Russian personal fund explained: taxes, setup, trusts

Payments to family from a personal fund during the founder's life are free of personal income tax, and the entry ticket is 100 million roubles, about $1,200,000. From 2027 the fund's reduced profit tax rate is set to rise from 15% to 22% under a bill.

In detail

Since 1 March 2022 Russia has allowed its citizens to create their own version of a family foundation: the personal fund (lichny fond) under the Civil Code. The entry ticket is high: from 100 million roubles, about $1,200,000. In return the fund offers what neither a company nor a will can: assets live by your rules during your lifetime and after death, and payments to family members while the founder is alive are free of personal income tax. Below is how a personal fund works, what it costs, what taxes it pays in 2026, what changes in 2027 and when a foreign trust or foundation is the better choice.

What a personal fund is, in plain words

A personal fund is a non-profit organisation that a citizen sets up to manage their assets. The founder transfers money, company shares, stocks or real estate to the fund; the fund owns them and distributes income under rules the founder wrote in advance. The rules are set out in Articles 123.20-4 to 123.20-8 of the Russian Civil Code.

• The fund is a separate legal entity. The assets belong to it, not to the founder.
• Only an individual can set up a fund. Since 2024 it can also be created on property acquired by spouses during marriage.
• The fund runs for a fixed term or indefinitely.
• Beneficiaries can be anyone, including the founder.

Put very simply, a personal fund is a safe with instructions. The manager holds the keys, and the founder writes the instructions: whom to pay, how much and when, what may be sold and what may not.

Lifetime and inheritance funds: the difference

There are two kinds of personal fund. The inheritance fund came first, on 1 September 2018, and is created only after the founder's death under a will. A lifetime fund is created by the founder, who also governs it as its supreme body.

A lifetime fund suits those who want to test the structure while alive: see how the manager performs and adjust the payment rules. An inheritance fund is cheaper and simpler, but nobody can fix its mistakes.

Personal fund, will or inheritance contract

A personal fund is not the only way to pass capital to a family. Russia also has wills and the inheritance contract, available since 1 June 2019. The difference lies in what happens to the assets after death.

A will works well for a flat and a bank account. For a business it is risky: shares scatter among heirs, and a company built over 20 years ends up run by a vote of people who never worked in it. A fund keeps the business whole: heirs get income, while decisions are taken by the manager under rules written in advance.

How much it costs to set up a personal fund

The main sum is the assets themselves: for a lifetime fund they must be worth at least 100 million roubles, about $1,200,000, confirmed by an appraiser's market valuation report.

The most expensive part is not the fee but the text of the management terms. It is a document for years and generations: if it does not foresee the manager's death, an heir's divorce or the sale of the business, the fund will stall exactly when it is meant to work.

How to set up a personal fund: step by step

1. Asset inventory and market valuation: money, shares, stocks, real estate.
2. Charter: name, purposes, bodies of the fund, term.
3. Management terms: beneficiaries, amount and order of payments, what may be done with the assets.
4. A notary certifies the founding decision, the charter and the management terms.
5. The notary files the documents electronically with the tax service. The fund is registered within 3 working days.
6. Assets are transferred to the fund: shares, stocks and real estate are re-registered in its name.
7. A manager is appointed and a bank account opened.

Since 2024 the founder's details are hidden in the public register of legal entities, and the charter is closed to outsiders. Registration moved from the Ministry of Justice to the tax service, and the law on non-profit organisations no longer applies to personal funds.

How the fund is run and who gets paid

• During their lifetime the founder is the fund's supreme body: appoints the manager and changes the rules.
• The manager runs the fund under the management terms.
• A board of trustees can be set up to supervise the manager.
• Beneficiaries receive payments under the management terms: money, use of property or the property itself.

The founder can write into the charter a ban on changing the charter and management terms by the founder. It sounds odd, but it is the main way to protect the structure from pressure: there is no point pressuring a founder who cannot change anything. Since 2024 other people can also donate assets to the fund, and the fund may become a qualified investor and hold foreign currency, securities and digital rights.

Which assets go into a personal fund

• Shares in limited liability companies, through a notary, with an entry in the register of legal entities.
• Stocks, through the registrar or a broker.
• Real estate, with the transfer registered in the real estate register.
• Money, foreign currency and securities, including foreign ones.
• Digital rights and intellectual property rights, such as a trademark.

The 100 million rouble threshold is measured on the assets the founder transfers when creating the fund. More assets can be added later, including from other people.

Who a personal fund suits

• A business owner in Russia who wants the company to outlive them and not split among heirs.
• A family with capital from $1,200,000 in Russian assets: shares, stocks, real estate.
• Those who want to pay children and parents income free of personal income tax while they remain Russian tax residents.
• Those with heirs who are too young, or not ready, to be trusted with the whole capital.

Who it does not suit: those with capital below the threshold, families living abroad who will not be Russian tax residents, and anyone hoping to hide assets from existing creditors.

Personal fund taxes in 2026

The tax rules for personal funds were rewritten in 2024, and since 2025 a fund pays profit tax at a reduced 15% if at least 90% of its income is passive.

Hence the fund's core tax logic: income accumulates inside at 15% and is paid to the family free of personal income tax. For a business owner this is a way to keep dividends in one place and pass them to children without annual tax on each of them. More on taxation of foreign structures on the page controlled foreign companies.

What changes for personal funds in 2027

In September 2026 the government submitted a package of Tax Code amendments to the State Duma. It brings three changes for personal funds, mostly from 1 January 2027:

• the reduced profit tax rate rises from 15% to 22%;
• tax on dividends received by the fund also rises from 15% to 22%;
• sales of debt securities and debt digital financial assets are added to the list of passive income.

A separate deputies' bill for a 25% rate was rejected by the Duma. The gap with the standard 25% rate narrows from 10 to 3 percentage points, so in 2027 funds will be set up not for the rate but for succession, management and tax-free payments to the family.

Personal funds and moving abroad

For readers living between countries, a personal fund has one important feature: its tax benefits are tied to Russian tax residence.

• While the founder is alive, payments to a relative who has become a Russian non-resident are taxed at 30%.
• After the founder's death, payments are free of personal income tax for all beneficiaries.
• The fund itself remains a Russian organisation and pays profit tax in Russia wherever the founder lives.
• The country where a beneficiary lives may tax the payments under its own rules: for it, this is income from a foreign structure.

So for a family that has already moved, or plans to, the fund is assessed twice: under Russian rules and under the rules of the country where the children will live. Sometimes a pair of structures works better: a personal fund for Russian assets and a foreign foundation or trust for assets abroad. On choosing a country to live in with taxes in mind, see the page relocation.

How a personal fund differs from a trust and a foreign foundation

Russian law has no trust: a trust is not an organisation but a relationship in which a trustee owns assets for the benefit of beneficiaries. A private foundation abroad is closer to a personal fund: it is also a legal entity. The differences lie in the law, the entry price and taxes.

A Russian tax resident who controls a foreign trust or foundation must notify the tax service. The fine for failing to file is 500,000 roubles, about $5,900. Profit of such a structure is taxed in the hands of the controlling person if it exceeds 10 million roubles a year. Tax authorities exchange data on foreign accounts automatically; some countries have suspended this exchange with Russia, but the duty to notify and declare remains. A comparison of all options is in the article trust or foundation: which to choose.

When a foreign structure is the better choice

• The assets are already abroad: accounts, real estate, shares in foreign companies.
• The family lives in other countries, and payments will go to Russian non-residents, for whom a personal fund gives no relief.
• Protection is needed from risks tied to Russian jurisdiction: account freezes, limits on moving capital.
• Capital is below $1,200,000: abroad the entry threshold is many times lower.

A personal fund wins when the main assets are in Russia: shares in Russian companies, real estate, securities held with Russian brokers. Then a foreign structure adds only reporting, while the Russian fund gives the family tax-free payments. More on foreign options in the articles trust and foundation in Gibraltar, trusts and foundations in Jersey and Guernsey and international trust in Cyprus.

Risks and pitfalls of a personal fund

• For the first 3 years the fund is liable for the founder's debts. Moving assets into a fund on the eve of a dispute with creditors is pointless.
• The 100 million rouble threshold is checked against a market valuation, not the contract price.
• The 15% rate holds only with 90% passive income. A fund that runs a business itself pays 25%.
• From 2027 the reduced rate rises to 22%: the benefit must be calculated on the new figures.
• A non-resident beneficiary pays 30% on payments during the founder's life.
• Rigid management terms protect against pressure but also make it hard to fix a mistake quickly.

The most common mistake is to start with the legal form rather than the family. First decide who will live on what in 20 years, and only then choose between a fund, a trust or a will. On inheritance across borders, see the article inheritance and a second passport, and on claiming a Russian inheritance from abroad, the article inheriting in Russia from abroad.

How we help

Murblz specialists work out what benefits the family more: a personal fund, a foreign foundation or a trust, prepare the documents and support the creation of the structure together with notaries and licensed managers.

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