The Ministry of Finance has resolved the issue of overstated personal income tax (PIT) on the sale of securities of redomiciled economically significant companies
Following the forced redomiciliation of companies such as X5 and Rusagro, investors faced unexpected tax consequences:
- only a portion of the acquisition costs was taken into account when selling shares (expenses were recognized only to the extent that the shares of the Russian economically significant company were reflected in the assets of the foreign holding company based on its balance sheet as of 31 December 2021), which resulted in a higher PIT burden;
- the holding period of depositary receipts prior to their conversion into shares of a Russian public joint-stock company was not counted for the purposes of the long-term capital gains relief.
In November 2025, amendments to the Russian Tax Code were adopted:
- an option was introduced to determine the value of the economically significant company’s stake based on an independent market valuation as of the redomiciliation date (i.e., the tax cost base of the shares will be determined based on their value at the time of redomiciliation rather than as of 31 December 2021);
- continuity of the holding period was introduced for individuals for the purposes of applying the long-term holding relief.
The Ministry of Finance clarified that the new rules also apply to companies whose redomiciliation was confirmed by court decisions in 2024, including X5 and Rusagro.
As a result, investors will be able to reduce their tax base and restore their entitlement to tax reliefs, while any excess PIT withheld will be subject to recalculation — through a broker or, if necessary, by filing a tax return.
