The EU Council approved a mechanism for using income from frozen assets of the Russian Federation
[ad_1]
The European Union is preparing to use profits from frozen Russian assets. The EU Council approved a regulation according to which income from blocked funds must now be recorded and kept separately. This creates legal grounds for sending money to help Ukraine in the future, Brussels notes. Meanwhile, the International Monetary Fund said that the use of assets must be legally justified. About €260 billion belonging to the Central Bank was frozen abroad, the majority is stored in European infrastructure.
How does the new EU Council regulation affect the fate of funds? “Kommersant FM” discussed this issue with BGP Litigation partner Sergei Glandin: “The assets are frozen, but they are spinning. The European authorities want to understand how much of this income they have, how much profit there will be. That is, the money will simply accumulate in a separate sub-account in the conditional Euroclear. Then the EU will understand how many there are and whether they can be exchanged for something, for example. For example, return to the authorities of the Russian Federation with some kind of proposal from the series: you have so much of our funds at NSD, and we have so much of yours, let’s change something somehow. Such a possibility of events happening is possible.
At the same time, as long as Article 17 of the EU Charter on fundamental property rights and the impossibility of confiscating anything without paying adequate proportionate compensation is in effect in the European Union, there will be no funding from these funds for Ukraine. But assets, even when frozen, by virtue of the legislation of any state, are subject to taxation on the profit that was generated there for a certain calendar year. And according to its budget rule, Belgium can spend this tax on anything, even in Ukraine, even in Papua New Guinea, even in Albania, wherever it wants. But without the consent of the title owner or in lieu of it, the legal fate of his assets cannot be decided.”
The Council of the European Union confirms that the current decision is only the first step towards using profits from assets. In the future, Brussels may introduce a contribution to the EU budget from revenues or dispose of them differently. The head of the Luxembourg office of KRK Group Nikita Ryabinin explained how these mechanisms can work in practice:
“There are two real scenarios. If we move away from political statements to specific actions, then a tax may be applied, the so-called windfall tax. Then the funds received from this tax will be used to finance the Ukrainian budget deficit.
They can use at least 100% of the profit from these assets. This is quite a serious amount. We have seen an account holding between €1 billion and €4 billion, the profits made during the lockdown.
The second point is that they may try to implement the idea of issuing bonds, which could be secured by possible future confiscation of these funds. Maybe they just segregate these accounts for better accounting.”
If the windfall tax is introduced, Brussels expects to collect €15 billion in penalties by 2027, the Financial Times reported. Moscow has repeatedly called any proposals to use Central Bank funds illegal. In addition, the Russian Foreign Ministry stated that the government is considering options for providing legal and economic influence on those “who expect to profit from the theft of assets.”
Everything is clear with us – Telegram channel “Kommersant FM”.
[ad_2]
Source link
