No more taxable income in form of material gain from purchase of shares at IPOs: Bank of Russia Directive issued

Under the previous framework, the market price of securities – used, inter alia, to determine income in the form of material gain – was calculated without regard to transactions executed through targeted orders. Investors participating in IPOs submit such targeted orders to acquire specific securities. Accordingly, transactions executed in this manner do not participate in the formation of the securities’ market price for tax purposes. However, where, on the IPO date, the securities begin trading on an organized market at a price reflecting prevailing supply and demand for these securities following the initial offering, the price that is treated as the market price for PIT purposes may exceed the actual offering price, thereby giving rise to taxable income in the form of material gain in the hands of the individual investor. This typically occurred when demand for the offering significantly outstripped available supply, prompting investors who acquired securities in the initial offering to sell them on the secondary market on the same day.

It should be also noted that, for corporate taxpayers, it was expressly provided that where listed securities are acquired at the time of their placement, as well in the course of their first public offering following such placement (including through a broker), the actual acquisition price of such securities is deemed to be the market price and is recognized for corporate income tax purposes. By contrast, as noted above, no equivalent provisions were introduced for individuals. 

The Directive introduces a special approach to determining the market price of securities acquired by individuals in the context of IPOs:

• Where securities are acquired on an organized trading venue by public subscription on their first day of trading, their market price is determined as the actual offer price at which the securities were acquired.
• Where publicly traded securities are acquired on an organized trading venue in the course of their first day of trading, their market price is determined as the actual  transaction price at which the securities were acquired. 

As a result, in an IPO context, the acquisition price of shares is effectively aligned with their market price, thereby removing the basis for recognizing taxable income in the form of material gain. 

The Directive came into force on 28 March 2026 and replaces the previous Order of the Federal Service for Financial Markets (FSFM). No amendments to the Tax Code are required in this respect.