# Special Administrative Regions (SAR): Redomiciliation of Holdings to Russia

> How special administrative regions on Russky and Oktyabrsky islands work, international holding company (IHC) status, and redomiciliation of holdings from abroad.

Author: Алёна Дунаева — юрист, Family Office (https://wiki.private.law/authors/dunaeva)
Last modified: 2026-07-16T22:48:00.000Z
Canonical: https://wiki.private.law/en/russia-sar-redomicile
Topics: structures
Jurisdictions: russia
Semantic tags: company

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## Concept

> 🔗 **Related**
> [holding structures](https://wiki.private.law/en/holding-structures)

Special administrative regions are two Russian enclaves with a special corporate and tax regime: Russky Island in Primorye and Oktyabrsky Island in Kaliningrad. They were created in 2018 so that companies with foreign registration could change their jurisdiction to Russian without liquidating and while preserving familiar holding mechanics. For businesses that grew on Cypriot and Dutch structures, this is a way to bring ownership back inside the country.

Legally, such a company is called international: a foreign entity transfers itself to the Russian register and continues to operate under rules similar to familiar offshore ones. Positionally, SARs occupy an intermediate niche between a classic offshore and an ordinary Russian company—the flexibility of holding law and currency concessions are preserved, while registration and tax attachment become Russian. For a group built through holding structures in Cyprus or the Netherlands, this allows preserving the corporate framework without reassembling ownership from scratch.

## Origins of SARs

> 🔗 **Related**
> [CFC](https://wiki.private.law/en/kik)  ·  [Cypriot holdings](https://wiki.private.law/en/company-cyprus)

Before 2018, major Russian capital held holdings abroad—Cyprus, the Netherlands, Luxembourg, British Virgin Islands. These jurisdictions provided flexible corporate law, a broad treaty network, and a structure understandable to banks and investors. De-offshorization—CFC rules from 2015, automatic exchange of information, growing substance requirements—made such constructions more expensive and transparent.

The 2022 sanctions completed the process: foreign registration of Russian business turned into a direct risk—freezes, bank refusals, inability to manage one's own assets. The response came in laws No. 290-FZ and No. 291-FZ of August 3, 2018, which introduced the figure of an international company and the mechanism of redomiciliation—transfer of a legal entity from a foreign register to the Russian one without ceasing operations. The company is preserved as the same entity, with its history and obligations, but now under Russian law.

The instrument itself grew from the logic of de-offshorization. From 2015, CFC rules came into effect: undistributed profits of foreign companies became taxable for Russian controlling persons, and ownership through Cyprus or BVI required disclosure and reporting. In parallel, the OECD and the European Union tightened substance requirements, and Cypriot holdings lost their former ease. By 2018, the state proposed a counter-route—its own haven with well-designed corporate law, placing it symmetrically on two geopolitical edges: Russky Island near Vladivostok and Oktyabrsky Island in Kaliningrad.

## How the Regime Works

A foreign organization registers in a SAR as an international company and assumes investment obligations in the region. Here it's worth distinguishing two figures. **International Company (IC)**—the basic status after redomiciliation: the company assumes an obligation to invest approximately 50 million rubles in the region within six months and receives currency and corporate concessions. **International Holding Company (IHC)**—a superstructure over it: upon meeting additional conditions regarding ownership structure and presence, it is specifically eligible for benefits on dividends, interest, and royalties.

The tax advantages of IHCs consist of two sets of rates, and it's important not to confuse them. The basic set: 0% on received dividends under the general participation rule—a share of at least 15% and continuous ownership of at least 365 days; 5% on outgoing dividends of a public IHC, as well as on received interest and royalties—versus the usual 13–20%; plus protection from tax audits for periods before relocation. The second set appeared in 2023, when the special IHC regime was reassembled: rates of 5% on received and 10% on paid dividends, interest, and royalties now apply to both public and non-public IHCs until January 1, 2036, but in exchange for real presence. The conditions are strict: a share of passive income above 90%, at least 70% of expenses within Russia, management from the Russian Federation, at least 15 employees residing in the region, and capital investments of at least 300 million rubles within three years ([amendments to the Tax Code of the Russian Federation](https://www.consultant.ru/legalnews/18853/)). Which set is used depends on the date of entry into the regime—this fork is discussed below, in the status conditions.

Benefits come bundled with obligations. For reduced profit tax rates, an IHC must invest at least 300 million rubles in the region's infrastructure within the established timeframe and maintain a real presence—office, personnel, management bodies. This is a preferential holding regime under FTS supervision, not an anonymous offshore shell: the benefit is configured for groups that actually transfer their management center to the country and bear associated costs.

> ⚙️ Substance here is a mandatory price of the regime: office, staff, management bodies, and investments in the region are verified by the FTS. Without their fulfillment, reduced rates do not apply, and IHC status can be lost, including retroactively.

## IHC Status Conditions

> 🔗 **Related**
> [holding regime](https://wiki.private.law/en/holding-structures)  ·  [substance](https://wiki.private.law/en/economic-substance)  ·  [CFC](https://wiki.private.law/en/kik)

Legally, the international company was introduced by Law No. 290-FZ, and the IHC tax regime is enshrined in Chapter 25 of the Tax Code of the Russian Federation; key conditions for reduced rates are collected in [Article 284.10](https://www.consultant.ru/document/cons_doc_LAW_28165/98bcbf8dcf50e119fcb60a72f71ef34c8e522999/). In addition to the participation rule described above for the zero rate, the article adds its own requirements—real presence in the region and investments in infrastructure of at least 300 million rubles; the same presence tests unlock the reduced rate on received interest and royalties. Essentially, this is a holding regime with verifiable substance and investment obligations, and the status must be maintained year after year.

The regime was fine-tuned for sanctions reality. Law No. 18-FZ of February 25, 2022 expanded benefits and simplified entry, allowing newer companies into the regions. A fork appeared by timing: those who received IHC status before February 25, 2022 use the previous, softer benefits until the end of 2025, and from 2026 must comply with the conditions of Article 284.10—presence, investments, ownership structure. From 2025, the general profit tax rate rose to 25%, so IHC reduced rates became more significant, and their justification—stricter. For former offshore holdings, this is a continuation of the logic of CFC rules: the benefit follows the real substance of the business.

> ⚙️ The key date for existing IHCs is the end of 2025: the previous, softer benefits are available only to those who received status before February 25, 2022, and only until this deadline. From 2026, all regime participants apply the uniform conditions of Article 284.10.

## Who Relocated

> 🔗 **Related**
> [British Virgin Islands](https://wiki.private.law/en/offshore-companies)

After 2022, redomiciliation became a mass route. Holdings historically assembled through Cyprus and the Netherlands moved to SARs—from technology groups to metallurgical ones. By the end of 2025, approximately 674 companies are registered in the two regions: about 526 on Oktyabrsky and 148 on Russky.

Notable names have taken this route. The parent structure of Tinkoff—ICPJSC "TCS Holding"—moved from Cyprus to Russky Island in February 2024, and trading of its shares on the Moscow Exchange resumed in March. VK completed its move from the British Virgin Islands to Oktyabrsky. In 2025 alone, about 135 companies redomiciled to SARs, including Ozon, Cian, and Etalon. For public issuers, this is also a way to maintain listing and settlements within the Russian perimeter.

Alongside the voluntary route, a compulsory one appeared—the law on economically significant organizations (ESO): here we're talking not about voluntary relocation, but about restoring control over strategic assets. How this mechanism works and the X5 case—below, in the regulation section.

## Regulation and Compliance

> 🔗 **Related**
> [beneficial ownership](https://wiki.private.law/en/beneficial-ownership-nominee)  ·  [CFC](https://wiki.private.law/en/kik)  ·  [personal decoupling](https://wiki.private.law/en/russia-tax-residency-exit)

Relocation is formalized through an authorized registering agent: the company submits documents on exclusion from the foreign register and entry into the Russian one, assumes investment obligations, and discloses the ownership structure down to ultimate beneficiaries. Then it lives under FTS supervision and the region's management company. Currency regulation is softened—a number of concessions on operations apply to international companies—however, requirements for disclosure of beneficial ownership and reporting remain fully Russian.

The compulsory track stands separately. The law on economically significant organizations (No. 470-FZ of August 4, 2023) and the government list of such organizations (Order No. 491-r of March 1, 2024) allow, by court decision, to suspend the corporate rights of a foreign parent company and transfer shares directly to Russian beneficiaries, bypassing the unfriendly parent structure. The list includes major groups—Akron, Rusagro, Alfa-Insurance, Azbuka Vkusa; the first public case was X5—about it below.

The regime does not cancel the rest of the perimeter. CFC rules continue to apply to the beneficiaries themselves, sanctions compliance and bank checks remain, and automatic exchange of tax information with unfriendly jurisdictions has effectively collapsed.

> 🧭 Corporate registration and personal tax status are decoupled. Transferring a holding to a SAR does not make the owner a Russian tax resident—personal decoupling is calculated by its own rules: days of presence and center of vital interests.

### X5 Case

The most famous example of the compulsory route is the grocery retailer X5. In 2024, the Ministry of Industry and Trade obtained through court the suspension of corporate rights of the Dutch X5 Retail Group over the Russian operating company: the Arbitration Court of the Moscow Region granted the claim on April 25, 2024, the appeal rejected the complaint on July 2, cassation upheld the decision on November 21. X5 became the first economically significant organization to go through this path; shares transferred to the Russian perimeter, and stocks returned to the Moscow Exchange. Later, the Ministry of Finance filed a similar lawsuit against Luxembourg's ABH Holdings—the parent company of Alfa-Bank and AlfaStrakhovanie. Thus, the ESO mechanism turned from a theoretical norm into a working tool for returning strategic assets.

## Where the Regime Is Heading

> 🔗 **Related**
> [automatic exchange](https://wiki.private.law/en/crs-overview)  ·  [suspension of tax treaties](https://wiki.private.law/en/russia-tax-treaties-suspension)  ·  [holding dividend flows](https://wiki.private.law/en/holding-dividend-flows)  ·  [relocation](https://wiki.private.law/en/relocation-from-russia)  ·  [Holding structures](https://wiki.private.law/en/holding-structures)  ·  [Loss of Russian tax residency](https://wiki.private.law/en/russia-tax-residency-exit)  ·  [Offshore companies](https://wiki.private.law/en/offshore-companies)  ·  [Currency residency and reporting](https://wiki.private.law/en/russia-foreign-account-reporting)

SARs have evolved from a niche option in 2018 to the main route for holdings whose beneficiaries and assets remain in Russia—voluntary redomiciliation for those who relocate themselves, and ESO for those returned through court—and the flow of residents continues to grow. The state is building out the regime for the task of an internal financial center: expanding the range of benefits, simplifying the listing of international public companies (IPHC) on the Moscow Exchange, adding arbitration clauses, currency concessions for settlements within the perimeter, and special regimes for exchanges and funds. The general tax reform of 2025, which raised the base profit tax rate to 25%, made IHC reduced rates noticeably more valuable, and against the backdrop of collapsed automatic exchange with unfriendly countries and suspension of tax treaties, an internal holding for many groups is becoming the default solution.

A sober view of the regime's boundaries: SARs close ownership, listing, and tax base inside the country, but do not cancel external restrictions. Recognition of Russian registration and IHC status by foreign tax authorities is not guaranteed, access to foreign banks for such structures has narrowed, and for non-resident beneficiaries and cross-border flows, sanctions and banking compliance remain. IHC status is beneficial for those whose center of interests and assets are already tied to Russia; for those who are moving capital and life outward, this is movement in the opposite direction, and the cross-border part—banks, settlements, beneficiary relocation—remains a separate task.

Therefore, the regime's benefits are calculated for a specific configuration: the regime fits well for groups whose assets, revenue, and management are already here. Before choosing Russian registration, it's worth calculating holding dividend flows and the entire relocation scenario—the tax effect depends on where the money and management center ultimately settle. Specific rates, deadlines, and status conditions should be verified against the current version of the Tax Code of the Russian Federation and relevant laws.

> 💡 IHC benefits are quite real—zero tax on qualified dividends and protection from audits of past periods—but they are tied to investment obligations to the region and real presence. The regime is beneficial for companies whose center of gravity is already in Russia.

*This material is of an overview nature and is not individual tax or legal advice.*

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## Factual claims

- Before 2018, major Russian capital held holdings abroad—Cyprus, the Netherlands, Luxembourg, British Virgin Islands.
- The 2022 sanctions completed the process: foreign registration of Russian business turned into a direct risk—freezes, bank refusals, inability to manage one's own assets.
- Legally, the international company was introduced by Law No.
- After 2022, redomiciliation became a mass route.
- Alongside the voluntary route, a compulsory one appeared—the law on economically significant organizations (ESO): here we're talking not about voluntary relocation, but about restoring control over strategic assets.
- The most famous example of the compulsory route is the grocery retailer X5.