Dividends from a Russian subsidiary to a shareholder in an unfriendly state
A Russian LLC or joint-stock company may still pay its Western parent — but only within RUB 10 million a month, into a type C account, or under a permit granted on conditions the sub-commission set in 2023. Here is how the pieces fit.
The default rule
Decree No. 254 of 4 May 2022 brought distributions of profit to participants from unfriendly states under the “temporary procedure” of Decree No. 95. The practical effect is a monthly ceiling: a Russian company may pay profit to unfriendly participants in an aggregate amount of up to RUB 10 million per calendar month (or the equivalent in foreign currency) without any approval (navigator card 8.1). Anything above that must either be paid in roubles into a type C account opened in the recipient's name with a Russian bank (card 8.3) or be covered by an individual permit (card 8.2). Payment abroad above the cap without a permit is not an option a Russian bank will execute.
The same ceiling applies to joint-stock dividends, to interest and principal on loans from unfriendly creditors, and — since Decree No. 377 of 1 June 2026 — to Russian banks' own obligations under deposits held by unfriendly legal entities. The RUB 10 million limit is per debtor and per creditor, counted across all such obligations in the month; the Bank of Russia's Letter No. 12-4-2/3652 of 16 May 2022 explains the counting.
What a type C account is, and is not
A type C account is a rouble account in the foreign creditor's name at a Russian bank or depositary. Money paid into it discharges the Russian company's obligation, so the subsidiary is no longer in default. But the holder can use the funds only for a short list of purposes — paying Russian taxes, buying Russian government bonds, and a few others — and cannot transfer them abroad or convert them without a permit. Decree No. 550 of 4 August 2026 removed deposits of foreign individuals and of Russian-registered branches of foreign companies from the regime; for corporate shareholders and creditors it remains. The separate guide on type C accounts covers what can be done with a balance once it is there.
The two routes to a permit
The sub-commission's extract No. 171/5 of 7 July 2023 lists the conditions on which it will permit dividends above the cap to be paid abroad (card 8.4): the amount may not exceed 50% of the previous year's net profit; the applicant must show a retrospective of dividends paid in prior periods; the foreign shareholder must be willing to continue its business in Russia; and the subsidiary accepts KPIs, usually on headcount and investment, monitored by the Russian authorities. In practice the permit is granted to companies that have kept operating and have not announced an exit.
The second route, from extract No. 182/5 of 9 August 2023 (card 8.5), is tied to new investment: where the foreign shareholder has invested in the Russian economy after 1 April 2023 — expanding production, bringing technology — the sub-commission will permit dividends in the amount of that investment. The two routes can be combined in one application.
Since 30 October 2024 a Bank of Russia clarification (No. 4-OR) also allows a dividend obligation to be discharged by set-off against a claim the Russian company holds against the shareholder, provided a permit of the Bank of Russia or the Government Commission covers it (cards 8.7 and 10.4).
The exception that changes everything
None of the above applies if the shareholder, although registered in an unfriendly state, is controlled by Russian persons and the control has been disclosed to the Russian tax authorities under the Federal Tax Service's letter of 30 September 2022 (card 8.6). The same holds for a shareholder controlled by a person from a friendly state, where that control was established before 1 March 2022. In those cases profit may be distributed without the cap, the type C account or a permit. Groups that restructured their holding chain in 2022–2023 to put a friendly or Russian-controlled entity between the Russian subsidiary and the Western parent did so for this reason. The disclosure itself is a formal filing, not a permit, but it has to precede the payment.
What happens to the money abroad
Even a permitted dividend has a receiving-end problem. Decree No. 430 prohibits crediting foreign currency received as Russian dividends to a resident's foreign account (card 1.4) — relevant where the shareholder is itself a Russian currency resident, which is often true of individual owners with Russian citizenship. Roubles may be credited and then converted on the foreign account (card 1.5), and foreign-currency dividends may go to the foreign subsidiaries of Russian banks (card 1.6). A non-resident corporate shareholder is not bound by Decree No. 430; its difficulty is finding a correspondent bank that will accept the payment, which is a Western-sanctions question rather than a Russian one.
Checklist before paying
- Is the shareholder “unfriendly” under Directive No. 430-r, and is any of the control exceptions available and disclosed?
- Is the month's aggregate to that shareholder — dividends, interest, principal, deposit payouts — within RUB 10 million?
- If not: type C account, or a permit under extract No. 171/5 or No. 182/5, or set-off with a permit.
- Does the recipient's own account at the foreign bank accept the payment (Decree No. 430 for residents; correspondent banking for everyone)?