14.10.2016 — Less currency control for Russian citizens permanently living abroad

The Ministry of Finance has proposed to change the criteria for currency residence status. If the proposed bill is adopted, all Russian citizens irrespective of their place of living, will be deemed Russian residents for the purposes of currency regulations. At the same time, those Russian citizens who permanently live abroad and do not live in Russia for more than 3 months in a calendar year will be exempted from the obligation to notify the Russian authorities of their foreign bank accounts and the restrictions on currency operations.

The Russian legislation currently in force recognizes all Russian citizens, except for those who live abroad for more than one year and do not return to Russia, as currency residents that are obliged to notify the tax authorities of their foreign bank accounts, transfers of funds thereon and to comply with the legislative limitations related to operations with such bank accounts. Thus, for Russian citizens living abroad any visit to Russia terminates their non-resident status and makes them subject to currency control requirements.

The bill proposed by the Ministry of Finance will enable such Russian citizens to visit Russia for three months in a year without falling under the obligations set by the currency control legislation. 

13.10.2016 — Blacklisted entities cannot establish a Russian subsidiary

The Government has submitted to the State Duma a bill aimed at prohibiting establishment of subsidiaries by foreign legal entities that have been banned from operating in Russia. Thus, if the bill is adopted, such blacklisted legal entities will be unable to work in Russia via its subsidiaries.

The proposed bill is aimed at deepening the sanctions against foreign legal entities that are deemed unwelcome by the Russian authorities. The main purpose of the amendments is to fill the gap in the law, which allows such blacklisted entities to operate in Russia via subsidiaries.

Please be reminded that according to the Federal Law № 272-FZ “On measures against persons involved in violations of fundamental human rights and freedoms, rights and freedoms of Russian citizens” blacklisted entities are foreign legal entities whose activities threaten the foundations of the Russian constitutional system, the country’s safety or security. The decision on the recognition of a legal entity as blacklisted is taken by the General Prosecutor or his deputies in coordination with the Ministry of Foreign Affairs.

In addition to the prohibition on the establishment of a subsidiary, the bill envisages the procedure of the liquidation of already established legal entities. 

12.10.2016 — Employers can be fined for specifying gender in a job opening

A job opening for an administrative position in a medical center specified that a woman of pleasant appearance is required. The court considered such requirements gender discrimination and thus fined the company and its officials. Gender discrimination is one of the most obvious offences, however there are other pitfalls to be avoided when looking for a candidate: not all requirements for candidates are considered legal and not all personal information can be requested during an interview.

When publishing an opening advertisement or preparing a questionnaire to be filled by candidates during an interview every employer must be very cautious. All such job descriptions and necessary questionnaires should be strictly connected to the candidates’ professional skills and characteristics relevant for the position in question. Otherwise the authorities may find the employer in violation of the employment law on the grounds of discrimination. In that case the employer’s refusal to hire a candidate can be challenged in court, while the company and its officials can be fined by up to 10 000 rubles and up to 3 000 rubles for each violation accordingly (Art. 13.11.1. of the Code of Administrative Offences).

Employers must also beware that some personal information can never be requested during the recruitment process. Thus, it is only permissible to ask a candidate to provide information on his criminal records or health condition in cases foreseen by the law and for certain positions only (for example, if the employee will have to work with children). 

At the same time, some information has to be requested from each candidate to be employed. For example, it is strongly advised to ask all successful candidates on their working experience in the civil service. This is due to the fact that an employer must notify the authorities of all former state officials it hires and check for a possible conflict of interest. The company and its officials may be penalized for failure to do so as well. 

11.10.2016 — There is no property tax liability for property in need of renovation

Courts supported the position of a taxpayer that timeworn real estate in need of renovation, which cannot therefore be used in the company’s activities, are not subject to property taxes.

A company’s assets requiring renovation reduce the property tax base. Until such renovation is performed, such assets are to be accounted as non-current assets because of the impossibility to estimate its original value for the purposes of calculating the property taxes (Ruling of the Federal Arbitrazh Court of the Urals District dated 07.09.2016 in case No. A76-11526/2015). 

These assets are to be qualified as fixed assets and accounted for tax purposes only after the necessary reconstruction is complete. This position was previously expressed by the higher courts as well (Information letter of the Presidium of the Supreme Arbitrazh Court of Russia dated 17.11.2011 No. 148).

10.10.2016 — Court injunction in respect of real estate does not preclude assignment of pledgee rights

The Supreme Court found that a court injunction prohibiting registration of encumbrances or title transfer in respect of a real estate object does not preclude registration of the pledgee change because such registration does not violate real estate owner’s rights.

Parties concluded an assignment agreement in respect of a loan, which led to the assignment of real estate pledge as well. However, the registration authority (Rosreestr) refused to register the pledgee change on the grounds of a previous court injunction prohibiting registration actions in respect of the pledged property at the request of its owner.

The Supreme Court did not support this position. According to the highest court, court injunctions of this kind are intended to prevent the alienation of property and the establishment of new encumbrances against it. At the same time, registration of a new pledgee to an existing pledge does not involve such consequences and therefore does not violate the owner’s rights (Ruling of the Supreme Court of the Russian Federation dated 01.09.2016 No. 305-KG16-6316).