On 3 June 2022 the European Commission announced its sixth package of sanctions against Russia. Further details are now available on the Institute’s webpage on Sanctions.
One of the measures is that the provision directly or indirectly of certain business-relevant services such as accounting, auditing including statutory audit, bookkeeping and tax consulting services, business and management consulting, and public relations services to the Russian government, as well as to legal persons, entities or bodies established in Russia are now prohibited.
The relevant legal acts, a Decision 2022/884 and a Regulation 2022/879 have been published in the Official Journal.
The recitals to Regulation 2022/879 provide a little more detail of the services which fall within the sanctions. They state that “......accounting, auditing, bookkeeping and tax consultancy services cover the recording of commercial transactions for businesses and others; examination services of accounting records and financial statements; business tax planning and consulting; and the preparation of tax documents….”
Exemptions to the EU sanction are provided. There is an exemption for provision of services that are strictly necessary for the termination by 5 July 2022 of contracts which are not compliant with the Article (i.e now prohibited by the sanction) which were concluded before 4 June 2022 or of ancillary contracts necessary for the execution of such contracts.
Exemption is also given for services that are strictly necessary for the exercise of the right of defence in judicial proceedings and the right to an effective legal remedy.
An exemption is given for services for the exclusive use of entities established in Russia but owned, solely controlled, or jointly controlled, by an entity in an EU Member State.
Derogations (which would have to be sought) are provided for services necessary for humanitarian purposes.
The provisions are somewhat vague. For example, the wording on the applicable date is not entirely clear though it seems that the services are banned with a deadline for cessation of activities ,the provision of services that are strictly necessary, of 5 July 2022. Strictly necessary services are not defined either. On 24 June 2022 the EU Commission updated its FAQs to include an FAQ document on prohibition of certain business relevant services. You can click here to read the FAQs on sanctions on certain business relevant services.
In the UK a ban on professional services exports to Russia was announced by the UK government on May 4th.No further details have been publicly announced although we understand that legislation is being prepared on those sanctions. We will provide further information when available.
Please see links below for some recent news items on this issue:
European Commission press release on Sixth package of sanctions
Arthur Cox, solicitors
Linklaters Responses to the Russia/Ukraine Crisis – Sanctions Update No.3
Reed Smith
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