The tax authorities have resumed active control over transactions between Russians and currency non-residents - citizens who do not have a residence permit in Russia. Sergey Ivanov, Senior Tax Consultant at Tax Compliance, commented on the emerging trend in the Vedomosti review. 

The strengthening of control over such transactions may be related to the end of the moratorium on administrative liability for violations of currency legislation at the end of 2023. It is noteworthy that in March 2024 the Department of the Federal Tax Service of Russia for the Republic of Crimea warned taxpayers about this risk on its official resource. 

Indeed, a transaction with a non-resident by cash settlement acquires the status of an illegal currency transaction and leads to serious financial losses, since it is considered as a settlement bypassing accounts in authorised banks. The fine for an illegal currency transaction ranges from 20 to 40 per cent of the transaction amount under Article 15. 25 of the Code of Administrative Offences of the Russian Federation. 

In our practice, our team has encountered similar situations. For example, one of TC's clients was claimed by the tax authority in 2024 due to the purchase of a car from a foreign citizen. In accordance with the contract, settlements between them were carried out according to the following scheme: 90% of the amount was a transfer of funds from the seller to the buyer for a debt owed to a third party in Russia (the buyer transferred it to himself and later repaid it) and 10% was cash from the buyer to the seller. Such ways of structuring transactions in the context of sanctions restrictions and foreign business withdrawal from the Russian market is a well-known practice used to acquire premium segment property, our lawyer explains. 

How to deal with such situations? The obvious option is not to pay in cash, but this is not always possible. Therefore, it is necessary to use mechanisms to prevent such transactions from qualifying as violating currency legislation. Tax Compliance experts individually analyse such situations and develop legal ways to protect such transactions.