EU Plans 11th Russia Sanctions Package Targeting 100 Entities and Individuals
The European Union is preparing to impose sanctions on 100 people and organizations as part of a broad 11th package aimed at restricting Russia. The information comes from the EUobserver publication.
The report outlines the possibility of adding new sanctions and granting special permissions for certain financial transactions to firms that exit the Russian market. These European companies would be allowed to transfer funds to sanctioned Russians if such transfers are essential to completing the transactions, with a deadline set for August 31, 2023. This provision underscores how the EU may balance enforcement with operational realities for ongoing business needs.
Additionally, regulators in Europe might permit the provision of legal services by year end to facilitate the orderly withdrawal of firms from Russia. Although roughly 1,000 foreign companies have already left Russia since February 24, 2022, a number of EU entities remain active in the country. Notable examples include subsidiaries of large European banks and energy companies such as Engie, OMV, and Total, among others.
Yet the exit from Russia is not simple. Any sale of Russian enterprises by companies from countries that face sanctions must receive approval from a subcommittee of the government commission on foreign investment, chaired by Russia the Minister of Finance. The process adds a layer of bureaucratic scrutiny that can slow or complicate divestment efforts.
Further, EUobserver notes that foreign enterprises may be required to pay an exit tax when leaving Russia. The tax would be at least 5 percent of the market value of the business, and at least 10 percent of the sale price if the discount on the sale is less than 90 percent of market value. Even larger discounts could trigger a higher tax burden. These rules reflect Russia’s approach to capturing value from departing foreign investors.
Beyond exit taxes, companies that continue operations in Russia could face taxes up to 25 percent of profits, according to a cited anonymous source. This scenario could materialize if bilateral tax treaties are suspended or altered in response to sanctions. Earlier proposals from Russian authorities suggested suspending activity with countries that impose sanctions in response to the broader sanctions regime.
The 11th sanctions package has been in development since the spring of 2023. During a visit to Kiev on May 9, Ursula von der Leyen, head of the European Commission, indicated that the new package would target bypasses of sanctions and loopholes. The measures could include prohibiting transit of European goods to third countries via Russia or restricting exports of European products to third countries that then supply Russia in contravention of EU sanctions.
Energy sector implications are also on the table. It was suggested that the Druzhba pipeline could be restricted for oil purchases by Germany, with Hungary potentially retaining certain rights. Other potential actions include new visa bans and asset freezes affecting Russian officials, organizations, and a couple of smaller banks, according to EUobserver.
On May 13, Polskie Radio reported that EU member states had not yet reached a consensus on the 11th package. A meeting of the EU permanent representatives on May 12 did not yield a decision. The outlet added that the package aims to close loopholes and curb attempts to circumvent existing restrictions. It also suggested that if goods destined for third countries are detected entering the Russian market, export bans will be imposed. Polskie Radio emphasizes that such measures would follow careful and thorough analysis.