The Council of the EU approved a measure that effectively imposes a levy on the proceeds from frozen Russian assets on 21 May, 2024. The generated funds will largely be used to support Ukraine’s military efforts in its conflict with Russia.
The Council adopted a set of legal acts ensuring that the net profits stemming from unexpected and extraordinary revenues accruing to central securities depositories (CSDs) in the EU, as a result of the implementation of the EU restrictive measures, will be used for further military support to Ukraine, as well as its defence industry capacities and reconstruction.
This means that the CSDs holding Russian sovereign assets and reserves of more than EUR 1 million will make a financial contribution from their corresponding net profits, accumulating since 15 February, 2024.
The amounts will be paid by the CSDs to the EU on a bi-annual basis, and will be used for further military support to Ukraine through the European Peace Facility, as well as with support to Ukraine’s defence industry capacities and reconstruction needs with EU programmes, according to the following key:
- European Peace Facility 90%.
- EU programmes financed from the EU budget 10%.
This allocation will be reviewed yearly, and for the first time before 1 January, 2025.
CSDs will be allowed to provisionally retain a share of around 10% of the financial contribution to comply with statutory capital and risk management requirements in view of the impact due to the war in Ukraine, with regard to the assets held by CSDs.
On 12 February 2024, the Council decided that CSDs holding more than EUR 1 million of assets and reserves of the Central Bank of Russia (CBR) that were immobilised as consequence of EU’s restrictive measures, must set aside extraordinary cash balances accumulating due to EU restrictive measures, and may not dispose of the ensuing net profits.
