On Wednesday 23 July 2026, the EU Member States approved the 21st sanctions package against Russia and Belarus in response to the ongoing war of aggression against Ukraine. The package introduces new measures in the energy and financial sectors, new trade restrictions and further provisions designed to protect EU companies from abusive retaliatory litigation. It also continues a trend seen in previous sanctions packages, with EU measures increasingly being directed at companies in third countries involved in the circumvention of EU sanctions. China has now responded directly with countersanctions.
Following difficult negotiations, during which several EU Member States had sought exemptions or special arrangements for their national companies, EU leaders agreed on a new sanctions package targeting Russia and Belarus. Given the lengthy negotiations, the EU had already imposed additional personal sanctions on 15 June 2026, between the 20th and 21st sanctions packages. Those measures also introduced a new exemption for business activities involving Yangzhou Yangjie Electronic Technology Co., Ltd., a Chinese company added to the sanctions list under the 20th sanctions package. The EU’s latest measures build on the provisions of its 20th sanctions package adopted in April 2026 (see our article: Foreign trade law update: 20th package of EU sanctions against Russia). As in previous packages, the latest sanctions focus primarily on the energy and financial sectors, although new exemptions have softened certain LNG-related sanctions.
EU sanctions against Russia and Belarus
The 21st sanctions package mainly incorporates the following acts:
- Amending Regulation (EU) 2026/1848 tightens the largely trade-related sanctions set out in Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine.
- Amending Regulation (EU) 2026/1844 modifies Regulation (EU) 269/2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine. In addition to introducing new exemptions, the package also expands the legal protection available to EU companies.
- Implementing Regulation (EU) 2026/1843 amends Annex I to Regulation (EU) 269/2014, which lists the natural and legal persons subject to financial sanctions.
- Amending Regulation (EU) 2026/1846 expands the trade-related sanctions set out in Regulation (EC) 765/2006 on restrictive measures in view of the situation in Belarus and Belarus’ involvement in Russia’s aggression against Ukraine. Moreover, implementing Regulation (EU) 2026/1817 amends Annex I to Regulation (EC) 765/2006, which lists the natural and legal persons subject to financial sanctions.
Particularly noteworthy changes include:
Oil price cap and energy infrastructure
The mechanism introduced as part of the 18th sanctions package to adjust the oil price cap in line with average market prices has been suspended for one year until July 2027. The measure aims to limit Russia’s revenues from oil exports, particularly in light of the expected price increases should the Strait of Hormuz be closed. The mechanism can be reviewed earlier in the event of exceptional market developments.
The sale of LNG tankers to buyers in third countries is now subject to a notification requirement. Following an evaluation by the Commission, the Council will decide within three months whether to impose a full ban on sales to persons in Russia or for use in Russia. Such a ban would be accompanied by additional due diligence requirements similar to those already applicable to the sale of common high priority items.
By contrast, the import ban on Russian LNG for delivery to third countries under Article 3ra of Regulation (EU) 833/2014, which has been in force since 25 April 2026, has been relaxed through the introduction of new exemptions. Temporary exemptions, which may be extended, have been introduced both for LNG shipments to Japan and South Korea and for the performance of existing long-term contracts. These exemptions were introduced at the request of Greece, as Greek companies, including the shipping company Dynagas, transport Russian LNG to third countries.
Tougher sanctions against Russia’s shadow fleet
The EU has further expanded its measures against Russia’s shadow fleet. An additional 41 vessels – on top of the 632 already sanctioned – will now be subject to a port access ban and a ban on the provision of services. For the first time, the sanctions also target service providers in third countries that have rendered services to listed vessels.
Expansion of financial and cryptocurrency sanctions
The existing sanctions in the financial sector have been significantly ramped up. The list of Russian banks and banks in third countries subject to a transaction ban has been expanded, with more than 100 Russian banks now covered by the measure. In addition, the use of financial messaging services is now prohibited.
Sanctions targeting cryptocurrencies have likewise been tightened. Among other measures, the package introduces a new transaction ban targeting crypto-asset service providers and platforms in certain third countries. The restrictions on the ownership or control of crypto-asset service providers by Russian nationals have also been expanded.
Trade restrictions
Further restrictions have been introduced on the import and export of goods. On the export side, the restrictions now include certain metal powders and alloys used in the aerospace sector and in drone production, as well as related technologies such as jamming equipment.
On the import side, the package seeks in particular to further diversify metal ore imports. In 2025, EU imports of the affected products amounted to approximately EUR 60 million, compared with EUR 285 million before the start of Russia’s invasion of Ukraine.
Extension of divestment exemption
The exemptions for divestment from Russia have been extended by a further year. Under Article 12b Regulation (EU) 833/2014, authorisation for the sale of sanctioned products to persons and companies in Russia may now be granted until 31 December 2027, provided the transaction is strictly necessary for a divestment from Russia.
Legal protection for EU companies
The EU is further strengthening the legal protection afforded to European companies against abusive retaliatory litigation by expanding the prohibition on the recognition of Russian court judgments under Article 11c(1) Regulation (EU) 833/2014 and by granting EU courts the authority to order persons not to seek the enforcement of unlawful Russian judgments in any jurisdiction.
Anti-circumvention measures and new listings
The 21st sanctions package includes the largest round of individual listings since the start of the war, totalling 218 (48 individuals and 170 entities). The listed natural and legal persons are subject to asset freezes and no funds or economic resources may be made available to them. There are also travel restrictions in place for natural persons.
Increasing extraterritorial reach – listings of companies in third countries
This sanctions package also continues the trend of EU sanctions directly targeting companies in third countries. This mechanism is similar to US secondary sanctions in that it extends the reach of EU sanctions “through the back door”. By listing companies in third countries, the EU is imposing sanctions on businesses that circumvent its restrictive measures, even though, from a strictly legal point of view, those companies are not obliged to comply with EU sanctions. The 21st sanctions package employs this mechanism in a number of areas, including the following:
- Foreign trade (dual-use goods): Article 2b Regulation (EU) 833/2014, in conjunction with Annex IV, prohibits the export of dual-use goods and certain advanced technology products to the persons and entities listed in that Annex. A total of 51 new entities have now been added, 27 of which are based in third countries (notably China, Turkey, Kyrgyzstan, India, Kazakhstan and the United Arab Emirates).
- Financial sector (banks): The transaction bans laid down in Articles 5ac and 5ad Regulation (EU) 833/2014 in conjunction with Annexes XLIV and XLV allow the EU to deny financial or credit institutions access to transactions with EU economic operators. Under the 21st sanctions package, these institutions now include four banks based in third countries (Mongolia, Kyrgyzstan, India).
- Crypto-assets: Through the newly introduced Article 5bc and Annex LVII to Regulation (EU) 833/2014, the EU has, for the first time, established a standalone framework for imposing transaction bans on crypto-asset service providers and trading platforms located in third countries. The transaction ban has been extended to include 14 crypto platforms in third countries.
- Oil trading and refineries: Five entities have been added to the list of oil traders subject to the transaction ban, while the new Part D of Annex XLVII to Regulation (EU) 833/2014 makes it possible to impose such bans on refineries in Russia and third countries which process or refine Russian crude oil. The ban on the sole listed third-country refinery will however only come into force in January 2027.
- Shipping (shadow fleet): The 21st sanctions package expands the listing criteria for the EU port access ban (Article 3s in conjunction with Annex XLII to Regulation (EU) 833/2014) to include third-country vessels that provide certain services to listed vessels. Applying these new criteria, the EU has designated five bunker vessels that had previously supplied fuel to sanctioned tankers.
- LNG tanker sales: The new Article 3qa Regulation (EU) 833/2014 introduces a notification obligation for EU sellers where ownership of an LNG tanker is transferred to a buyer in a third country. The EU is also considering a complete ban on sales of such tankers to persons in Russia or for use in Russia, with a decision expected later this autumn. Should such a ban be adopted, EU sellers would need to ensure – when selling LNG tankers to buyers in third countries – that the vessels do not end up in Russia via resale chains or other circumvention arrangements.
China’s response
In a swift response to the EU’s 21st sanctions package, China’s Ministry of Commerce (MOFCOM) placed 14 EU companies on its export control list on 24 July 2026. The move follows the EU’s decision to list additional Chinese companies alleged to have supplied dual-use goods to Russia’s military-industrial complex. German businesses targeted by the Chinese restrictions include Sindlhauer Materials GmbH, Rheinmetall AG, and Antraco Chemie-Handelsgesellschaft mbH. The measures ban exports of dual-use goods by Chinese persons and companies to the listed EU companies and also have extraterritorial effect, prohibiting companies outside China from supplying Chinese-origin dual-use goods to the listed businesses.
New exemption for transactions with Yangzhou Yangjie Electronic Technology Co., Ltd
The 20th sanctions package already imposed personal sanctions on companies from third countries – including Chinese semiconductor supplier Yangzhou Yangjie Electronic Technology Co., Ltd, which was added to Annex I to Regulation (EU) 269/2014 for supplying Russia with dual-use goods. This meant that EU companies were immediately prohibited from making funds or economic resources available to the Chinese company, without any transition period. Given the strained conditions in the global semiconductor market, the measure jeopardised the supply chains of many EU businesses that depend on semiconductor products and were unable to replace the sanctioned supplier at short notice.
In response to pressure, especially from the European automotive sector, the EU introduced an exemption in Article 6b(5l) Regulation (EU) 269/2014 two months after the ban came into force. The new provision allows competent authorities to authorise the performance of contracts concluded with Yangzhou Yangjie Electronic Technology Co., Ltd. before 23 April 2026 until 31 December 2026. New transactions involving critical components manufactured by the sanctioned company may also be authorised until 16 March 2027. In Germany, the authorisation process is complicated by unresolved questions regarding the respective responsibilities of the Office for Economic Affairs and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle) and the Bundesbank. While formal application templates have not yet been published, administrative practice to date suggests that authorisation for new transactions involving critical components will require evidence of specific payments, such as non-binding quotations or pro forma invoices.
EU sanctions against Belarus
Finally, the 21st sanctions package further expands the sanctions against Belarus, aligning the trade-related provisions and protective measures for EU companies with those applicable under the Russia sanctions regime. This includes extending the existing restrictions on Belarusian nationals to prohibit them from owning, controlling, or holding any posts in the governing bodies of companies providing crypto-asset services.
In addition, four further Belarusian entities have been added to the sanctions list due to their support for the Belarusian and/or Russian defence and security sectors.
Outlook
EU businesses must ensure that their compliance systems reflect the clear trend in recent sanctions packages towards targeting companies based in third countries. Compliance with the Russia and Belarus sanctions regimes can no longer be achieved simply by avoiding dealings with embargoed countries. Increasingly, transactions with companies in non-sanctioned third countries may also be subject to restrictions.
At the same time, the expansion of Chinese sanctions measures against EU companies underscores the need to review existing compliance processes. Companies that supply products to EU businesses appearing on China’s export control list should therefore ensure that they have effective systems in place to identify dual-use products of Chinese origin.
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