The Private Client Industry in Russia during COVID-19
It was a welcome surprise to see the majority of wealthy Russian clients return home during the pandemic and immediately gather their family back together. For…
By Amy Glover / August 26, 2020
It was a welcome surprise to see the majority of wealthy Russian clients return home during the pandemic and immediately gather their family back together.
For advisors, it has been fantastic to spend more time with clients and get to know one another again.
The client focus has been on understanding proper estate planning options. Interestingly, Russian clients are increasingly including the younger generation in such planning discussions. It has been a good reset point for many of the families.
Regardless, clients did not expect the lockdown to last as long as it did. With borders being closed, clients have realised that they need more than just a Cypriot passport to withstand a global pandemic. As such, lots of Russian clients are re-thinking residency requirements for future pandemics.
There has also been an increased focus on compliance during lockdown, looking carefully at structures in place. In particular, the stock market in Russia is not very active. Some clients are looking to join it in the future, and the process of preparing the structures, being more transparent and thinking about the day-to-day management is being considered.
There has been a significant number of proposals with regards to incoming tax initiatives from the government. From January 1st 2021, advisors expect high-net individuals will need to pay increased rates on personal income tax on assets 5 million Rouble +. However, the government promises that the additional increase will go to medical support fund. Would you be more willing to pay it if you knew where it was going? At the same time, tax treaties with countries such as Luxembourg are being reviewed.
Lastly, there has been a number of tax incentives to encourage business growth, including tax breaks for technology start-ups and an incentive for foreign controlled companies to return to Russian shores.