The Ministry of Finance proposes to amend the currency legislation by allowing non—resident citizens of the EAEU to pay for goods and services in cash. This will allow foreign car buyers to avoid large fines for such transactions, lawyers and experts say. The details are in the Izvestia article.
Indulgences for non-residents
The Ministry of Finance of the Russian Federation allows for the possibility of settlements with non-residents of the Russian Federation in cash in the future. This follows from a letter signed by Alexei Moiseev, Deputy Minister of Finance of the Russian Federation, addressed to the President of the National Automobile Union (a copy is available to Izvestia). The ministry notes that, given the current situation with restrictions on cross-border payments caused by external reasons, "removing legal uncertainty when residents make car purchase and sale transactions with non—residents — citizens of the EAEU countries - using foreign currency is possible only by changing the currency legislation of the Russian Federation."
"The Ministry of Finance of the Russian Federation, together with interested federal executive authorities and the Bank of Russia, will work out the issue of allowing currency transactions in the territory of the Russian Federation between residents of the member states of the Eurasian Economic Union in cash in the currency of the Russian Federation," the Ministry of Finance said in a letter.
Penalty for "cash"
According to Federal Law No. 173-FZ dated 10.12.2003 "On Currency Regulation and Currency Control", the use of funds as a means of payment between a resident and a non-resident is a currency transaction. If a Russian citizen buys a car from a foreigner, according to this law, settlements on the transaction should only be made by transferring money to bank accounts in a Russian or foreign bank. Paying for a purchase in cash is considered an illegal currency transaction. According to Part 1 of Article 12.25 of the Administrative Code "Violation of the currency legislation of the Russian Federation and acts of currency regulatory authorities", this threatens the buyer with a fine of 20-40% of the transaction amount.
As the vice-president of the National Automobile Union (NAS), Jan Heitser, told Izvestia, it is not uncommon for buyers of cars from foreign sellers to pay in cash. As an example, he cited the situation when last fall, shortly after buying a used crossover from a Kyrgyz citizen for 2.85 million rubles, a Muscovite woman received a fine of almost 900 thousand rubles from the Federal Tax Service.
— Russia is part of the common customs space with other EAEU countries, goods between these countries move freely within the framework of the single market. A large number of foreign citizens live in our country, many of whom participate in car purchase and sale transactions. Under the conditions of sanctions pressure and difficulties with cross-border banking operations, in some cases cash payments are the only possible way to pay for the purchased car. In these circumstances, it is advisable to remove such transactions from the scope of the law on Currency Regulation and Currency Control," Jan Heitser told Izvestia.
According to him, since 2022, at least 1 million new and used cars have been imported from the EAEU countries to Russia. In most cases, their sellers were foreign citizens who are not residents of the Russian Federation. A significant part of the transactions for the purchase of cars from them were paid for in cash. Thus, potentially fines for violations of the rules of currency regulation threaten "hundreds of thousands of Russian motorists," the NAS vice president noted.
Right down to the tomatoes
The problem with fines for purchase and sale transactions between residents and non-residents using cash does exist, admits Sergey Radko, a lawyer for the Freedom of Choice movement. Moreover, it concerns not only the purchase of cars, but also any other transactions with foreigners that are settled for cash.
— It can be the purchase of real estate, and the payment of any services. For example, by buying tomatoes from a non-resident for cash on the market or paying him for some work done, a Russian citizen also violates currency legislation. It's just that information about transactions with vehicles and real estate is transmitted by the relevant authorities to the tax service. Having seen the signs of an offense, the tax authorities make a decision to impose a fine," Sergei Radko said.
Prove the impossibility
The decision on bringing to justice for violation of currency legislation is made on a case-by-case basis, the Ministry of Finance notes.
"A person cannot be found guilty of committing an administrative offense if he did not have the opportunity to comply with the requirements of the currency legislation of the Russian Federation. This may be evidenced by the application of restrictive measures of an extraterritorial nature by foreign States, and that such a person has taken all measures in his power to comply with [established] requirements. The absence of a resident's guilt in violating the currency legislation of the Russian Federation indicates the absence of an administrative offense, which <... This is a circumstance that precludes proceedings on an administrative offense," the Ministry of Finance said in a letter.
If a resident had no other way to pay for a product or service, the current legislation allows him to avoid liability, Sergey Radko agrees. However, to do this, the accused of violating currency legislation will have to prove that he really had no other ways to pay off, he notes.
— At a minimum, you will need certificates from banks stating that non-cash payments did not go abroad. You will also have to prove that the other participant in the transaction, a non—resident, does not have open accounts in Russian banks," explains the lawyer of the Freedom of Choice movement.
Specific knowledge
For the vast majority of motorists, currency legislation is a very distant topic, says Maxim Kadakov, editor—in-chief of Za Rulem magazine. And if they still know the traffic regulations and the "automotive" chapter of the Administrative Code, then many car owners do not even know about the specifics of settlements between residents and non-residents of the Russian Federation, as well as about the possible legal consequences of violations in this area of law, he is sure.
— Of course, ignorance of the law does not exempt from responsibility. But the main problem is that no one has ever explained to foreign car buyers that they face hefty fines for paying in cash. Of course, there must be certain rules and procedures in currency regulation, as in any other area. But in the current economic and geopolitical conditions, these rules and this order should first of all be "with a human face," Maxim Kadakov notes.
The Ministry of Finance could not promptly respond to a request from Izvestia regarding plans to change currency legislation.
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