One of our clients received a request from the tax authority outside the framework of a tax audit to pay tax on transactions for 2023 relating to an account opened with WioBank PJSC, a bank located in the UAE. In addition, additional documents and information concerning this account, as well as a statement of account transactions, were requested.  

The distinctive feature of the information contained in the request is that:

1.    The client was not present in the territory of the Russian Federation in 2023 and 2024 for more than 183 calendar days, and on the basis of Part 8 of Article 12 of Federal Law No. 173-FZ "On Currency Control and Currency Regulation" did not submit reports to the currency authorities, as such an obligation simply did not exist. On this basis, he also believed that he was not a tax resident of the Russian Federation, which he noted in the self-certification form.

2.    When opening the foreign account, the client provided the bank with his Emirates ID (UAE residence permit) and therefore believed that he was a UAE resident.

On the basis of the above, the following conclusions can be drawn:

• Within the framework of the automatic exchange of financial information, the Federal Tax Service of Russia has access to information about accounts opened by Russian residents abroad, even if the individual lives primarily outside the Russian Federation.

• Despite having an Emirates ID (UAE residence permit) and not being a tax resident of the Russian Federation, UAE banks may treat Russian citizens as Russian residents and transmit information about them to the Federal Tax Service of Russia under the automatic exchange of information.

• Moreover, it should be assumed that the UAE has begun a full exchange of financial information for prior periods, and the Russian tax authorities have received not only aggregate account balances, but also information on specific transactions carried out on those accounts.  

Under Russian currency legislation, if you are a currency resident of the Russian Federation and have an account opened with a foreign bank, you are required to notify the tax authorities of its opening and closing, as well as to report on the movement of funds and other financial assets on the account. Failure to comply with the established procedure entails risks of administrative liability.

If you are outside the Russian Federation for more than 183 calendar days in a year, you are not required to submit currency reports.

At the same time, if you receive a similar request, you must respond to it, as failure to respond is grounds for liability (the fine is 200 rubles for each document).

In this regard, we recommend that you provide the tax authority with confirmation that you do not have the status of a Russian tax resident, together with an explanatory note containing a calculation of the number of days spent outside the territory of the Russian Federation.

If you have an account with a foreign bank and want to ensure compliance with Russian currency legislation, or if you have already received a similar request for information, the ALPINE Tax team is ready to help you.