Legal news
and practices in Russia01.09.2020
Courts of three levels supported tax agency in dispute with taxpayer about non-compliance with the terms of tax exemption of income received when liquidating a controlled foreign company
FEDERAL TAX SERVICE
INFORMATION
TAX OFFICIALS PREVENTED AN ATTEMPT OF TAX-FREE DEOFFSHORIZATION
Moscow courts have supported tax authorities in a dispute with an individual who tried to avoid taxing the proceeds received when liquidating a controlled offshore foreign company.
The taxpayer submitted a refined tax return for 2017, in which he stated the income received when liquidating a foreign company, as well as the payment of dividends. At the same time, the taxpayer was not just the only member of the liquidated organization and its controlling person, but its borrower as well. In liquidation, the foreign company ceded the right to demand a loan to its own borrower. The taxpayer also submitted an application for exemption of such income from taxation in accordance with paragraph 60 of article 217 of the Tax Code of the Russian Federation.
The tax authority considered that in respect of the income from the shareholding in a foreign organization, paragraph 60 of article 217 of the Tax Code of the Russian Federation should not be applied, as the mandatory condition for the exemption of income from taxation is the provision of information on the value of property (property rights) according to the accounting records of the liquidated foreign organization as of the date when the property was received from it. However, there was no information on dividends received from the liquidated foreign organization in the liquidation balance provided by the taxpayer.
In addition, the court found that as a result of the assignment of the rights of demand under the loan, the creditor and the debtor coincided in the person of the taxpayer, respectively, the taxpayer received not property in kind, but material benefit in the form of non-refundable debt (to himself). Such material benefit is not specified by the provisions of paragraph 60 of article 217 of the Russian Federation and is subject to taxation.
Therefore, the courts of three levels, refusing to satisfy the claims, agreed with the tax authority’s argument that the taxpayer did not comply with the terms of tax exemption from the income obtained when liquidating a controlled foreign company.
ConsultantPlus newsletter 01.09.2020
| 
