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EU to facilitate exit from Russian markets for European companies by easing sanctions

Wednesday, 17 May 2023, 15:46

EU member countries are preparing to help their companies to exit Russia, amid a growing risk they will be taxed to fund Russian president Vladimir Putin's war.

Source: This is stated in the proposals for the 11th package of sanctions against the Russian Federation, referenced by EUobserver, as reported by European Pravda

Details: The proposals include new special permits for financial transactions and legal services designed to help European companies exit Russia.


But under the new proposal, EU countries will now be allowed to authorise financial transfers to blacklisted Russians "after having determined that such funds or economic resources are necessary for the completion of transactions, including sales, which are strictly necessary for the wind-down, by 31 August 2023, of a joint venture or similar legal arrangement established in Russia with this natural person or an entity owned by this natural person before 28 February 2022".

The EU had also banned European law firms from providing commercial services to Russian clients.

But the 11th round proposal aims to relax that as well in order to help disentangle related EU-Russian joint interests inside Europe.

"Competent authorities of the member states may authorise until 31 December 2023 the provision of legal services which are mandatory ... for such divestments to be completed, such as notary services," the proposal said.

According to a running tally by the Yale University in the United States, which was last updated on May 16, over 1,000 foreign firms have already left Russia over the past year.

But dozens of major EU-based companies are still present in the Russian market.

These include some of Europe's biggest banks (Deutsche Bank, ING Bank, Raiffeisen Bank International, UniCredit) and energy firms (Engie, OMV, and Total).

It also includes well-known fashion brands, such as Armani, Benetton, Diesel, and Lacoste.

Austrian energy-drink maker Red Bull, Danish medical equipment manufacturer Coloplast, Dutch consumer goods firm Phillips and drinks maker Heineken, Estonian taxi company Bolt, French hotel chain Accor and cosmetics maker Clarins, as well as German engineering firm Bosch are also amongst the European companies that remained on the Russian market. 

Meanwhile, Russia is not making it easy for its old friends to leave.

Strategic firms, such as banks and energy companies, now have to get permission to sell Russian assets from the foreign investment commission of the Russian finance ministry.

But this issue has no more than 10 or so permits a month, amid a waiting list of more than 700 applicants, Novaya Gazeta said.

Russia made things harder still in March by saying foreign firms had to pay a 10 percent tax on the assets they sold if they left.

As reported, the latest draft of new EU sanctions due to Russia's full-scale war in Ukraine offers a relaxed mechanism of restrictions on third countries that help Moscow import prohibited goods.

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