Category: News

After the announcement of partial mobilization by the President’s Decree on September 21, 2022 the employers are obliged to facilitate the enlistment into the Russian army when the call up to the military service will be forwarded to the reservists through the employer-company.

According to the Government Decree November 11, 2006 N 663 an employer must notify his employees on the enlistment against their signature as a rule, no later than 3 days before the appearance date specified in an army service summons. By failure to do so the employer would face administrative fines up to 3.000 RUB Clause 21.2 Code of Administrative Offences. Mobilization notification has to be organized by company’s HR department or its director, in case the employer does not have persons specially designated for such tasks.

The employer who duly notified the employee on the enlistment is not responsible for the employee’s further actions. Employer is only obliged to facilitate the timely appearance of the employee by the military enlistment office and not to interfere with the conscription.

In cases where an employee is directly summoned to the army by the military enlistment office, the employer should take the opportunity to make a copy of such summons for his staff files/personnel record.

According to the Federal Law On military duty and military service No 53-FZ dd. 28.03.1998 the called up employee should be released from work and continue to get an average monthly pay for the period he will be absent from work for a medical examination, mandatory preparation for military service, conscription for military service or entry into military service under a contract, admission to the mobilization manpower reserve, conscription for military training. The employee also retains his working place and position in the company. The time spent by the employee at events related to conscription for military service is included in the length of service for his annual paid leave. The employee’s costs during his absence period should be later reimbursed to the employer by the military enlistment office. Called up employees could not be dismissed. Their employment contracts should be uphold and they have the right to return to their previous place of work after they were released from the military service.

In case the employee is absent (vacation, sick leave, unexcused absence) or rejects to accept and sign into the summons the employer should document this fact and report the military enlistment office hereon.

There are cases where the company may receive a request with unspecified employees’ lists who are due to appear before the military commission instead of personal summons for particular employees. Such request will indicate characteristics of military professions (specified in individual military record card), which are summoned to the military enlistment office. Hereafter the employer needs to notify all relevant employees on the summon request. The commissariat will still have to give each of the employees a personal summons. Additionally the employer should also draft a list of employees who meet the criteria indicated in the request and forward it to the military enlistment office.

September 27, 2022 Russian Parliament is considering the draft law on ensuring the labor rights of mobilized. We will monitor the situation closely and update our clients on the relevant changes.

On September 08, 2022 the President Decree No. 618 implemented another hurdle for foreign companies trying to terminate their business operations in Russia. Since March of this year foreign companies from “unfriendly countries” were restricted to execute any transaction with shares of the Russian joint stock companies and other Russian securities, unless they obtained the consent of the Government Commission for these.

From now the approval of the Government Commission will be also mandatory in relation to any transactions with the shares of Russian limited liability companies in cases persons (individuals or legal entities) from “unfriendly countries” are involved. In the event foreign company is party to the transaction its “unfriendly status” can be based both on direct or indirect control of the person from the “unfriendly country”.

Hereto, any transactions entailing directly and (or) indirectly the establishment, change, termination of the rights of ownership, use or disposal of shares or of other rights that allow determining the conditions for managing Russian limited liability company or the conditions for its business activities are subject to the prior approval by the Government commission. If required the Government commission may also stipulate the conditions under which such transactions are allowed. 

The detailed procedure for obtainment of such governmental approval has not been specified yet, and should be issued within 10 days from the publication of President’s Decree.

The approval requirement will not be applicable in case the exemptions from the unfriendly status are given:

• Entities whose beneficiaries are Russian persons will not be considered persons of unfriendly countries, provided that control is disclosed to the tax authorities.
• Entities under the control of persons of friendly countries will also not be considered persons of unfriendly countries, provided that such control was established before March 1, 2022.

Consequently, the separation process from the Russian subsidiaries in the form of third-party sale or management buy-outs will require additional time and efforts from the foreign businesses and even could be put on hold by the Government Commission. 

We will monitor further changes and will be glad to provide advice on your exit / freezing options within the Russian market.

Seeking funds recovery from Russian bonds?  New payment options for bondholders of Russian sovereign debt.

Due to sanctions, many investors are desperate for restructuring opportunities of their portfolio, where the  foreign intermediaries cannot provide any services in paying bondholders of Russia’s sovereign debt. A recent Russian law has provided a temporary payment mechanism that will allow execution of payment obligations to Russian residents and foreign bondholders. It involves the transfer of funds to the National Settlement Depository (“NSD”).

There are 3 groups of bondholders, and the payment method will be different for each of them:

• Group 1: bondholders keeping records with the Russian depositary infrastructure (NSD or sub-depositaries);

• Group 2: bondholders keeping records with Russian depositaries that are clients of Foreign Depositaries;

• Group 3: bondholders keeping records with Foreign Depositaries. This group cannot be paid in accordance with standard procedures.

Group 1 can receive payment in RUB at the RUB exchange rate to the bond’s nominal currency established by the Bank of Russia on the date of payment.

Group 2 will receive payment like Group 1, but through corresponding Russian Depositaries without participation of foreign intermediaries.

Group 3 payments will be deposited by the NSD on special RUB type “I- accounts” in the NSD.  The payment will be indexed at the foreign exchange rate for the bond’s nominal currency on the day of actual settlement.

Bondholders must follow a special identification procedure in order to receive their funds. This involves provision of documentation (either via the Foreign Depositary or by bondholder itself) and a waiver of potential claims against the Russian Ministry of Finance. The list of documentation is published in the Ministry of Finance Order № 245 of 24 June 2022.

Please feel free to contact us for further information or assistance on the subject.

With events unfolding quickly and measures and countermeasures following swiftly, we refer to a comprehensive overview of relevant current news for the business community in Russia. It is a newsletter provided by the Association of European Businesses (AEB) that is being sent on a regular basis. If you would like to subscribe to this free service of the AEB, you can do this via: https://aebrus.ru/en/subscribe/ (the field names in the form are in Russian, but top down it reads: “first name”, “last name”, “email address”).

For questions about the impact of published (counter)measures on your activities or any other questions, please do not hesitate to us.

The Netherlands Embassy in Moscow and the Consulate-General in St. Petersburg organize interesting webinars. We note in particular the following.

On February 9, 2022 there will be a webinar titled “Consequences denunciation bilateral tax treaty between the Netherlands and Russia for (Dutch) companies”. The bilateral tax treaty or DTT has ended per 1 January 2022 and this will have an impact on, amongst others, dividend, interest and royalty withholding taxes due by companies. One of the speakers is Paul van der Pol, tax lawyer at Juralink.

Details on the webinar:

–          Time: 14:00 (CET), 16:00 (MSC)

–         ZOOM platform  

–          Working language; English

–          Duration: 1h

Registration:

by email to MOS-Economics@minbuza.nl indicating your name, email and company and “9 February DTT”.

For more information please refer to https://www.linkedin.com/company/nederlandse-ambassade-in-moskou-russische-federatie?

From December 29, 2021 all foreigners in Russia must undergo extensive medical monitoring under a law* to improve health safety in the country. The law requires the following:

• Submission of biometric data, both fingerprints and photographic images to identify individuals;

• Medical tests for a wide range of diseases: HIV, syphilis, gonorrhoea, tuberculosis, leprosy, and Covid-19, but are also to trace any use of narcotics.

The law applies to all foreign labour migrants and to foreigners staying in Russia for longer than 3 months, as well as their family members, even children over 6 years of age. It will therefore constitute an additional requirement for highly qualified specialists, to keep or be re-issued a HQS visa.

An exemption exists only for diplomats and citizens of Belarus. Foreigners visiting Russia on the basis of a visa for ninety days or less, will not be subject to the new requirements.  Foreigners with a temporary residence permit do need to take the medical tests, but only once, in order to be granted their temporary residence permit.

An appointment can be made for testing, via blood samples and X-ray (for tuberculosis) in the area – for Moscow residents this can be done at the Moscow Migration Centre in Sakharovo – where they will be issued a certificate, when tests are passed successfully.

This certificate must be submitted to the authorities within 30 days for foreign labour migrants, or within 90 calendar days from the moment of entry into the Russian Federation for others than labour migrants.

Certificates are valid for a 90-day period and must be repeated every quarter [see update 22 February 2022 below: one year]. So all medical tests need to be done again in order to get a new certificate no later than one month after the original medical certificate expired.

Refusal to undergo examinations and submit biometric data could lead to revocation of permits or expulsion from Russia.

The law may be an instrument for Russian authorities to monitor the large foreign workforce from Turk-Asian republics, and any possible infectious diseases they might have.

The Western businesses community however is very upset about the law and many business people have said this will affect their decisions on living and working in Russia, especially with families.

Not all details of the law and its implementation are clear yet, but we will update you when there is more information.

Update 30 December: We have received information that long talks between Russian government authorities and international business associations have had a positive result. Medical examinations for foreigners under the new law from 29 December 2021 would not be required every quarter but only once a year.

Update 22 February 2022: The Ministry of Health has confirmed that the validity of medical certificates for foreigners has been extended to one year.

*The new law Law No. 274-FZ was enacted on 1 July 2021, but is effective only from 29 December 2021. It amended two Federal Laws – ” On the Legal Status of Foreign Citizens in the Russian Federation ” (dated 25.07.2002 No. 115-FZ) and ” On State Fingerprint Registration in the Russian Federation ” (dated 25.07.1998 No. 128-FZ).

From 1 September 2021, a simplified Russian visa procedure applies to close relatives of Russian citizens abroad. A Russian citizen in for instance the Netherlands, can submit an application for an entry visa for his/her foreign relative to the local diplomatic mission or consulate. There is no need to get a formal invitation issued by the Russian Ministry of Internal Affairs.

In addition, foreign relatives will be able to get multiple entry visas with an extended period up to one year. Not only close relatives such as spouse and children benefit from the simplified visa procedure. It is also open to (grand)parents and grandchildren.

The new rule came into force on 1 September 2021 and is set out in point 3 of article 1 of Federal Act No. 270-FZ of 01.07.2021.

Would you like more information on the procedure? Feel free to contact us.

As of 29 December 2021, important changes in Russian migration legislation will enter into force.

1. Fingerprint registration and photographing:

For whom and when:

1. Foreign citizens, who arrived without employment purposes for a period of more than 90 days – within 90 days from the date of entry into the Russian Federation.
2. Foreign citizens, who arrived for employment purposes (including the HQS category) – within 30 days from the date of entry into the Russian Federation or upon receipt of a work permit, patent.

Nr. of occurrences: single time

2. Medical test:

Test: absence of the use of narcotics or psychoactive drugs, infectious diseases, certificate on the absence of HIV infection

For whom and when:

1. Foreign citizens, who arrived without employment purposes for a period of more than 90 days – within 90 days from the date of entry into the Russian Federation.
2. Foreign citizens, who arrived for employment purposes (including the HQS category) – within 30 days from the date of entry into the Russian Federation.

Nr. of occurrences:

• For passing the procedure of fingerprint registration and photographing.
• Again within 30 calendar days from the date of expiration of medical documents*. The results are to be provided to the territorial body of the Ministry of Internal Affairs or through the Gosuslugi portal.

Exception: Citizens of the Republic of Belarus and citizens under the age of six are exempt from the above procedures.

In case the above procedures are not successfully fulfilled, the period of temporary stay will be reduced. In case of negative results of a medical test, a stay (residence) in the Russian Federation will be judged unwanted or entry into the Russian Federation will not permitted.

*In practice, the medical certificate’s validity is 90 days.

We will keep you updated on any changes, adjustments or clarifications.

Update May 26, 2021: today President Putin signed the law on Double Tax Tready (“DTT”) denunciation with the Netherlands (Federal Law of May 26, 2021 Nr. 139-ФЗ).

It is expected that Russia will file the notification on denunciation before June 30, 2021, so that the Netherlands- Russia Double Tax Treaty will expire on January 1, 2022.

In April, the Russian government had decided to submit the draft bill on denouncing the treaty to the State Duma. In the previous months it had become clear that a compromise between both states on new conditions for a DTT was unlikely.

Please see our previous publication or contact us for details on the consequences this will have.