General authorisation for the provision of business software and services to Russian (subsidiary) companies

published on 3 June 2024 | reading time approx. 2 minutes

1. From 20 June 2024, business software and certain services may only be supplied to Russian companies that are 100 percent controlled by an EU parent company after prior notification to the Federal Office of Economics and Export Control (German “BAFA”).

2. The services concerned include:

Provision of business management software (ERP software) and industrial design
Auditing, accounting and tax consultancy, PR
Legal and IT consultancy
Market and opinion research
All types of technical assistance and brokering services related to the above

3. With general authorisation No. 42 (General Authorisation) of 20 February 2024, BAFA has approved these services in general form. This means that an individual authorisation is no longer required, but only a single notification to BAFA no later than 30 days after the start of the service. The existing subsidiary privilege will continue to apply until 20 June 2024.

4. The General Authorisation generally applies to German residents within the meaning of Section 2 (15) Foreign Trade and Payments Act (German “Außenwirtschaftsgesetz”). Thanks to the General Authorisation, a detailed and time-consuming authorisation procedure is no longer necessary.

The EU's 12^th sanctions package changed the requirements for the provision of services to Russian legal entities. Until then, a blanket exemption applied to the provision of services to subsidiaries under the 100 per cent control of one (or more) EU parent companies (“subsidiaries”).

From 20 June 2024, the ban on the provision of services to Russian legal and natural persons would have applied to subsidiaries as well. In order to anticipate the expected flood of applications, BAFA has now responded with General Authorisation No. 42.

Accordingly, the services concerned are authorised in general form, so that a formal authorisation in individual cases pursuant to Article 5n (10) (c) and (h) of Regulation (EU) No. 833/2014 (Russia Embargo Regulation) is no longer required.

Requirements for notification to BAFA

The following aspects have to be considered when notifying BAFA:

1. Formal notification. Anyone providing the above-mentioned services must register as a user via the BAFA online portal (ELAN-K2) before using the General Authorisation for the first time or within 30 days. Registration is required. The registration can either be made by the service provider itself or you can have Rödl & Partner authorized as a service provider so that the registration is made by us.

2. Content of the notification. The notification must contain information about the service provider, the service recipient and the company that controls or owns the service recipient. It is sufficient to report the first supply of services. Subsequent supplies of services to the same recipient do not need to be notified, even if they are different services.

In practice, the General Authorisation makes the work much easier: a time-consuming authorisation procedure and a detailed description of the services in each individual case are no longer necessary.

It should be noted, however, that the General Authorisation is granted on condition that the service providers actually submit the relevant notification to the BAFA. If they fail to do so, they will not be able to claim the General Authorisation. and the service will be prohibited under the Russia Embargo Regulation from 20 June 2024!