Russian Federal Law No.287-FZ will come into force on 1 March 2022, allowing Russian business owners to transfer to new private foundations business and personal assets of at least RUB100 million.
The reform aims to provide continuity to businesses by reducing inheritance disputes. Unlike existing inheritance foundations, it will be possible to establish these new entities during the founder’s lifetime, who will be able to transfer cash, investment portfolios, real estate, business assets and other types of property, which will not be included in their estate.
These entities will be subject to corporate profits tax and distributions to beneficiaries will be subject to income tax withholding. Moreover, they will retain subsidiary liability for the financial obligations of the founder for three years from the establishment of the foundation and vice versa. Nonetheless, this will not apply to beneficiaries.
Foundations will also not be subject to mandatory audits, but will have to be disclosed to the founder’s creditors and to the state authorities, the latter of which will also be aware of the names of the beneficiaries and payments made to them.