Federal Law No.140-FZ “On voluntary declaration of assets and bank accounts/deposits by individuals and on introducing amendments to certain legislative acts of the Russian Federation” (the “Federal Law”), or so-called the “capital amnesty law,” came into force on June 08, 2015.

The Federal Law offers an opportunity to voluntarily disclose information on existing assets, including foreign ones, by filing with the tax authority a special declaration indicating the following:

• Property (real estate, vehicles, securities, shares and interest in charter/share capital of Russian and foreign companies) owned or actually held by the declarant. This list of assets does not include cash.
• Foreign companies controlled by the declarant by way other than direct shareholding.
• Bank accounts/deposits outside the Russian Federation opened by the declarant as of the filing date.
• Bank accounts/deposits, of which the declarant is deemed a beneficiary.

In return for the voluntary disclosure, the government guarantees release from liability, but only with respect to specific components of an offence pertaining to purchase, use or disposal over assets or controlled foreign companies reflected in the declaration, namely:

• Release from criminal liability for not performing obligations on repatriation of monies in foreign currency or in Russian rubles, evasion of customs duties, taxes and/or levies, failure to fulfill obligations of a tax agent, concealment of monies or property to be used for recovery of taxes and/or levies. It should be noted that this list of deeds that has fallen under amnesty does not cover fraud, illegal incorporation of a legal entity or money laundering.
• Release from administrative liability for illegal business activity, failure to follow the cash handling procedure or teller operations procedure, failure to meet requirements related to use of special bank accounts, failure to provide required information to tax authorities, gross violation of rules for accounting and provision of accounting statements, violation of foreign currency laws.
• Release from liability for tax offences.

The Federal Law guarantees that all information indicated in the declarations will be deemed a tax secret and will not be available to any other authorities or organizations.

It should also be noted that the amnesty covers only the deeds committed by the declarant or figurehead owner of property before January 01, 2015, providedthat as of the filing date no proceedings on a criminal, administration or tax offence have been initiated and no field tax audit has been started.

According to the Federal Law, the guarantees cover only the property and the persons indicated in the declaration. Those who decide to disclose should pay attention as to what is disclosed and provided to the tax authority for purposes of not being held liable as regards undeclared assets.

A declaration can be provided within the period from July 01 to December 31, after which the amnesty terminates. The Federal Tax Service has already developed and published on the web site nalog.ru free software for filling out a special declaration for these purposes.

When deciding whether or not to file the declaration and disclose existing foreign assets, a potential declarant should scrutinize provisions of the Federal Law to identify all possible risks, subject, among other things, to the effective amendments to the deoffshorization law, and analyze past operations with property as to any existing formal grounds for auditors to make a conclusion that certain components of an offence do not fall under the amnesty.

Federal law No.140-FZ “On voluntary declaration of assets and bank accounts/deposits by individuals and on introducing amendments to certain legislative acts of the Russian Federation” dated 08.06.2015

Igor Gorokhov    Senior Associate   St. Petersburg   igorokhov@cls.ru   Tel.: +7 (812) 346 79 90

Anastasya Kuzmina   Associate   St. Petersburg    akuzmina@cls.ru   Tel.: +7 (812) 346 79 90

Additional notes

Should any questions arise in connection with the above or if you need any additional materials, please contact Igor Gorokhov or Anastasia Kuzmina, St. Petersburg Office of Capital Legal Services.

This Information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues.