on Conditions for Returning Foreign Companies to Russia
The return of foreign companies from unfriendly states to the Russian market can only occur with the permission of the government commission on foreign investments, a Ministry of Finance representative told "Vedomosti." He added that the current presidential decrees No. 618 (on the special procedure for certain types of transactions between certain persons) and No. 81 (on additional temporary economic measures to ensure financial stability) concern both the sale of business and its return to Russia. "When making decisions, the government commission primarily focuses on the position of the relevant department," the Ministry of Finance representative emphasized.
The head of the Ministry of Economic Development, Maxim Reshetnikov, previously stated that such decisions "will be made individually." He noted that the Russian economy has changed, so the requirements for foreign firms in terms of localization, investments, and technologies will be "completely different." First Deputy Prime Minister Denis Manturov, speaking about the foreign automotive industry, warned, that "just taking and returning as easily as they left will no longer be possible."
Earlier, the President of Russia instructed the government to work out a mechanism for the return of foreign companies. He noted that this process should be regulated in such a way as to preserve advantages for domestic producers, but at the same time not violate the rules of the World Trade Organization.
Recall that previously the Central Bank and the Ministry of Finance also worked on adjusting legislation so that foreigners, including those from unfriendly states, could invest in Russian securities and withdraw profits from such new investments.
Ministry of Finance Began Discussing the Issue of Increased Tax on X5 and "Rusagro" Securities
The Department of Tax Policy of the Ministry of Finance of the Russian Federation is working on issues of taxation procedures for transactions with securities of economically significant organizations (ESOs). This is how the department responded to the appeal of the Association of Bondholders (ABO) regarding problems caused by the forced redomiciliation of ESOs in Russia, reports "RBC Investments."
On January 20, ABO sent a letter to the Ministry of Finance, the Central Bank, the State Duma, and the Federation Council to eliminate tax consequences for private investors caused by the forced redomiciliation of economically significant organizations in the Russian Federation. This concerns X5 Retail Group: during the move, the depositary receipts of the Dutch company, previously traded on the Moscow Exchange, were replaced with shares of the Russian PJSC "Corporate Center X5," as well as the ongoing redomiciliation procedure of "Rusagro."
"Amendments to the tax legislation are already being discussed. The main thing here is not to create unjustified increased taxation," said Anatoly Aksakov, head of the State Duma's financial market committee, to the publication. He suggested that the amendments could be adopted in the first half of 2025. A source in a large broker familiar with the issue confirmed that the discussion has already begun. ABO also received a letter signed by the first deputy chairman of the Bank of Russia, Vladimir Chistyukhin, in which the Central Bank expressed its readiness to participate in the discussion of this issue.
The ABO letter stated that as a result of the redomiciliation of foreign companies such as X5 and "Rusagro," significant tax consequences arise for private investors. The period of holding receipts before their conversion into shares will not be counted for obtaining long-term holding benefits, leading to increased personal income tax when selling shares. Investors who acquired X5 securities will face the fact that only 57.6% of their costs will be considered when calculating the tax, which increases the tax base and the tax amount.
Bank of Russia Raised Asset Criterion for Qualified Investor Status
The minimum amount of assets a person must own to be recognized as a qualified investor is increasing from 6 to 12 million rubles. And from January 1, 2026, to 24 million rubles. The relevant directive of the regulator was registered by the Ministry of Justice of Russia.
According to the Bank of Russia, this measure will reduce the number of cases where a person receives qualified investor status but does not understand the specifics of complex financial instruments and the risks associated with them.
The comprehensive reform being consistently carried out by the regulator is aimed at providing people with more opportunities to obtain such status based on knowledge and experience. Recall that qualified investor status can be obtained based on (a) the volume of assets in a brokerage account, (b) work experience in an organization related to securities, (c) the presence of economic or financial education, or (d) the turnover amount on a brokerage account for a year.
Wealth Tax in France Criticized by Government
France's Budget Minister Amélie de Montchalin criticizedthe bill passed by the National Assembly, the lower house of parliament, to introduce a 2-percent wealth tax, stating that this measure would harm investments and job creation. "This measure will have one serious consequence for our country, namely that investments, entrepreneurship, and corporate growth, which we are trying to promote because it is good for the French, for jobs, and the welfare of everyone, will decrease, and this is unacceptable," she said.
The bill was unlikely to be passed anyway. It must receive support in the French Senate, the upper house of parliament, where right-centrist lawmakers dominate. The so-called "Zucman tax," named after French economist Gabriel Zucman, was supported by green and left-wing lawmakers but not by the government. Zucman called the vote a "historic victory."
According to the bill, the measure would apply to the wealthiest citizens and affect only 0.01% of the country's population. This is about 4,000 people — each with a fortune exceeding 100 million euros (105 million dollars). As stated in the project's rationale, the wealthiest people generally pay proportionally less tax than most French people due to their use of tax optimization methods.
The new tax could bring the state treasury between 15 and 25 billion euros a year and would only apply to those who do not currently pay enough taxes. The tax would apply to trusts and holding companies, which are often used to evade taxes.
Recall that a "wealth tax" is already in effect in France, with a rate from 0.5% to 1.5%. However, it currently applies only to real estate if its total value exceeds 1.3 million euros. The 1.5% rate applies when the total value of real estate exceeds 10 million euros. The new tax would exist alongside the old one.
US Suspends Beneficial Ownership Information Requirements
The US Department of the Treasury announced the suspension of enforcement actions regarding the requirement to provide beneficial ownership information (BOI) for US citizens. This decision, made in response to numerous complaints from small businesses, essentially exempts American companies from the obligation to disclose information about their ultimate owners at this time.
These news should be considered by investors planning to make direct investments in the US, as well as the increasingly popular investments in American pre-IPOs.
In 2021, the US Congress passed the Corporate Transparency Act (CTA), aimed at combating money laundering and terrorist financing. The law required many companies to report information about their beneficial owners — individuals who ultimately own or control the company — to the Financial Crimes Enforcement Network (FinCEN), a division of the US Department of the Treasury. This requirement came into effect on January 1, 2024, and applied to both newly created and existing companies.
The main goal of the law was to prevent the use of shell companies for tax evasion, money laundering, and other illegal activities. According to FinCEN, providing information about beneficial owners was intended to make it more difficult for unscrupulous entities to hide or benefit from their illicitly obtained income through opaque ownership structures.
The law faced criticism from small business representatives and some politicians. They argued that the disclosure requirements were overly burdensome, especially for small businesses with limited resources. Additionally, there were concerns about the privacy and security of the information provided.
President Donald Trump called the obligation to disclose beneficial owners of legal entities "an outrageous practice." He noted, that this rule became an absolute disaster for small businesses across the country and expressed satisfaction with its suspension.
Mark Gindileev, tax lawyer
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