How an immigrant or foreigner can manage property in Russia: advice from a lawyer - ForumDaily
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How an immigrant or foreigner can manage property in Russia: advice from a lawyer

One of these days in my office A client, a US citizen, contacted me. Shortly before the New Year, I had issued a power of attorney to him to dispose of an apartment in Russia that he owned. He had inherited the property many years ago. The client wanted to sell the apartment, but was surprised to learn from me that, according to current Russian legislation, he could not do so without permission from the Government Commission. I recommended that he formalize a gift, but his only relative left in St. Petersburg was a distant aunt.

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Having explained the tax aspect to him, she made a power of attorney for the right to gift his apartment to this very aunt. However, the good Samaritans told him that he allegedly could not formalize the gift because the aunt was not his close relative, they even referred to Article 14 of the Family Code of the Russian Federation.

All this, of course, made me smile, but if I had not had this wonderful client, there would not have been this article, the content of which, I hope, many will find useful. I have not yet found another way to combat misconceptions, except through public speaking and writing articles.

The question of how to sell or give away your apartment in Russia arises for many Russian-speaking residents of America, and not only Russian-speaking ones. Why? Because many, many people have investments in the Russian Federation. Some consciously invested their savings in the Russian economy, others simply have housing left in which they once lived.

Many years ago, I was handling a property division case between a millionaire client of mine, a Dutch citizen, and his Russian wife. The stumbling block was a chain of hotels in St. Petersburg. I asked him why, given his financial capabilities, he had decided to buy real estate for a chain of hotels in St. Petersburg, and not somewhere in Europe or America. It turned out that, with identical prices for a hotel room, property maintenance in Russia is significantly cheaper than in many other countries, and property taxes are also very lenient, and the profit, accordingly, is significantly higher.

On the subject: How to Accept an Inheritance from the USA in Russia: Advice from a Notary

Most likely, he is not the only one who thinks and reasons this way. Many people, even those living abroad, buy real estate in Russia: some use their right to maternity capital, others – in the hope of returning, and others – for other reasons. However, thousands of people have owned this property since time immemorial. Some die, others inherit, and the new owners do not always have Russian citizenship, and the need to dispose of their property arises.

Decree of the Government of the Russian Federation No. 295 of March 6, 2022 introduced significant restrictions on the disposal of property by foreign citizens on the territory of the Russian Federation. These changes have shocked and panicked many; myths have emerged, overgrown with horrifying details. I suggest we figure out whether all this is so scary.

To understand the nature of the restrictions, it is necessary to understand who in Russia is a foreign citizen and who is not, even despite the absence of a Russian passport and/or the presence of an American one.

Article 10 of the Law on Citizenship provides an exhaustive answer to the question of who is a citizen of Russia. According to this provision of the law, a citizen of Russia who has dual or multiple citizenship is considered only as a citizen of Russia, regardless of his place of residence. The acquisition of citizenship of a foreign state by a citizen of Russia does not entail the cancellation of the existing citizenship.

That is, Russians who have received American citizenship are not former, but actual citizens of the Russian Federation and are considered in the Russian Federation exclusively as citizens of Russia with all the consequences that follow from this fact. Among the pleasant consequences is the right to dispose of the property belonging to them freely, without restrictions and without the need to obtain anyone's permission (except for the permission of the spouse, if the property was acquired during the marriage, but we will talk about their rights another time).

Many people who have received an American passport completely forget about having a Russian passport: they do not renew it, do not change it due to a change of surname, and completely ignore its existence. In reality, the absence of a Russian passport does not mean the absence of Russian citizenship. For those who consciously and deliberately would like to renounce their Russian citizenship, there is a special procedure, but even this procedure initially requires restoring the Russian passport.

Conclusion: if you had Russian citizenship, you still have it, and this citizenship itself will not go anywhere. Therefore, if your grandmother from Voronezh left you an apartment as an inheritance, and you have been living in America for thirty years and have even managed to forget the Russian language, you are still a citizen of Russia, you will be able to obtain a Russian passport and, accordingly, freely dispose of the inherited property.

It's a different matter if you don't have and never have had a Russian passport (in particular), as well as Russian citizenship (in general), but you have a grandmother in Voronezh, and she decided to leave the inheritance to you. What should foreign citizens do if they don't have and never had Russian citizenship in their medical history?

In addition to going to obtain permission from the Government Commission, there are other solutions. The most common is donation. Contrary to popular misconception (that donation is only allowed to close relatives), a foreign citizen can donate his property to any person. The difference between donation to a close or distant relative is only in the tax aspect, and not in the possibility of the transaction itself.

Thus, when making a gift to a close relative who is a citizen of the Russian Federation and a tax resident of the Russian Federation, the latter is exempt from paying tax. When making a gift to a stranger or a non-close relative (niece, aunt, cousin, mother-in-law or mother-in-law), the latter will have to pay a tax of 13% (however, the Tax Code provides for exceptions here too).

The laws of the Russian Federation do not provide for any other legal grounds for denying a foreign citizen the right to dispose of his/her property free of charge. This is clearly stated in the Protocol of the meeting of the subcommittee of the government commission for control over the implementation of foreign investments No. 90/1 of September 26, 2022: "to allow resident individuals to carry out gratuitous transactions that entail the emergence of ownership of real estate alienated by foreign citizens, the ban on the implementation of which was established on March 1, 2022."

That is, individuals are allowed to make gratuitous transactions with real estate alienated by foreign citizens, and no one can limit this right.

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That is, if someone tells you that due to your foreign citizenship you cannot dispose of your dacha in the Moscow region, then this is not a prohibition by the legislator, but the result of the ignorance of a single consultant. In this case, you just need to contact a specialist or specialists to get a second or even third professional opinion, to get to the root of the matter, instead of relying on someone else's personal opinion.

If you need to sell or donate property in Russia, accept or refuse an inheritance (or choose what is best in your particular case), if you want to understand whether you have Russian citizenship and the right to obtain a Russian passport, contact my officeWe will answer these and many other questions.

Material prepared in partnership with

Karina Duval - lawyer, notary, expert in international law

Russian registration: #78/857
NYS registration: 4775086
Notary public, registration: 02DU6376542

tel: + 7 (921) 946-0582 (in Russia) / + 1 (718) 704-8558 (in USA)
E-MAIL:
[email protected],
Website:
https://karinaduvall.com/
www.integrika.com

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