Finance Ministry proposes confiscating funds illegally moved offshore

We already presented our vision of general trends in the taxation of intragroup services in our alert on the most important tax events for the first half of 2019. Until recently the tax authorities have followed the main two lines of attack: (1) challenging expenses on the grounds of insufficient documentary support and (2) requalification of remuneration for services in other types of income (generally dividends).

Continue reading “Finance Ministry proposes confiscating funds illegally moved offshore”

Development of court practice on taxation of corporate restructurings

On 13 February 2017 the Commercial Court of Vladimir Oblast delivered a judgement in case No. А11-6203/2016 (the “Judgement”) under the claim of Mondelez Rus Limited Liability Company (the “Company”). The Judgement demonstrates which questions the Russian tax authorities address when analyzing the tax implications of corporate restructurings by multinational companies at the level of their Russian assets. Continue reading “Development of court practice on taxation of corporate restructurings”

Indirect sale of real estate in the Russian Federation in the context of the beneficial ownership rules

On 17 January 2017 the Commercial Court of Vladimir Oblast delivered a judgement in case No. А11-6602/2016 (the “Decision”) under the claim of Vladimir Energy Retail Company[1]  Public Joint-Stock Company (the “Company”). Continue reading “Indirect sale of real estate in the Russian Federation in the context of the beneficial ownership rules”

Development of Russian court practice on tax implications when dividends are paid to foreign companies (application of the “beneficial owner” concept).

On 13 October 2016 the Commercial Court of Kemerovo Region delivered a judgement in case No. А27-20527/2015 (the “Decision”) under the claim of Krasnobrodsky Yuzhny Limited Liability Company (the “Company”). Continue reading “Development of Russian court practice on tax implications when dividends are paid to foreign companies (application of the “beneficial owner” concept).”

Development of the practice of determining market price for tax purposes in arm’s-length transactions

On 1 August 2016 the Commercial Court of the Republic of Tatarstan delivered a decision in case No. А65-2248/2016 (the “Decision”) under the claim of A1-Nedvizhimost Limited Liability Company (the “Company”). Continue reading “Development of the practice of determining market price for tax purposes in arm’s-length transactions”

Development of practice on treating of facilities as immovable property for the purpose of imposing corporate property tax

On 12 July 2016 the Commercial Court of Moscow rendered a decision in case No. А40-98958/16-108-827.

This case considered a dispute between ORSKNEFTEORGSINTEZ OJSC (the “Company”) and Federal Tax Service Interregional Inspectorate No. 1 for Major Taxpayers connected with the Company’s failure to pay corporate property tax in 2013 on an industrial pipeline (the “Facility”) installed as part of implementing a project for construction of a loading rack for light petroleum products. The Company took the position that the tax is not payable since the facility is movable property accounted as fixed assets in 2013 and, hence, is subject to exemption from taxation according to Article 374(4)(8) of the RF Tax Code. Continue reading “Development of practice on treating of facilities as immovable property for the purpose of imposing corporate property tax”

Development of court practice in tax disputes over accounting of expenses to pay for intragroup services

On 23 May 2016 the Commercial Court of the North Caucasus Region delivered a ruling in the case of Bonduelle-Kuban LLC (the “Company”), No. А32-8522/2015, in which the court upheld the judgments of the lower courts and supported the position of the tax authority, denying the Company the right to deduct expenses to pay for intragroup services for profit tax purposes

The issue of deducting expenses for intragroup services has been relevant for many years now, and the court practice on this issue is quite varied. That being said, the number of disputes lost by taxpayers is quite high, especially in a situation involving calculation of remuneration according to the cost+ system (the “pioneers” in such disputes have been companies of the BAT group which also used this system to calculate the cost of services). Continue reading “Development of court practice in tax disputes over accounting of expenses to pay for intragroup services”