Part 1 of Article 12 of the Federal Law No. 173-FZ of December 10, 2003 "On Currency Regulation and Currency Control" establishes the right of residents to open unrestricted accounts (deposit accounts) in foreign currency and the currency of the Russian Federation with banks located outside the territory of the Russian Federation.
However, the concepts of "tax resident" and "resident" for the purposes of applying the Federal Law "On Currency Control" are not the same.
A tax resident is a natural person who is physically within the Russian Federation at least 183 calendar days over the course of 12 consecutive months (Paragraph 2 of Article 207 of the Tax Code). However, the following are recognized as residents for the purposes of the Federal Law "On Currency Control":
- natural persons who are citizens of the Russian Federation, with the exception of citizens of the Russian Federation permanently residing in a foreign state for at least one year, including those holding residence permits issued by an authorized state body of the relevant foreign state or temporarily staying in a foreign country for at least one year on the basis of a work visa or a student visa with a validity period of not less than one year or on the basis of the aggregate of such visas with a total period of validity of not less than one year;
- individuals permanently residing in the Russian Federation on the basis of a residence permit in accordance with the legislation of the Russian Federation, foreign citizens and stateless persons.
Accordingly, an individual citizen of the Russian Federation will not be recognized as a currency resident if (Subparagraph A, Clause 7, Part 1 of Article 1 of the Federal Law "On Currency Control"):
- the individual permanently resides in a foreign state for at least one year, including holders of residence permits issued by the authorized state body of the relevant foreign state;
- an individual temporarily resides in a foreign country for at least one year on the basis of a work visa or a student visa with a validity period of at least one year or based on the aggregate of such visas with a total validity of at least one year.
Thus, a citizen of the Russian Federation acquires the status of a non-resident (loses resident status) after one year of continuous stay outside the Russian Federation. At the same time, if a Russian citizen, after acquiring non-resident status in the specified order, enters Russia, that citizen looses that non-resident status. From the moment of entry into the Russian Federation, this citizen will be considered a resident for the purposes of currency legislation regardless of the duration of time spent outside Russia.
The Letter of the Federal Tax Service of Russia dated December 13, 2016 No. OA-3-17 / 6173 @ indicated that, under the current legislation on currency regulation and currency control, a citizen of the Russian Federation permanently residing in a foreign state arriving to the territory of the Russian Federation acquires the status of a currency resident.
Only after a year of continuous stay in a foreign country will such an individual no longer be within the requirements of Russian currency legislation and be able to restore the status of a non-resident.
Thus, when establishing non-currency-resident status, the fact of the continuity of stay in a foreign country is important.
Documents confirming the status of a citizen of the Russian Federation as a non-resident may include the following:
- a copy of the international passport with border control stamps showing crossings of the state border of the Russian Federation;
- a copy of the residence permit or other document issued by the authorized state body of the relevant foreign state and confirming permanent residence in the territory of a foreign state.
Translated by Alinga Consulting Group.
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