Restrictions on provision of services for residents of Russia

The list of sanctions includes some types of services, about which the media has practically written nothing, but which are used by many entrepreneurs when structuring their business.

Among other things, on June 3, 2022, the Council of Europe adopted a decision to amend Regulation No. 833/2014, which deals with restrictive measures related to Russia's activities in Ukraine.

Link to the decision of the Council of Europe - Publications Office (europa.eu)

According to these measures, from 5 July 2022 it is prohibited to act or arrange for another person to act as a trustee, variable shareholder, director or secretary or in any other similar capacity of a trust or similar legal entity for the benefit of the following persons:

a) Russian citizen* or person living in Russia**;

b) a legal entity established in Russia;

c) a legal entity whose ownership rights are more than 50% owned by the person referred to in points a and b;

d) a legal entity that is more than 50% controlled by the person referred to in points a and b or c;

e) a legal or natural person acting on behalf of or under the direction of the person referred to in point а, b, с, or d.

It must be considered that acting as a “nominal” shareholder of the company without receiving payment for this service (so-called through friendship) is still subject to these restrictive measures (as well as mediating the mentioned activity) and may be punished for violating the sanction:

• in the case of a natural person, up to 300 fine units or imprisonment;
• up to 400,000 fine units for legal entities.

(As of 2022, 1 fine unit in Estonia is 4 euros)

From the same date (07 May 2022), it is prohibited to provide accounting, auditing (including mandatory audit directly or indirectly), tax consulting, business or management consulting or public relations services:

1. to the Russian government;
2.  to legal entities, companies or organizations established in Russia

Since 7 October 2022 these restrictions in Council Regulation (EU) No 833/2014 expanded on legal, IT consulting, architecture, and engineering services 

It should be noted that above restrictions shall not apply to  

• the provision of services that are strictly necessary for the exercise of the right of defence in judicial proceedings and the right to an effective legal remedy;
• the provision of services which are strictly necessary to ensure access to judicial, administrative or arbitral proceedings in a Member State, or for the recognition or enforcement of a judgment or an arbitration award rendered in a Member State, provided that such provision of services is consistent with the objectives of and of Council Regulation (EU) No 269/2014;
• to the provision of services intended for the exclusive use of legal persons, entities or bodies established in Russia that are owned by, or solely or jointly controlled by, a legal person, entity or body which is incorporated or constituted under the law of a Member State, a country member of the European Economic Area, Switzerland or a partner country as listed in Annex VIII (USA, Japan, United Kingdom, South Korea);
• the provision of services necessary for public health emergencies, the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety or the environment, or as a response to natural disasters;
• to the provision of services necessary for software updates for non-military use and for a non-military end user, permitted by Regilation Articles in relation to goods listed in Annex.

^{*Does not apply to persons who have a residence permit of an EU member state.}

^{**There may also be persons who do not have the citizenship of the Russian Federation}