The background of the issue is as follows. In the summer, State Duma deputies were considering amendments to the law "On Currency Regulation and Currency Control." And among other things, without serious discussion, a clarification disappeared from individual paragraphs of this law that the amendments apply to legal entities. That is how the requirement was extended to individuals, following the same scheme as for companies, to notify the tax authorities quarterly about the movement of funds in their foreign accounts.
According to the rules published on the website of the Tax Service, "residents quarterly, within 30 days after the end of the quarter," must submit to the tax authority at their place of registration "reports on the movement of funds in accounts (deposits) in banks outside the Russian Federation, as of the last calendar date of the reporting quarter."
This, of course, does not mean providing documents in the language or according to the reporting standards of the country whose laws govern the bank where the Russian has an account. The rules clarify that "supporting bank documents are submitted in the form of a copy, notarized in accordance with the requirements of the legislation of the Russian Federation." Their translation is also required, "notarized in accordance with the requirements of the legislation of the Russian Federation." In other words, documents translated by foreign translators and certified by foreign notaries may not be accepted.
First, consider what this means for those subject to the law. They will have to come to Russia four times a year or, due to the notarization requirement, send documents to a notary or some trusted person, and then forward them to the tax authority. And all operations must be completed within one month. Moreover, all this will be possible only if the account holder can explain to foreign bank employees how to prepare documents according to Russian standards, and they, in turn, agree to do so.
The main question is who is subject to the reporting requirement. Many mistakenly believe that it applies only to tax residents of the Russian Federation—that is, those who lived in Russia for 183 days or more in the past year. However, Russia has two interpretations of the concept of residency. The second is contained precisely in the law "On Currency Regulation." According to it, any citizen of the Russian Federation who comes to the homeland is considered a "resident" by its authorities.
The tax authorities themselves have traditionally adhered to their own interpretation. They have had numerous disputes in the past, for example, with customs officials. But will the tax authorities now work "their own way"? This will become clear in three months—in April 2015, when the first reports are due. But already rumors are circulating that in the coming year, the concept of a resident as a person who has lived in Russia for 183 days or more will disappear from Russian legislation. So there will be nothing to argue about.
There is, of course, hope that legislators will come to their senses. Discussion on this topic continues in the State Duma, and some deputies suggest that a separate, more lenient notification procedure may be introduced for individuals. But this will not be discussed until next year. So the law will come into force in its current form, and hoping for concessions by the first reporting period is clearly not worth it.
But one can be sure that in 2015, legislators will approve penalties for non-compliance with this provision of the law. Penalties for failure to submit reports are already being discussed in the State Duma. As with the so-called "second citizenship" law, this involves strict measures, up to criminal ones. Apparently, it will no longer be possible to get off with a fine of 1,500 rubles, which currently threatens those who did not timely notify the tax authorities about opening (or closing) an account in a foreign bank. Considering that the possibility of extending the statute of limitations for tax crimes from three to ten years is being discussed, breaking the law could be very costly.
Nevertheless, there is no doubt that many will still violate it. Some (and they will be the majority) simply out of ignorance, since they do not closely follow news from Russia while living abroad. Others will do so deliberately, as they consider the process of notifying the tax service about the movement of their foreign accounts too costly and unpleasant. Especially since Russian legislation already requires that any payments from abroad come to a citizen's account in a domestic bank, and only then be sent abroad—to their foreign account. This significantly increases the cost of transferring even large sums and makes sending small amounts simply pointless, because bank fees and exchange rate differences simply "eat up" the funds.
What loopholes, according to experts, can Russians in this situation use? The first, simplest one is not to notify the tax authorities about the existence of a foreign account at all. Theoretically, it is difficult for Russian tax authorities to find out whether a citizen has an account in a foreign bank if he himself has not notified them. Many owners of foreign accounts notified the domestic tax authorities not out of respect for the law, but because without it, Russian banks do not transfer citizens' money from the Russian Federation to their personal accounts abroad. However, notification is not required if the money is transferred not to oneself but to someone else, including a spouse or child.
But such operations are not so difficult to track, because almost all of them fall under the same law "On Currency Control," and banks notify the state about them. And if the tax service suspects that you have a hidden account abroad, it may send a request to that bank. Theoretically, it is not obliged to respond, but if the request is made not directly but through the "competent authorities" of the country where the account is opened, then the bank will most likely provide the necessary data to the Russian tax authorities. And then punishment will be unavoidable.
It can, as we remember, turn out to be criminal as well, if the State Duma deputies adopt such a decision in 2015. However, not for everyone. Minor children, experts say, can open accounts in many foreign countries. If they are under 14, then the punishment cannot be criminal under Russian law. And then the parents of the violator will probably get off with just a fine.
Finally, many Russians will likely simply prefer to close their personal accounts and try, for example, to open them in the name of companies. If these are sophisticated businessmen, and they have a long chain of offshore companies, then it will hardly be possible for Russian tax authorities to identify them. By the way, a foreign legal entity whose founders include Russians may also be recognized as a resident in the Russian Federation. Such precedents already exist.
Thus, the amendments to the law 'On Currency Regulation' that are coming into force are clearly another step towards 'closing' the country and 'cutting off' from their homeland those Russian citizens who permanently reside abroad. It seems that this step is clearly unreasonable, since it is unequivocally a political decision; it is unlikely to bring practical benefit to the country's budget, but it will seriously harm millions of fellow citizens and turn them against their native country, which they left for a variety of reasons. Some, of course, with the thought of saying goodbye forever, but many simply go to work in another country. However, the Russian authorities apparently believe that everyone born in Russia should live and work at home.
Ivan PREOBRAZHENSKY, Yelena ZEMSKOVA.
IA 'Rosbalt'