Author: Anna-Marie Dobbelstein

From January 1, 2019 an exemption from personal income tax regarding the sale of property has become effective in the Russian Federation. Property comprises both immovable and other property except proprietary rights.

When gaining profit from the sale of property, both non-residents and residents of the RF can now be exempted from personal income tax. For this exemption to apply they must have the property freehold in their possession for a certain term. Based on the type of property and the circumstances of its acceptance, there are minimal terms for possession of property, after which no personal income tax would not be due on the sale.

The minimal ownership term stipulated for immovable property
is 3 years received:

• by means of inheritance or based on a documented gift from a family member or close relative;

• as a result of privatization;

• according to an annuity agreement with permanent alimony.

In other cases, the minimal ownership term for immovable property is five years.

Moreover, the 3-year ownership term is also applicable to property other than immovable property (except for proprietary rights).

If the non-resident would fail to achieve the minimal ownership term, the personal income tax would be due at a rate of 30 per cent of the total sum of the sales profit.

In case a non-resident uses property for entrepreneurial activity, the exemption of personal income tax can be applicable only to profit from the sale of vehicles, houses, apartments, rooms, dachas, garden houses or a any share/participation in them taking into account the abovementioned requirements.

These amendments follow from the Federal Law dated 27.11.2018 No. 424-FZ. If you have any questions, please contact Juralink by telephone or email. Our specialists will be pleased to support you on this issue.

The Supreme Court of the Russian Federation has supported the decisions of lower courts that refuse to execute the arbitral award of a foreign court. The ground provided is that the arbitration clause of the International Chamber of Commerce included in the contract between parties is not enforceable (case No. A40-176466 / 17).

Juralink has analyzed this situation and presents you ways to reduce the risk of non-execution of arbitral decisions in Russia:

(1) If the existing arbitration clauses do not indicate a specific arbitration institution, then ask your counterpart to enter into an additional agreement to confirm the original intention of the parties.

(2) In future contracts, approach the preparation of such reservations with special care, make maximum efforts to include in the arbitration agreement all the necessary details regarding the dispute resolution method chosen by the parties fully and with a high degree of certainty.

If you have any questions, please contact Juralink. Our experts will advise you on the optimal wording for modifying and / or drafting arbitration clauses.

We would like to thank you for the co-operation in the past year and we are looking forward to develop new interesting projects with you in the new year. For now we wish you joyfull holidays with family and friends!

According to the migration legislation of the Russian Federation, highly qualified specialists must be registered at their place of stay in Russia within 90 days.

But there are two exceptions:

1. After travelling within Russia and staying in a hotel (the hotel being obliged to register the foreigner at the hotel location:
   > the foreigner has only 30 days to register at his/her regular place of stay.
2. After receipt of a new visa (visa prolongation):
   > the foreigner has only 3 days to be registered at his/her place of stay with the new visa.

Nadjeschda and the Queen of Spades by Tchaikovsky is an special theatrical music performance about the women in Tchaikovsky’s life and their influence on his work. A variation of musical pieces is linked together by a narration about Tchaikovsky’s life and a series of photo portraits made by Dutch photographer Nadja Willems, decendant of Nadjeschda von Meck- patron of Tchaikovsky. We are happy to sponsor the performance.

Performances will take place:

in Moscow (November 1 until December 2, 2018 – http://glinka.museum/visitors/events/?SECTION_ID=3 )

in Klin (November 2, 2018 – https://tchaikovsky.house/category/concert/)

and in St. Petersburg (November 4, 2018 – http://www.obraztsova.org/events_november_18.html).

Russia has not yet published its response to the latest US sanctions. Earlier there were notes about introduction of criminal liability for compliance with US sanctions. But more moderate measures are being considered now:

1. administrative liability for sanctions compliance instead of criminal liability;
2. a framework law for counter-measures against the US and other “unfriendly states”;
3. the increase of import customs duties for certain goods originating from the United States; and
4. the extension of the import ban of 2014 for agricultural products from the US and the EU.

We will keep you updated.