Taxing assets of private entities, not just the Russian Central Bank. EU summit pushes discussion on Ukraine’s reconstruction.

Brussels – Not just Russian Central Bank assets. To rebuild Ukraine (when the time comes), the heads of state and government will push the discussion further by calling for a reflection on how to use the extra profits of private Russian entities, not just public ones, frozen the EU.

“The European Council reiterates its call for decisive progress, in coordination with partners, on extraordinary revenues held by private entities, deriving directly from Russia’s immobilized assets, to be directed to support Ukraine and its recovery and reconstruction, in line with applicable contractual obligations and in accordance with EU and international law,” reads the latest Board of Conclusions (dated Dec. 12) from the European summit opening tomorrow in Brussels.

The discussion of how to exploit the more than 200 billion euros of Russian assets tied up in the EU since the start of Russia’s war in Ukraine in February 2022 got into full swing yesterday, with a European Commission proposal of moving the profits from sanctioned Russian assets in the EU into a separate account, as a first, cautious step to then going on to use them to finance Ukraine’s reconstruction.

The ‘how to do it’ will have to be decided later based on the decisions of governments, which meanwhile will have to approve the proposal unanimously (and this will not be easy to do). To avoid legal problems, the Commission has proposed to use not the actual assets (which the European Commission estimated at about 211 billion euros), but the profits derived from just being immobilized in the EU territory, mainly held at Euroclear, in Belgium, and at Clearstream, in Luxembourg. The proposal, an EU official explains, will not be retroactive, so it cannot target the extra profits made so far, but will apply from the moment governments have found a common position on the issue. And only on resources flowing from the sanctioned Russian Central Bank.

According to the conclusions in the Ukraine chapter, EU leaders will also extend the discussion to private entities. The text of conclusions further states that the heads of state and government take “note of the recent proposals on extraordinary extraordinary extraordinary revenues from Russia’s immovable assets,” welcoming the agreement “reached on the directive on the definition of offenses and penalties for violating the Union’s restrictive measures.”