City Backtracks on New Expat Rule

Moscow authorities backtracked Monday on a new rule requiring expatriates to register their apartment rental contracts as part of a drive to collect taxes, saying the rule was only a recommendation that would not be enforced.

A city official, Valery Goryunov, told reporters Friday that foreigners would have to start registering apartment rental contracts from Feb. 1, sparking a flurry of criticism and concern on Internet web sites frequented by expatriates.

Goryunov's department, the Moscow City Center for Rental Accommodation, confirmed Monday that the rule would go into effect, but it reversed itself after the Federal Migration Service, which oversees the registration of foreigners, dismissed the pending change as "nonsense."

"We just recommend that foreigners register at the place where they are going to live in Moscow," the department's deputy head Alexander Tezavrovsky said by telephone. "But it is not a law at all and doesn't carry any punitive measures."

Tezavrovsky said the recommendation aimed to improve the lives of foreigners and Russians alike because registering would give tenants access to free health care and public schools.

The recommendation to register with the Moscow City Center for Rental Accommodation comes in response to a City Hall decision on Nov. 25 to take new measures to collect taxes from landlords and to control illegal migration.

Moscow authorities lost up to 2 billion rubles ($61 million) in unpaid apartment rental taxes last year, Goryunov said Friday. Only 5,500 of the estimated 125,000 landlords in the city pay taxes on their rented apartments, he said.

Foreigners already are required to register with the Federal Migration Service, usually through their employers and by using their employers' address. They also can register by mail within three days of arrival to the country.

"The problem is that at the moment it is too easy to get registration in Moscow, and city authorities want to change that," said Sergei Melnikov, a lawyer specializing on immigration issues.

The recommendation might be a result of the financial crisis, Melnikov said. "The authorities don't want to lose tax money from landlords that are supposed to be spent on citizens and roads," he said.

A Federal Migration Service spokesman said Monday that "nothing is going to change for foreigners."

"It is nonsense," the spokesman, Konstantin Poltoranin, said of the announced change. "Moscow authorities are making a few attempts, but we are not planning to make any changes now or in the nearest future."

Konstantin Kovalyov, managing partner of Blackwood Real Estate, which assists expatriates in renting elite apartments, warned that a recommendation could be worse than a law. "It could result in corruption," he said.

Another problem is that the market is poorly controlled, and landlords are used to putting lower prices in their contracts in order to pay lower taxes, Kovalyov said.

Transforming the recommendation into law would not be easy, said Alexei Filippenkov of Visa Delight, which provides visa and registration support to expatriates. "We haven't found any regulation in the federal law that allows the new rule," Filippenkov said. "They [Moscow authorities] have to change the law first."

But Moscow authorities have a reputation of being able to get their initiatives approved on the federal level, he said. "We have been checking for changes in the district branches of the Federal Migration Service since Friday but haven't seen any yet," he said.

The Moscow City Center for Rental Accommodation, meanwhile, is preparing for a flood of foreigners to register from Feb. 1. The recommendation places the onus of registering on the foreigners, who are supposed to get their landlords to sign the paperwork.

"We are very busy at the moment doing all the preparations necessary to get ready by next Monday," Tezavrovsky said. "We need to teach more than 20 new employees so that the new system functions well."