Asset transfers from IIAs and tax deduction: regulator’s explanations
Transfers of foreign securities from one professional market participant to another do not affect the right to get a tax deduction, if such transfers were associated with sanctions and meet a number of conditions.
The Bank of Russia has sent a relevant information letter to brokers and depositories. The letter was prepared based on the clarifications provided by the Ministry of Finance.
The right for a tax deduction for individual investment accounts (IIAs) is preserved where:
— only the depository recording foreign securities changed, while their accounting on the previous IIA never terminated;
— one professional market participant transferred all assets recognised in an IIA to another participant, simultaneously assigning all rights and obligations under the related investment account agreement;
— when assets were transferred from one professional market participant to another, the accounting of foreign securities in the IIA was terminated, but the client signed a new IIA agreement with another professional market participant and, within one month after this date, cancelled the agreement with the previous market participant.
The Bank of Russia recommends that brokers and depositories should inform clients, whose assets were transferred this way, that they remain eligible for a tax deduction and that they should help their clients in receiving this tax deduction.
Jointly with the executive authorities, the Bank of Russia is studying possibilities to protect the rights of clients of sanctioned brokers whose assets were transferred using other schemes.