IIS-3 or a brokerage account: a tax break in exchange for a lock-up

Both an IIS-3 and an ordinary brokerage account are used to buy securities of Russian issuers. The difference between them lies not in the market but in the arrangement with the state. An IIS-3 gives a deduction on the contribution and exempts the income from tax at closing, but taking the invested money out before the end of the statutory term is possible only at the cost of both benefits. An ordinary account gives no deduction on the contribution and sets no term: free cash is withdrawn whenever it is needed.

So the question of "which to open" breaks down into two others. How likely is it that the money will be needed before the term is up? And is there any tax that the deduction is able to refund? The mechanics of the account itself — terms, the procedure for deductions, closing — are covered in the article on how the third-type IIS works; here there is only the comparison and the conditions under which each side loses.

What is traded for what

The new-style account has been available since 1 January 2024. Its basis is the Federal Law "On the Securities Market", and the tax part is set out in Article 219.2 of the Russian Tax Code. Its benefits apply together, not as a choice between them, as was the case with accounts of the earlier types.

The first is the deduction on the contribution. It is calculated on an amount capped at RUB 400,000 a year, and the only tax that can be refunded is tax actually paid on other income — at the rate at which it was paid. The second is the exemption of income when the account is closed; its cap is RUB 30m.

The price of both benefits is the term. For an account opened in 2026, the minimum term is 5 years. For accounts opened later it lengthens in steps, and the step in force has to be checked in the year of opening. Taking out part of the invested money without closing the account is not allowed. Foreign securities cannot be bought on such an account.

An ordinary brokerage account has neither a term nor a deduction on the contribution. Income is taxed at the general rates: 13% within an annual tax base of RUB 2.4m and 15% above that threshold. It has a benefit of its own as well — for holding a security for a long time; the minimum holding period for it is 3 years. The conditions under which it applies are gathered in the article on the long-term holding benefit; without them the ordinary account looks poorer than it is.

There is also income that the IIS-3 benefit does not touch — dividends. Tax on them is withheld at payment, and the exemption of income at the closing of the account does not cover them. On the other hand, dividends from an IIS-3 can be received to a separate bank account — an option introduced by a law signed in 2024. What stays locked is the invested money, not the dividends on it.

Conditions under which the IIS-3 loses

The term is not met. Closing ahead of term cancels the benefits: the deductions already refunded will have to be returned to the budget with late-payment interest. The law makes an exception for withdrawing money to pay for costly medical treatment from a list approved by the Government. In all other cases an account closed early costs more than an ordinary account — by the amount of the interest and by all the time the money was out of reach. How to estimate the price of an exit in advance is shown in the breakdown of closing an IIS early.

There is nothing to refund. The deduction on the contribution does not create money; it returns tax that has already been paid. If there was no taxable income during the year — neither a salary with tax withheld nor any other income on which tax was paid — a contribution to an IIS-3 will refund nothing. Only the second benefit remains, and it has to be waited for until closing. The step-by-step calculation is in the article on the IIS-3 tax deduction.

The portfolio lives on dividends. When most of the income comes from dividends rather than from price growth, the exemption at closing exempts very little: the tax on them was withheld along the way. Which securities pay dividends and how often can be seen in the dividends section — that is enough to understand what the income of the planned equity portfolio will be made of.

Securities are needed that cannot be held on the account. If the plan includes foreign securities, the IIS-3 is closed to them. What of this is available on an ordinary account is determined by the agreement with the broker and by the regulator's rules.

Conditions under which the ordinary account loses

The term is known and long, and tax is being paid on other income. In that case the ordinary account does not provide the refund that a contribution to an IIS-3 would provide with the same money.

The income is expected from price growth. On an ordinary account the profit from a sale enters the tax base at the general rates, and what can reduce it is the long-term holding benefit — on its own conditions. On an IIS-3 the income is exempted when the account is closed, within the cap set by law.

Protection against the bankruptcy of an intermediary is a point to be checked for both accounts. Since 1 January 2026 a guarantee system has been in operation for the IIS-3. If a broker or asset manager participating in it goes bankrupt, the IIS Guarantee Fund pays compensation capped at RUB 1.4m. The intermediary's participation is voluntary, a fall in the price of securities is not a guarantee event, and this system has nothing to do with bank deposit insurance. What is covered and what is not is in the article on the IIS guarantee system. Whether an ordinary account has comparable protection depends on the law and on the agreement with the intermediary, and has to be checked separately.

Split the money, not the accounts

The law does not require choosing one. It is permitted to hold three accounts of the new type at the same time, there is no annual ceiling on contributions to the account itself — only the deduction is limited — and nobody forbids an ordinary account alongside. So the question is better put about the money than about the account: which part of it has a term that is known and longer than the minimum, and which part may be needed in any given month. The first is able to meet the conditions of an IIS-3; the second is not, however much the deduction promises.

Nor does the choice of account tie the investor to an intermediary: an IIS-3 can be transferred to another broker or to an asset management company without losing the term. How this is done and what to read in the agreement is in the article on opening and transferring an IIS-3; the procedure for checking the intermediary itself is described in the article on choosing a broker.

Testing it on your own figures

A general comparison says nothing about your case until the contribution, the term and the tax paid on other income have been put into it. The IIS-3 calculator shows what the benefits yield for your contribution and term; the tax calculator shows how much tax falls on the same income without them.

The most useful thing to test is not the favourable scenario but the worst: the contributions have been made, the deductions received, and the account has had to be closed ahead of term. If such an outcome is plausible for you, the comparison has to start from it.

When what is said here stops being true

The comparison rests on assumptions, and each of them may shift.

The wording of the law. The minimum term depends on the year the account is opened, and the deduction caps and the rates are given as of the date this article was prepared. An account is opened for years, and the conditions written down today may be different by the time it is closed — the current wording of Article 219.2 of the Russian Tax Code has to be checked before opening and before closing.

Your tax. The deduction on the contribution is a derivative of the tax paid on other income. If the source of income has changed or the withheld tax has disappeared, the answer to the question about the contribution has changed as well.

The agreement with the intermediary. Fees, the procedure for transferring dividends to a bank account, the time taken to execute a withdrawal order, and participation in the guarantee system are determined by the agreement and the rules of the particular broker or asset manager.

And none of the benefits concerns the performance of the securities themselves. The deduction reduces the tax, not the loss: an account with refunded tax on which securities that have fallen in price were bought remains a loss-making account. The question "IIS-3 or an ordinary account" is settled after the question "what to buy and for how long", not instead of it.