Perched as it is in an upmarket neighbourhood overlooking the scenic Vondelpark, it is not hard to imagine why a Russian billionaire would have been interested in the 1879 five-storey Amsterdam property with a lush private garden.

That billionaire was Arkady Volozh, a co-founder of Russia’s biggest search engine, Yandex. He bought the £3m house in 2019, becoming one of the dozens of wealthy Russians who have invested in property in the Dutch capital.

But since October, the mansion, which had been undergoing extensive refurbishment, has been taken over by a group of squatters, who issued a statement saying they had done so in a protest against Volozh’s reported ties to the Kremlin, and the wider housing crisis in Amsterdam.

Last Wednesday, a Dutch court ruled the squatters did not have to vacate the property.

When the Guardian visited the house, it was hung with banners criticising the war in Ukraine. The Guardian was refused entry to the apartment by one of the squatters, who declined to give her name, citing security issues.

Lighting a cigarette, the squatter said she was relieved by the judge’s verdict. “The law is finally on our side,” she smiled.

Volozh was placed under EU sanctions in June after the bloc accused him of “materially or financially” supporting Russia as the country launched its invasion of Ukraine. For years, Russian opposition figures have argued that Yandex’s news aggregator, which has become a key source of information for many Russians, was censoring articles critical of the government and propping up Kremlin-friendly narratives.

An EU statement at the time of Volozh being placed under sanctions accused Yandex of “promoting state media and narratives in its search results, and deranking and removing content critical of the Kremlin, such as content related to Russia’s war of aggression against Ukraine”.

Volozh declared the European Commission’s decision “misguided” and quickly resigned from his position as chief executive to prevent Yandex from also being targeted by sanctions.

Heleen over de Linden, a Dutch lawyer who represented the squatters, said of the court ruling: “I was convinced we were in the right, but I was still somewhat surprised to see the judge agree with our arguments. These sanctions are new, so we haven’t had many cases like this before.”

De Linden said that traditionally the Netherlands had strict property rights that favoured owners, meaning the ruling could set an important precedent.

The west has imposed sanctions on hundreds of Russian politicians and prominent businesspeople since the start of the war, often seizing their multimillion-pound properties and yachts. The ruling in Amsterdam exposes the increasingly difficult situation for Russia’s rich and powerful in Europe, a region where their money and investment were once welcomed with open arms.

As an individual under sanctions, Volozh is prevented from entering or transiting EU territory. The sanctions also mean all accounts belonging to Volozh have been frozen, and he is prohibited from making any profit from renting out property.

Volozh’s lawyer, John Wolfs, argued in court that his client was renovating the flat with the aim of subsequently moving into it with his family. “Their main residence is elsewhere. But because Mr Volozh’s activities take place in Europe, they regularly visit Amsterdam. They think it’s a beautiful city,” Wolfs said in court.

Although he is barred from entering the Netherlands on his Russian passport, Volozh acquired Maltese citizenship in 2016 through the controversial “golden passport” scheme, which could open the door for him to travel to and reside in the Netherlands.

Wolfs pointed to a section of EU law that permits individuals under sanctions to use their property for “personal consumption”.

“Assets which are only suitable for personal use or consumption, and therefore cannot be used by a designated person to obtain funds, goods or services, do not fall within the definition of ‘economic resources,’” the Council of Europe said in a report in June 2022. “Therefore they are not covered by the regulations and no authorisation is required to make them available to a designated person.”

De Linden questioned the idea that Volozh intended to move into the apartment. “The property is very nice, but would a Russian billionaire really move to the centre of Amsterdam with his grownup children? This property is not like a massive mansion or a private island that Russian oligarchs usually live on,” she said.

“Even if he would move to the property, his life would be severely restricted here. He can’t pay for food or other services. He isn’t even allowed to pay for a taxi,” the lawyer added.

There were also signs that Volozh was renovating the house in order to rent it, or part of it, out. According to information available on the Dutch public registry, a new address was added to the apartment in 2022, which property experts said could mean that Volozh may wish to rent or sell.

“You don’t add addresses if you’re going to live somewhere yourself, there is no reason to do that. This is usually done so that you can rent out the extra home or plan to split the building and sell it as separate flats,” said Gert Jan Bakker, an expert in the Dutch housing market.

Yvo Amar, a specialist in the field of sanctions and export control, said the refurbishment posed legal questions. “A sanctioned individual is not allowed to refurbish his flat unless his contractor received an exemption from the ministry of finance,” Amar said. “The house grows in value after you renovate it. That goes against the sanctions,” Amar added.

Having heard both sides, the court sided with the squatters. The judge ruled Volozh was unlikely to move into the property given the sanctions and the fact that he had no reason to travel to the Netherlands as he had resigned from his position at Yandex, a company that has its European headquarters in Amsterdam.

In a statement to the Guardian, Wolfs said he planned to appeal. “There is no legal basis whatsoever for squatters to take over a family home simply because it was empty while undergoing renovation. We are appealing the decision, and trust that the rule of law and facts will prevail,” he said.

In London, which according to one estimate has more than 1,895 Russian-owned properties, squatters have also been moving into the mansions of Russian billionaires who have been placed under sanctions. In March, police arrested four squatters who had moved into the £50m London mansion of Oleg Deripaska, an aluminium magnate and close ally of Vladimir Putin.