Estimates Suggest Russian Oligarchs Have Moved $50 Billion Worth of Assets Out of Europe

Russian billionaires, who have become the target of international sanctions and calls to repatriate their capital, have withdrawn assets worth tens of billions of dollars from Europe following Russia's full-scale invasion of Ukraine. According to Bloomberg, the total value of assets re-registered by Russians since February 2022 is estimated to be at least $50 billion.

Last month, shareholders of United Medical Group CY Plc and MD Medical Group Investments Plc, owned by magnates Igor Shilov and Mark Kurzer, approved the relocation of their companies from Cyprus to Russia. This move is contributing to raising the overall asset value to $50 billion.

This shift disrupts a decade-long practice of Russian billionaires keeping their assets in Europe, benefiting from favorable legal systems, the ability to receive dividends in foreign currency, and low taxes. Now, the wealthiest Russians are finding it increasingly challenging to find places to invest their wealth due to sanctions imposed by the US, UK, and Europe.

The transfer of assets registered in Cyprus, Jersey, and Switzerland to Russia and friendly countries such as the United Arab Emirates and Kazakhstan began shortly after the invasion. Among the early movers were family assets of fertilizer producer Andrey Guryev and metallurgy magnate Viktor Rashnikov from Switzerland and Cyprus to Russia. Others, like billionaire Igor Altushkin, joined later.

The Kremlin is pressuring Russia's richest individuals to repatriate their assets from countries it deems "unfriendly." The double taxation avoidance agreement was terminated, making it impractical to leave assets in places like Europe. Russia is complicating the payment of dividends and asset sales for organizations registered in these jurisdictions.

To entice oligarchs back home, the Kremlin is offering incentives like local domestic offshore zones with low taxes, introduced in 2018 and continually improved. Russia has also increased the cost of storing assets in traditional safe havens like Cyprus and Malta, while holding companies with international assets re-registered in Russia can expect tax benefits.

It's not only billionaires who are moving their assets; other Russians are also repatriating their holdings. This year, 115 companies relocated from offshore zones back to the homeland, bringing the total to 254.

Several of Russia's largest raw material and technology companies remain registered in Europe. Fertilizer manufacturer EuroChem Group AG, founded by billionaire Andrey Melnichenko, is based in Zug, Switzerland, while agricultural firm Ros Agro PLC has shifted its listing to Kazakhstan and is working on re-registration from Cyprus, as reported by the company last month.