From 2 March 2022, Russia introduced special rules for real estate transactions with foreign legal entities and individuals associated with foreign states that adopted measures targeting Russian legal entities and individuals (“Foreign States“):
- Russian residents may carry out transactions resulting in the change of ownership of real estate assets with (a) the counterparties from the Foreign States and (b) with persons, including Russian and non-Russian legal entities, controlled by such counterparties, only upon obtaining a permit issued by the Governmental Commission for Control over Foreign Investments in the Russian Federation. The procedure for obtaining such permit is to be developed by the Russian government within five days.
- The same regime applies to transactions between Russian residents and foreign persons not affiliated with the Foreign States where such nonaffiliated foreign persons acquired real estate assets from the counterparties from the Foreign States after 22 February 2022.
The restrictions do not apply to transactions with Russian state bodies and the Russian Central Bank.
The real estate assets are not limited to those located within Russia. In 2021, Russia officially included the US and the Czech Republic in the list of “unfriendly” states. However, by intent, the new rules appear to target all states that have taken or will take measures against Russia, even if they are not expressly included in the formal list of “unfriendly” states.
Key takeaways
Real estate sale and purchase transactions between Russian persons and foreign persons are now subject to special permits. The procedure for the issuance of such permits will be developed within five days.
