Cancellation of the repatriation
of foreign currency earnings from 01.07.2021

Federal Law No. 173 “On Currency Regulation and Currency Control” of 10.12.2003 was amended, which abolished from July 1 the requirement for residents to repatriate proceeds in foreign currency under foreign trade agreements with non-residents. The exception is foreign trade contracts for the supply of goods for certain items of the Customs Code of the EAEU.

This means that from July 1, 2021, residents are actually exempt from half of the repatriation requirements, namely, from the obligation to receive foreign currency earnings for goods transferred to non-residents, services rendered, work performed and the results of intellectual activity transferred. Simultaneously with the above-mentioned change, it is provided for the possibility of crediting foreign currency earnings from a non-resident to a resident’s foreign account.

What are the requirements for repatriation that remain in force?

1. advances paid by residents to non-residents under foreign trade contracts (for goods, works or services). If a resident has paid an advance to a non-resident, and the non-resident has not delivered the goods / provided the service, etc., then the resident is still obliged to ensure the return of the advance within the terms established by the contract;
2. foreign trade agreements on the transfer of certain goods to non-residents;
3. loan agreements under which a resident has provided a loan to a non-resident.

The cancellation of the repatriation will affect new contracts, as well as contracts that were concluded before July 1, 2021, but for which the obligations to pay in foreign currency were not fulfilled.

The cancellation of the repatriation of foreign exchange earnings for the export of goods, works, services opens up opportunities for various ways of restructuring the debt of a non-resident, making offsets, changing the methods of execution, etc. Everything that previously entailed risks under export contracts, starting from force majeure circumstances for a non-resident or his bankruptcy and ending with debt forgiveness, etc., is now allowed.

The specialists of LLC “Sterngoff Audit” will be glad to make clear which of your contracts the rules on repatriation are canceled, and which are not. We are also ready to develop a strategy together with you based on the results of the audit. Please send your requests to info@sterngoff.com.