The leaders of the countries of the European Union (EU) supported the introduction of a "tax on unforeseen income", which will allow Ukraine to transfer profits from the frozen assets of the Russian Central Bank.
Bloomberg writes about this with reference to sources familiar with the course of negotiations at the summit in Brussels.
The more than €200 billion in frozen assets of the Central Bank is expected to bring in about €3 billion in revenue.
More than half of the assets are in cash and deposits, but at the same time, a significant part of the amount is kept in securities, which will be converted into cash in the coming years.
The agency adds that many securities are held in the accounts of the Belgian financial company Euroclear. In the first quarter of this year, they generated revenue of approximately €750 million.
The prospect of taxing and sequestering windfall raises both legal and financial issues, according to a Bloomberg interlocutor.
He said several EU leaders at the summit expressed concern that the use of asset income could encourage reserve holders to abandon the euro. However, supporters of the tax emphasized that this risk was avoided when they blocked the assets of the Central Bank.
The EU also plans to seek support from the G7 countries, although the vast majority of authorized assets of the Central Bank are located in Europe. Several European countries want the G7 to approve the transfer of revenues to Ukraine, Bloomberg sources stated.
The agency notes that the option with a windfall tax is the least problematic of the options for transferring part of Russian assets to Ukraine discussed by European countries. However, there is still a risk of challenging this decision in court.
- Since the beginning of the war in Ukraine, the EU has frozen the assets of the Russian Central Bank for more than €200 billion. A significant part of these funds is kept in the depository of Euroclear and has already brought almost €750 million in profit in the first quarter of 2023. In addition, the EU has frozen €24.1 billion in assets belonging to Russians and Russian companies under sanctions.
- At the same time, Bloomberg, referring to the relevant document, writes that the European Union cannot legally confiscate the frozen Russian assets in full, instead focusing on their temporary use.
- The government of Estonia approved the principles of using frozen Russian assets to support Ukraine. Estonia became the first European country to develop such a legal solution.
- The Prime Minister Denys Shmyhal said on February 24 that Ukraine claims $300-500 billion of frozen Russian assets.