Bank of Russia explains IIA regulation aspects
The regulator turns the attention of professional market participants to important aspects of managing individual investment accounts (IIAs). Since the beginning of 2024, it is allowed to open only type 3 IIAs without limiting investment amounts and for a period of five to ten years, depending on the year of signing the agreement. Type 1 and type 2 IIAs opened before 1 January 2024 continue to be maintained on the same terms. However, it is prohibited to have old- and new-type accounts at the same time.
Investors may transform their older IIAs into new ones. In this case, the period of ownership of the account by the investor, but no more than three years, will be recognised. Such transformed IIAs will be subject to new rules, including the application for a tax deduction and payments due on securities.
The regulator clarifies that returns on securities recorded in a type 3 IIA may only be credited to this account, but it is prohibited to transfer the payments, for example, to the client’s bank account. If an investor decides to withdraw all or part of funds from the IIA, the agreement will be cancelled and all tax benefits will be lost. The exception is situations when funds are needed to pay for expensive medical services the list of which was approved by the Russian Government.
Furthermore, as regards old-type IIAs, the procedure for paying income on securities may still be stipulated in the agreement with a broker or trust manager.
The Bank of Russia also reminds market participants that, from 1 January 2024, no foreign financial instruments may be purchased using IIAs of any type. This ban is not applicable to earlier purchased foreign assets and does not prevent investors from transforming their IIAs.
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