On 26 March 2022 the Law No. 67-FZ was adopted, later clarifications of the Ministry of Finance were published – in the Letter No. 03-12-12/1/37761 of 26 April 2022 the Ministry of Finance informed that fr om 1 January 2022 the threshold for recognizing transactions as controlled was raised to 120 million rubles instead of the previous 60 million rubles valid for transactions in 2021. Similar clarifications were also issued later by the Federal Tax Service (No. ШЮ-4-13/6548@ of 27 May 2022).

The Tax Service also previously published a letter (No. ШЮ-4-13/2724@ of 5 March 2022) on the application of discounted prices that could result in transaction losses if certain legal entities are subject to sanctions. Such circumstances should be taken into account by the tax authorities when considering transactions and price levels.

Another novelty is the non-application of the 40% penalty on unpaid tax (at least RUB 30,000) for transactions in 2022-2023, regardless of the date of the contract (Russian Tax Code, Article 129.3). However, transfer documentation defining the price corridor and level must be available. Please note that the cancellation of penalties does not remove the risk of additional tax charges from the tax authorities.

In addition to updating the lim it and removing the penalty mentioned above, a number of other changes have been spelled out in Law 67-FZ of 26.03.2022.

With the new amendments, the so-called “safe margin” for interest rates in intragroup loan agreements will change between 2022 and 2023. If the interest is within this range (not above the maximum and not below the minimum), the company may recognise it as an expense in full for tax purposes. If the interest rate is outside this range, there is a risk of the expense not being recognised.

Based on the example of the euro (Euro short-term rate), the following interest rate ceilings for liabilities denominated in euro will be established as of 1 January 2022 (for USD or any other currency other than RUB, the values will be equivalent, applying the rates corresponding to the currency, such as SOFR for USD, SHIBOR for CNY, SONIA for GPB):

Minimum: STR rate in EUR +0% (previously stated as + 4% in the Tax Code);

Maximum: STR rate in euros +7% (+5% for SARON rates and contracts in Swiss francs, TONAR and Japanese yen).

For ruble-denominated liabilities, a range of 0 to 180% of the Bank of Russia key rate (previously 75 to 125%) has been adopted.

The interest rate ceilings for debt instruments have also been modified: for loans, overdrafts and intercompany receivables denominated in a foreign currency from 1 January 2022 to 31 December 2023, the maximum rate will be that of 01.02.2022 (86.5032 for euro); interest on liabilities during these two years will be determined at the rate on the last day of the reporting period and must not be higher than the rate on 01.02.2022.

Changes are also made to the calculation of the thin capitalisation rule – the value of liabilities (existing before 01.03.2022) in foreign currency for the purposes of controlled debt is determined at the regulatory rate on the last reporting day, and the rate cannot be higher than the rate set by the Central Bank as of 01.01.2022.

We would also like to point out that as a result of the suspension of tax information exchange between Russia and certain countries, Russian tax residents who are members of an international group of companies will have to send a “Country Report” to the tax authorities upon request. It is currently known that the UK (from 17.03.2022), Germany (from 01.04.2022), USA (from 05.04.2022) have temporarily stopped the exchange of tax information with the Russian Federation.

We would like to remind you that starting fr om December 29, 2021 (with the Federal Law № 274-FZ fr om 01.07.2021 coming into force) the new migration legal requirements, which require foreign citizens to undergo dactylography and photographing as well as a mandatory medical examination. This requirement concerns:
• those arriving in Russia for the purpose of carrying out labor activities and
• foreign citizens arriving to the Russian Federation for other purposes for a period exceeding 90 calendar days.
For your convenience, we have compiled for you the addresses of clinics/stations in Moscow wh ere you can apply to get the necessary procedures.

Dactyloscopy and photography

Duration of procedures:
Within 30 calendar days from the date of entry into the Russian Federation or when applying for a patent or a work permit.

Where you can get it done:
1. At the Multifunctional Migration Center in Sakharovo on the day of the receipt of the work permit.
Address: Moscow, Troitskiy AO, Voronovskoe settlement, Varshavskoe highway, 64th km, bld. 1/47.
Opening hours: from Monday to Sunday from 08.00 to 20.00.
!! Here you can also undergo necessary medical examinations.
2. In the State Budgetary Institution “Migration Center” only for foreign citizens who came to Russia to perform labor activities.
Opening hours: from Monday to Friday from 09.00 to 18.00
!! Here you can also submit documents about the medical examination.

What documents are required:
To undergo dactyloscopy and photography, a foreign citizen must present the following documents:
• passport and a notarized translation of the passport;
• certificate of absence of disease caused by human immunodeficiency virus (HIV infection);
• documents confirming medical examination.

Period of validity:
Dactyloscopic registration and photographing are taken once; the documents are valid indefinitely. In case of loss of documents confirming the passing of fingerprinting and photographing, duplicates of these documents can be obtained.

Medical examinations

Time requirements for medical examinations:
• for foreign citizens arriving in Russia for labor purposes – within 30 calendar days from the date of entry into the Russian Federation. At the same time the foreign citizen is obliged to present these documents to migration authorities within thirty days from the date of entry;
• for other foreign citizens – within 90 calendar days from the date of entry into the Russian Federation.

What documents are required:
• passport and notarized translation of the passport;
• migration card;
• registration at the place of residence.

Where you can get it done (in Moscow):

1. CENTRAL DEPARTMENT FOR SPECIALIZED MEDICAL CARE
Address: Leninsky Prospekt, 17, room 56.
Phone: 8 499 558-58-28, 8 495-952-34-22.
Opening hours: from 09.30 to 13.00 on working days according to the order of the person in the line.
Range of necessary medical examinations: except fluorography.

2. Kutuzovsky clinic
Address: 41 Kutuzovsky Prospekt.
Phone: 8 499-249-25-55, 8 499 558 58 28.
Opening hours: working days from 09.00 to 15.00.
Range of necessary medical examinations: except fluorography.

3. Clinic named after V.G. Korolenko
Address: 3, Kosinskaya str.
Phone: 8 495-770 -09-83.
Opening hours: working days from 09.00 to 15.00.
Range of necessary medical examinations: There is no information about the possibility of fluorography.

4. Proletarsky clinic
Address: 22 Melnikova St.
Phone: 8 495-674-36-24, 8-499-558-58-28.
Opening hours: working days from 09.00 to 15.00.
Range of necessary medical examinations: except for phthisiatrician.

5. Ostankinsky clinic
Address: 103, Prospekt Mira St.
Phone: 8-495-682-30-91, 8-495-682-30-80.
Opening hours: working days from 09.00 to 15.00.
Range of necessary medical examinations: There is no information about the possibility of fluorography.

6. Sakharovo Multifunctional Migration Center – Branch “Multifunctional Medical Center of Labor Migration”
Address: Moscow, Troitskiy AO, Voronovskoe settlement, Varshavskoe highway, 64th km, bld. 1/47.
Opening hours: from Monday to Sunday from 08.00 to 20.00.
Full range of necessary medical examinations, including fluorography: yes.

7. State Budgetary Institution “Moscow City Scientific and Practical Center for Fighting Tuberculosis of the Department of Health of the City of Moscow”.
Address: 18, Dokukin St.
Phone: 8-499-187-78-72, 8-499-187-90-77.
Opening hours: 8.00-20.00, Saturday from 9.00-16.00.

Full range of necessary medical examinations, including fluorography: Yes.
Please note that the approximate time to take the tests takes 3 hours. Term of preparation of the medical report after examination and tests takes up to 7 working days.

Wh ere to submit the results of the medical examination
The results of the medical examination must be submitted in person to the migration authorities, considering the deadlines established by law.

You can submit the results of the medical examination:

1. At the Multifunctional Migration Center in Sakharovo on the day of the receipt of the work permit.
Address: Moscow, Troitskiy AO, Voronovskoe settlement, Varshavskoe highway, 64th km, bld. 1/47.
Opening hours: from Monday to Sunday from 08.00 to 20.00.

2. In the State Budgetary Institution “Migration Center” only for foreign citizens who came to Russia to perform labor activities.
Opening hours: from Monday to Friday from 09.00 to 18.00
!! Here you can also undergo dactyloscopy and photography.

First-hand comment from our foreign colleague.

I came to Russia at the beginning of January and, therefore, had to undergo a medical examination and fingerprinting.
I had a medical check-up in the medical center at 18 Dokukin St., because you can take all the analyses there and there is no need to go to other institutions. The line (without an appointment, the principle of a live line) was already quite long at 10 o’clock in the morning, so it is advisable to come early. The staff is friendly and helpful, but if you do not speak Russian, it is worth bringing an interpreter.
I ended up spending 4 hours in the clinic, including 3 hours in line, the tests themselves were done within an hour.
I received the results in 7 working days in the same building.
For fingerprinting I decided to go to the migration center in Sakharovo. I arrived by public transportation at 8 am and was directed to Gate 1 (for work permit holders). It took me 1.5 hours to get a voucher, then another 2 hours before I could get fingerprinted and photographed. It takes 4-6 business days to get confirmation that all the documents have been submitted.
Including the drive there and back, the whole procedure took me 10 hours. The staff is friendly and diligent, but the process on site is very unclear.

Summary of the procedure

Let’s summarize the order and steps of the above procedures:
1. Have your tests done at one (or several, in case one of the specialists/examination options is not available at the chosen center) of the medical centers listed above.
2. Receive test results from the appropriate medical center after 7 business days.
3. Get fingerprinted and photographed.
4. After all the procedures you will get a fingerprint card with. The information will be sent for registration to the information center of the Main Directorate of the Ministry of Internal Affairs in Moscow.

Please note that the information in the overview is relevant as of the date of this posting. The procedure is being clarified, and information may change. We recommend you to clarify the information before you visit a clinic or an authority.

We remind you that starting from January 1, 2021 important changes concerning the transport tax came into force.

For your convenience, we have made an overview of the main changes and recommendations on their application.

From January 1, 2021 the obligation of organizations to provide tax returns on transport tax for 2020 and subsequent tax periods (clause 17 of Article 1 of the Federal Law № 63-FZ of 15.04.2019, Federal Tax Service Order of 04.09.2019 Nr. MMV-7-21/440) was canceled.

Also, from this date uniform deadlines and advance payments for payment of transport tax were introduced for all organizations:

• the tax is to be paid no later than March 1 of the year following the expired calendar year;
• advance payments, if they are introduced by the law of the Federal subject of the Russia, are to be paid not later than the last day of the month following the expired quarter.

Starting from 2021 organizations must calculate and pay transport tax on their own (clause 1, Article 362 of the Tax Code of the Russian Federation).

The total amount of tax is calculated for each transport vehicle as the multiplication of tax base and tax rate with the multiplying coefficient (clause 2, Article 362 of the Tax Code of the Russian Federation).

The rates are set by the Federal subjects of Russia within the limits specified in the Article 361 of the Tax Code of the Russian Federation.

Organizations that have the right to transport tax benefits must send to the tax authority an application for a tax benefit (Article 361.1 of the Tax Code of the Russian Federation). At the same time organizations are also entitled to submit documents confirming the right to this benefit with the application.

The form of an application for a tax benefit is prescribed by Order No. ММВ-7-21/377@ of the Federal Tax Service dd. July 25, 2019.

From 2022, taxpayers will submit to the tax authority an application for a tax benefit in the form as amended by Order of the Federal Tax Service of Russia No. ED-7-21/574@ of 18.06.2021.

The Tax Code does not set a deadline for filing an application.

An application for tax benefit shall be considered by the tax authority within 30 days from the date of its receipt. This period can be extended in case of necessity for the tax authority to request information confirming the taxpayer’s right to tax benefit from other authorities and persons who have such information. In this case, the taxpayer shall be notified of the extension of the deadline for review of the application.

After considering of the application, the tax authority shall send to the taxpayer:

• notification on granting tax benefit;
• notification of refusal with the explanation of the grounds for refusal.

In order to ensure the full payment of tax, from 2021 the tax authorities will send taxpayers messages about the amount of tax calculated by the tax authorities (paragraph 4 of Article 363, paragraph 5 of Article 363 of the Tax Code).

The tax will be calculated basing on the information available at the tax authority:

• from the authorities that register vehicles – the Traffic Police;
• according to the information about the declared tax benefits received from the owners of vehicles.

Deadlines for mailing tax notices:

• Six months from the date the tax payment deadline expired (e.g., the notification for 2020 must be received by the taxpayer no later than September 1, 2021);
• Two months from the date of receipt of information on the recalculation of the tax;
• One month from the date of receipt of information from the Unified State Register of Legal Entities (EGRUL) that the company is being liquidated.

Tax notification is sent to the taxpayer via telecommunications, personal account on the website of the tax office, or by regular post (if it is impossible to notify by other means).

However! Please note that the above-mentioned notification is informative in nature and is sent to the taxpayer after the expiration of the tax period and the deadline for tax payment, and, consequently, does not cancel the obligation of the taxpayer to calculate and pay the tax on his own in the accordance with the law requirements.

Shall the tax amount independently calculated and paid by the taxpayer not match the data specified in the tax notification, within ten working days from the date of receipt of the message about the calculated tax amount the organization (tax payer) can send to the tax inspection its explanations and documents confirming: the correctness of the calculation, completeness and timeliness of the tax payment, the validity of the use of lower tax rates, tax benefits or the existence of the grounds for tax exemption (paragraph 6 of Article 363 of the Tax Code).

The term for considering the application is one calendar month. Shall the term take longer, the tax authorities are obliged to notify the taxpayer.

According to the results of consideration the taxpayer will receive:

• A message on recalculation of the amount to be paid, considering the explanations, evidence and arguments provided;
• A demand for additional payment if the taxpayer’s explanations are not accepted by the Federal Tax Service.

Also, starting from 2021 taxpayers are obliged to send a report on the owned transport vehicles which are considered to be objects of taxation. This obligation applies in case of non-receipt of a message about the amount of transportation tax calculated by the tax authorities concerning objects of taxation for the whole period of their ownership (Letter of the Federal Tax Service of Russia of 29.10.2020 N BS-4-21/17770@).

A report must be sent to the tax authority by the 31 December of the year following the expired tax period with the attachment of documents confirming the state registration of vehicles.

Wrongful non-submission (untimely submission) of the report leads to the fine at the rate of 20% of the unpaid tax amount of the vehicle, the report about was not submitted (untimely submitted) (clause 3 of article 129.1 of the Tax Code of the Russian Federation).

The standards for filling in the report on the owned transport vehicles have been determined by the Order of the Federal Tax Service No. ED-7-21/124@ dated 25.02.20.

Sending the above-mentioned report is not required if organization sends an application for a tax exemption in relation to the relevant object of taxation.

If you have any questions, we will be happy to offer you additional information on this topic.

Earlier, we provided you with an overview of the current situation with the liquidation of LLCs in Russia.

In addition to the previous review, we would like to further draw your attention to this year’s innovation: a simplified liquidation procedure.

A simplified liquidation procedure is available for SMEs (for the latest information on the status of SMEs, see here and here) and allows you to reduce the time and cost of the liquidation procedure, as well as reduce possible risks of improper liquidation (for example, restrictions on participation and management in new companies within three years).

However, not all SMEs are eligible for simplified liquidation by default. To do this, the company must comply with a list of certain additional criteria.

What conditions must be met to be eligible for simplified liquidation?

1. All founders (members) of the company made a resolution to terminate activities unanimously.
2. The company is included in the unified register of small and medium enterprises (SMEs).
3. The company is not a VAT payer (it is on a simplified tax system) or is exempt fr om VAT.
4. The company does not have debts to creditors, including debts to employees and the state budget.
5. There are no marks in the Unified State Register of Legal Entities about the inaccuracy of data and about the initiation of bankruptcy proceedings.
6. The company has no real estate and vehicles in the property.
7. The organization is not in the process of liquidation, reorganization or in the process of forced exclusion from the Unified State Register of Legal Entities by decision of the Federal Tax Service.

How to implement simplified liquidation?
To start a simplified liquidation, you must submit an application to the tax service on form P19001. At the moment, the paper and electronic formats of this form have not yet been approved, at the current stage, you can familiarize yourself with the draft form.

In the application, the founders (members) of the company confirm that:

• All financial obligations to counterparties have been fulfilled.
• All payments due to dismissed employees have been made.
• No later than one business day before exclusion from the Unified State Register of Legal Entities, all taxes have been paid and final tax reporting has been provided.

The application can be submitted electronically (using an enhanced qualified electronic signature of each participant), directly to the tax service on paper (notarization of signatures will be required) or through a notary public.

What is the time lim it for simplified liquidation?
The tax service will check the application and within 5 business days will make a decision on the upcoming exclusion of the company from the Unified State Register of Legal Entities or refusal.

In case of a positive decision by the tax service, information about the upcoming exclusion of the company from the register will be published in the Unified State Register of Legal Entities and in the State Registration Bulletin.

Within 3 months from the date of publication in the bulletin, the creditors of the company will be able to send their objections, if any.

If there are no objections from creditors within 3 months, the liquidated company will be excluded from the register.

It is important to know:
The initial conditions for simplified liquidation must be met at the time of exclusion. If during this period the company accumulates debts or assets, or fails to submit reports, simplified liquidation will not take place.

From December 1, 2021, in accordance with amendments to the Federal Law “On Communications” No. 126-FZ dated July 7, 2003, corporate mobile communications will be provided to organizations and individual entrepreneurs only if there is data about the corporate communications user in the Unified Identification and Authentication System (ESIA).

If this requirement is not met, organizations will be disconnected from corporate communications services from December 1.

What is ESIA?

ESIA is a Russian information system used for authorization on the state portal “Gosuslugi”.

How is data entered into ESIA?

Data is entered into ESIA in three stages. The procedure is as follows:

The organization enters the following information about employees using corporate mobile communications in its personal account on the website of the operator providing corporate communications:

personal data of an individual (passport data);
subscriber number;
name of the organization / full name of the individual entrepreneur.
Employees who have access to the personal account of the corporate communications operator can also enter information about themselves.

The employee confirms the transfer of information through the personal account on the State Services portal, after which the information is sent to the mobile operator.
The mobile operator enters the data into the Unified Identification and Authentication System.
When should the information be provided?

Data on users of corporate mobile communications under contracts concluded before 01.06.2021 must be entered into the system no later than 30.11.2021. When starting to use corporate mobile communications from June 1, 2021, the information must be transferred to the operator before the start of services.

Corporate users using M2M (Machine to machine) SIM cards for ATMs, POS terminals, video surveillance systems, the deadline for submitting information, according to Government Resolution No. 844 of 05/31/2021, must provide information no later than September 1, 2021.

In case your activity involves processing of personal data by using a website, we recommend that you check compliance with all legal requirements for the protection of personal data.

Starting March 27, 2021 the liability for violation of the processing of personal data became more strict: provisions of the Federal Law dated February 24, 2021 Nr. 19- FZ “On Amending the Russian Federation Code of Administrative Offences” will come into force.

This law increases the following fines:

• Legal entities may face a fine from sixty thousand to one hundred thousand rubles for unlawful and/or non-purpose data processing.
• In the absence of legally required consent to the processing of personal data, legal entities face a fine of thirty thousand to one hundred and fifty thousand rubles.
• Failure to provide users/subjects of personal data with access to the personal data processing policy or information on the personal data protection requirements being met may subject legal entities to a fine of thirty to sixty thousand rubles.

In addition to the fines increase, the warning as a form of administrative responsibility for violation of legislation on personal data is eliminated. According to clause 2 of the mentioned law, the limitation period for that kind of violation is increased to 1 year. Please note that Federal Supervision Service for Communications, Information Technologies and Media (Roskomnadzor) may inspect the compliance of the data collection and processing with Russian law. The first check may take place after three years from the date of registration of a legal entity by the tax authority. The second check will also be possible after the expiration of the three-year period from the date of the last scheduled check of the operator.

We recommend that you check your company for inclusion in the inspection plan on the official website of Roskomnadzor and prepare the necessary documents in case of an inspection. Unscheduled inspection of the company can be initiated if violations on the website are detected or if previously detected violations have not been eliminated. We will be happy to answer your questions!

Contacts:
Maria Matrossowa, Project leader swilar OOO
M: maria.matrossowa@swilar.ru, T: + 7 499 978 37 87 (ext. 308)
Tatiana Ushakova, Project manager swilar OOO
M: tatiana.ushakova@swilar.ru, T: +7 499 978 37 87 (ext. 309)

The latest news regarding the revision of double taxation avoidance agreements (DTAAs)

The DTAA protocol with Luxembourg was ratified in February, thus the protocol entered into force on 5 March 2021 and its provisions will apply from 1 January 2022 (the changes were previously expected to be adopted from 1 January 2021).

The protocol increases the withholding tax rate on dividend and interest income to 15%, with some exceptions for institutional investments.

In 2020, protocols to make similar changes to the DTAA were also signed with Cyprus and Malta, with effect from 1 January 2021.

On 26 May 2021, the law No. 1147902-7 on the denunciation of the double taxation avoidance agreement with the Netherlands was approved and published. The adoption of the law leads to the fact that parent companies registered in the Netherlands will pay tax on dividends at a rate of 15% instead of 3-5%, and the rate for interest and royalties will be 20%.

On June 7, 2021 Russia notified the Netherlands about denunciation of the agreement, the changes will come into force on January 1, 2022.

Switzerland is the next major jurisdiction in the negotiation process initiated by Russian Ministry of Finance. There are 2 more key jurisdictions remaining for revising the DTAAs, said Deputy Finance Minister Alexei Sazanov, namely, Hong Kong and Singapore.

There have been no official announcements of changes to other DTAAs yet.

We would like to inform you that in accordance with the Order of the Russian Government № 814-rs dd 31.03.2021 starting with the April 1, 2021 the flights with Germany were resumed.

According to the official announcement of the Russian Government dd. 25.03.2021 the flights are resumed on the following routes:

• Frankfurt am Main – Moscow – Frankfurt am Main – 5 times a week;
• Frankfurt am Main – St. Petersburg – Frankfurt am Main – 3 times a week;
• Moscow – Berlin – Moscow – 5 times a week;
• Moscow – Frankfurt am Main – Moscow – 3 times a week.

Thus, citizens of Germany with a valid visa to Russia (including business visa) can enter the Russian Federation.

Please note that according tothe Order of the Chief State Sanitary Inspector of theRussian Federation from 27.07.2020 № 22 for foreign citizens it is necessary to have a negative PCR-test made not earlier than 72 hours before the flight to Russia. The requirement (point 6.1. of the mentioned above Order №22) to keep a two-week quarantine for citizens arriving from Germany in order to perform employment activities is still in force.

We will be happy to answer your questions!

In March, www.karenina.de published an interview with Dr. Georg Schneider, “Geschäfte mit Russland? Aber ja!”.  Journalist Peter Kopf asked the General Director of swilar a number of questions about opportunities and problems of business-cooperation with Russia.

The key issues of the interview:

•  Whether import substitution policy in Russia is a problem for German companies;

• Whether it is possible to say that the state runs the economy in Russia;

• How German companies may use the huge gap which exists in Russia between individual and serial production;

• How to gain the trust of business partners in Russia and why it is so important to conclude a framework agreement;

• Whether banks hinder German companies from doing business in Russia;

• How customs issues affect business;

• How risky it is to invest in Russia at the moment;

• U.S. sanctions and the rate of their impact on German-Russian business;

• Pharmaceutical industry and the Sputnik V vaccine as the oil of tomorrow – fantastic opportunities for economic cooperation.

The full text of the interview is available on the website. Enjoy reading!

For reference

KARENINA www.karenina.de is the online edition of the German-Russian discussion forum “St. Petersburg Dialogue”, which began to develop during the pandemic. The goal of the online platform is to establish internal communication between forum members and working groups, as well as to make the association, founded in 2001, visible to the outside world through its own journalistic activities

Multiple entry for highly qualified specialists allowed

According to Decree of the Government of the Russian Federation No. 258-p dd. 06.02.2021 foreign Highly Qualified Specialists (HQS) as well as their family members are allowed multiple entries into the territory of the Russian Federation.

Separately, we would like to note that in order to enter the territory of the Russian Federation these foreign citizens must be included in the list (with an indication of the checkpoint across the state border of the Russian Federation and the date of entry) sent to the Federal Security Service of Russia and the Ministry of Internal Affairs of Russia by the federal executive authority, which competence the organization – employer or customer of works (services) is.