Home / Doing business in Russia 2020 / Currency control / Foreign currency transactions
  1. Introduction
    1. Political and administrative structure
    2. Legal environment
  2. Common forms of business structures for foreign investors
    1. Main types of structure
    2. Registration, liquidation and reorganisation of business structures
    3. Shareholders’ and participants’ agreements
    4. Strategic industries
  3. Anti-monopoly issues
    1. General legal and regulatory framework
    2. Scope of application of the Competition Law
    3. Anti-competitive practices and restriction of competition
    4. Liability
  4. Tax system
    1. General approach
    2. Corporate taxation
    3. Incentives
    4. Special tax regimes
    5. Taxation of individuals
    6. Double taxation treaties
  5. Customs regulations
    1. General approach
    2. Trade between EEU and non-EEU countries
    3. Mutual trade between the EEU members
  6. Currency control
    1. Foreign currency transactions
    2. Consequences of breach/Penalties
  7. Lending in Russia
    1. Lending documents and governing law
    2. Jurisdiction
    3. International finance transactions and repatriation requirements
    4. Security interests
    5. Recognition of security trusts
    6. Syndicated loans
    7. Enforcement
    8. Suretyships and guarantees
    9. Bankruptcy considerations
    10. Other lending related issues
  8. Employment and migration
    1. Formalising the employment relationship
    2. Managing employment relationships
    3. Terminating an employment agreement
    4. Specifics of employing foreign nationals
  9. Personal data protection
    1. General approach
    2. Scope of the Data Protection Law
    3. Liability
    4. Right to be forgotten
  10. Intellectual property
    1. General approach
    2. Contractual aspects of intellectual property rights
    3. Rights over the results of intellectual activity
    4. Company names, trade names, trademarks and appellations of origin
    5. Intellectual property rights infringements
    6. IP Court
  11. Advertising issues
    1. General approach
    2. Scope of application of the Advertising Law
    3. Violations of the Advertising Law
    4. Liability
  12. Anti-corruption and compliance
    1. General approach
    2. Legal framework
    3. Compliance requirements for companies
    4. Concept of corruption in Russian law
    5. Possible targets of bribery
    6. Liability and penalties for corruption
    7. Example of sector-specific anti-corruption measures
  13. Real estate and construction
    1. Rights to real estate
    2. Real estate transactions
    3. Resolution of real estate disputes
    4. Planning and construction issues
  14. Corporate bankruptcy
    1. Insolvency criteria
    2. Stages of bankruptcy proceedings
  15. Import substitution and production localisation in Russia
    1. Measures affecting goods importation and current import substitution legislation
    2. Localisation incentives
    3. Sector-specific impact of import restrictions and localisation requirements
  16. Banking sector
    1. Legislative and regulatory framework
    2. Licensing and operations
    3. Deposit insurance
    4. The anti-money laundering law
    5. Bank secrecy
    6. FATCA and CRS
  17. Environment, energy efficiency and renewables
    1. Environment
    2. Energy efficiency
    3. Renewables
  18. Infrastructure and public private partnerships
    1. General approach
    2. Key PPP legislation
    3. Russian PPP environment
    4. Financing
    5. Legal issues
    6. Prospects for infrastructure projects
  19. Oil & gas
    1. Legislative framework
    2. Ownership and licensing
    3. Restrictions on foreign investors
    4. Licences
    5. PSAs

Currency control

General approach

Most currency restrictions in Russia were removed in January 2007, following amendments to Federal Law No. 173-FZ “On Currency Regulation and Currency Control” dated 10 December 2003 (the “Currency Control Law”), which regulates currency transactions. Consequently, most currency transactions can be conducted without limitation.

However, the Currency Control Law, and related regulations, still contain a number of restrictions which should be taken into consideration (i) when dealing with transactions between residents and non-residents (in particular when importing and exporting goods and capital); and (ii) when importing and exporting foreign currency in cash.

Key contacts

Contact
Baranov Konstantin
Konstantin Baranov
Partner
Head of Banking & Finance
Tchoubykina Elena
Elena Tchoubykina
Counsel
Banking & Finance

Foreign currency transactions

Foreign currency transactions between residents

The following persons are considered to be “residents” for the purposes of the Currency Control Law:

  • citizens of the Russian Federation;
  • foreign nationals and stateless individuals who live permanently in Russia on the basis of a residence permit;
  • legal entities duly registered under Russian law, including professional participants of international economic activity included in the relevant list approved by the Government of the Russian Federation and the Central Bank of Russia (with the exception of so-called “international companies1);
  • branches and representative offices of Russian legal entities located outside the Russian Federation;
  • diplomatic representatives, consular offices and other official representatives, permanent representative offices at the international organisations and some other official representative offices of the Russian Federation and its bodies; and
  • the Government of the Russian Federation, regions and municipal units of the Russian Federation.

Generally, foreign currency operations between residents are prohibited, although there are some exceptions. For example, residents may borrow from, and then repay to, Russian authorised banks2 in a foreign currency. Contracts in Russia may be concluded with reference to foreign currencies. However, the actual payment must be made in roubles. This can lead to exchange rate differentials which may arise between the date the transaction is entered into and the payment date.

As a result of amendments made to the Currency Control Law in 2013, certain transfers of foreign currency and roubles are deemed to be currency operations, with the effect that certain limitations exist for residents when transferring funds from their accounts, whether held in Russia or abroad, to either accounts they hold abroad or to those held by third parties.

In addition, certain residents of the Russian Federation have been prohibited from opening accounts abroad, holding currency or valuables in foreign banks or entering into transactions with foreign financial instruments. This prohibition applies to individuals holding the highest state (federal and regional) or municipal official positions (such as the President of the Russian Federation, members of the Government, ministers, members of legislative bodies and of the highest courts), their spouses and minor children (also known as “politically exposed persons” or “PEPs”).

Foreign currency transactions between non-residents

The following persons are considered to be “non-residents” for the purposes of the Currency Control Law:

  • foreign nationals who do not qualify as residents;
  • legal entities and all other organisations that are registered under the legislation of a foreign jurisdiction and located outside the Russian Federation;
  • Russia-located representative offices and branches of legal entities or other organisations registered under the legislation of a foreign jurisdiction and located outside the Russian Federation;
  • diplomatic representatives, consular offices and other official representatives of foreign countries, as well as international and intergovernmental organisations that are located in the Russian Federation; and
  • legal entities having the status of an “international company”.

Payments in any currency are permitted without restriction between non-residents, provided that any such payments in Russian roubles within Russia are made to and from those non-residents’ accounts opened with Russian authorised banks. Payments in cash may not exceed RUB 100,000 (EUR 1,4303) or the equivalent in a foreign currency. Settlement under rouble transactions for sale of securities between non-residents is also permitted, although it can be subject to Russian securities market, anti-monopoly and other regulations.

Foreign currency transactions between residents and non-residents

Foreign currency transactions between residents and non-residents are also generally permitted subject to a few specific restrictions. 

Registration of foreign trade contracts

Pursuant to Instruction No. 181-I of the Central Bank of Russia (the “Instruction”), since 1 March 2018, the requirement to open a transaction passport documenting any foreign currency transaction between a resident and a non-resident has been abolished. Instead, Russian authorised banks are now required to generate data on foreign trade transactions of residents (in any foreign currency or in roubles) and of non-residents (in roubles), by registering contracts in respect of such transactions. The list of such transactions is formalised in the Instruction and includes, among others, currency conversion operations of both residents and non-residents and cross-border transactions between residents and non-residents. Transaction passports in place as of 1 March 2018 are considered closed and are stored in a currency control file with the relevant bank.

Any contract must be registered if its value is equal to or exceeds the equivalent of:

  • for import contracts or facility agreements – RUB 3m (EUR 42,900); and
  • for export contracts – RUB 6m (EUR 85,800).

In order to register an export contract, the resident-exporter must submit to the Russian authorised bank:

  • information on the export contract sufficient for its registration (including type, number, currency, date of the contract, value and date of performance of the obligations, as well as the details of the non-resident counterparty); or
  • the export contract itself (or an extract from it containing sufficient information for its registration).

For the purposes of registration, a resident-importer or a resident who is a party to a facility agreement must provide the relevant import contract or facility agreement (or an extract from the relevant contract) to the Russian authorised bank.

The bank must register the foreign trade contract or facility agreement not later than the next business day after the submission of the specified documents and must assign a unique number to the relevant contract.

Repatriation of proceeds

As a general rule, residents must repatriate roubles and foreign currency received from international trade and commercial activities to their bank accounts held with Russian authorised banks. Among the exceptions are payments due to a non-resident lender. These payments may be directly transferred into the lender’s foreign bank account. The bank must also inform the resident of the number assigned to the contract.

However, when giving a loan to a non-resident, a resident lender must ensure that the non-resident borrower repays the amounts due under the loan agreement to the lender’s Russian bank account within the time limit specified in the loan agreement. This rule does not apply if the parties can set off their mutual claims provided that a counterclaim of the non-resident results from a loan agreement where the funds were credited to the resident’s Russian bank account.

In addition, amendments to the Currency Control Law adopted in August 2019 abolished the repatriation requirement in relation to contracts between residents and non-residents, provided that such contracts are denominated in roubles and also envisage payments in roubles. This means that rouble proceeds due to a resident under such contracts can be credited to that resident’s account opened in a foreign bank. The abolition of the repatriation requirement in respect of such contracts is effective from 1 January 20204, with the exception of supply contracts in relation to certain categories of goods5, to which the abolition of the repatriation requirement will be applied gradually6. However, this abolition does not affect (i) the repatriation in relation to proceeds under loan agreements between residents and non-residents; and (ii) the repatriation required when the pre-paid funds must be returned to a resident because the relevant goods, services or IP rights were not delivered or provided by a non-resident.

In May 2014, the Russian Government decided to implement a requirement that a portion of export proceeds must be received by Russian companies in roubles. The Currency Control Law was amended to provide that the Government may determine (i) the portion of the export proceeds that must be received by the residents in roubles; (ii) a list of goods and services to which such requirement applies; and (iii) a list of countries, with residents of which a Russian resident will be obliged to enter into an export operation with such mandatory rouble part payment. For the time being, there is no information indicating whether the Russian Government is intending to prepare these lists or when it expects to do so.

Import and export of foreign currency in cash

Residents and non-residents can import and export foreign currency in cash subject to the following rules, established by the Customs Code of the Eurasian Economic Union, which came into force on 1 January 2018:

Up to USD 10,000 inclusive

No restriction

Over USD 10,000

Subject to a written customs declaration

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[1] As a part of an ongoing campaign on the “de-offshorisation” of the Russian economy, Federal Law No. 290-FZ “On International Companies” dated 3 August 2018 permitted foreign legal entities to change their place of incorporation to Russia and obtain the status of an “international company” (by becoming a participant in special administrative areas located on the Russky and Oktyabrsky Islands). These international companies enjoy some tax benefits (please see the Tax system chapter) and are considered to be non-residents for currency control purposes. Back ↑

[2] Credit institutions established under Russian law and authorised on the basis of the licences issued by the Central Bank of Russia to conduct operations in a foreign currency. Back ↑

[3] At the notional exchange rate of RUB 70 = EUR 1, as used for convenience throughout this guide. Back ↑

[4] Except for supply of wood, charcoal and related goods. Back ↑

[5] The list includes, among others, oil products, mineral fuels, copper and nickel. The list should be checked on a case-by-case basis. Back ↑

[6] From 1 January 2020, only 10% of proceeds will be exempt from the repatriation requirements. This percentage will gradually be increased on an annual basis and reach 100% on 1 January 2024. Back ↑


Key contacts

Baranov Konstantin
Konstantin Baranov
Partner
Head of Banking & Finance
Tchoubykina Elena
Elena Tchoubykina
Counsel
Banking & Finance