Russian tycoons have hauled at least $50 billion in assets out of Europe since the start of the Ukraine war, moving money home amid Western sanctions and pressure from the Kremlin to repatriate their riches, Bloomberg reported.
Europe has for decades been the preferred destination for offshore Russian companies to base their funds, but this tradition could soon come to an end as the costs of keeping capital abroad rise.
Not only have European sanctions taken their toll on Russian firms, but President Vladimir Putin has stepped up repatriation efforts as well – making it more difficult for Russia’s wealthiest individuals to keep their assets in nations deemed ‘unfriendly’, while lowering barriers to entry in his homeland.
Russia has introduced several measures to lure its billionaires back home. It suspended dual tax treaties and increased the costs of safeguarding assets in havens like Cyprus and Malta, while companies re-registering in Russia can qualify for tax benefits, Bloomberg reported.
“The Russia-Cyprus link doesn’t work very well now in terms of money transfers,” Alexei Kuznetsov, whose firm B1 Group previously operated in Russia, told the outlet. “This is solved by moving to a friendly jurisdiction or Russia.”
On the flip side of the coin, Russia is making it increasingly difficult for foreign firms, including banks, to leave the state.
Moscow now charges companies a fee of at least 10% of the sale value of the local business. In addition, the Russian government started requiring sellers from “unfriendly countries” to donate at least 10% of the sale proceeds to the state’s budget from March 2023.
Source : Insider
