Notice of Controlled Foreign Companies. Notice of participation in foreign organizations. What if you don't give notice?

The need to generate a notice of participation in foreign organizations appeared relatively recently - since January 2015. For a number of persons, this document is mandatory, while its compilation takes place according to a certain form of C-IO.

FILES

Who is required to notify

This document must be submitted:

• citizens of Russia;
• persons with dual citizenship;
• those who do not have citizenship at all;
• enterprises and organizations.

In addition, the obligation to form the document also lies with some foreign companies, including those that have divisions and branches within the Russian Federation and are considered, respectively, the taxpayers of our country.

The reason for filing a notification is both joining a foreign organization and leaving it. When "reformatting" the shares, the regulatory authorities should also be notified about this.

Where and when to submit the document

The notification is submitted to the local territorial office of the tax service, no later than thirty days (according to the calendar) from the date of "entry", change of share or "exit" from a foreign organization.

Refusal to accept a document

Sometimes tax authorities may refuse to accept submitted documents. Notification of participation in foreign organizations in this case is no exception. True, the list of reasons for refusal is not so long:

• incorrectly completed form;
• failure to provide original supporting documents;
• poor copy quality.

To correct the situation, you need to correct all the shortcomings and apply again.

What if you don't give notice?

Failure to fulfill the obligation to transmit a notice of participation in foreign organizations can lead to serious consequences in the form of a rather large fine (up to several tens of thousands of rubles).

At the same time, it should be remembered that the deliberate concealment of this fact will also not end in anything good, since today the tax authorities have access to various sources of information (including assisting with the tax authorities of other states in terms of information exchange).

Rules for filling out a notice

If you need to generate and send a notification of participation in foreign organizations to the tax office, we recommend that you use the tips below and see a sample of filling out the document.

To begin with, we recall that the notification form has a unified form and it is mandatory for use.

1. You can enter information into the form either by hand (but only with a blue, black or purple ballpoint pen) or in printed form on a computer.
2. Words must be written in large capital letters, legibly, so that it is readable and understandable.
3. Make mistakes in the form, do not make blots. If an oversight nevertheless happened, you should not correct it, it is better to fill out another form. And, of course, it is forbidden to indicate deliberately false information in the notification - if such facts are discovered, the consequences can be the most unpleasant.

If, after the notification has been sent, the taxpayer suddenly discovers that there was some inaccuracy in it, he has the right to submit an updated notification - there are no sanctions for this, the main thing is to meet the deadlines.

Sample filling out a notice of participation in foreign organizations

Filling out the first sheet

On the first page at the top of the notice, information about the taxpayer is entered: details of the company, its full name (with a deciphered organizational and legal status). It also indicates the number of the adjustment, the code of the tax authority and the code of the taxpayer, the reason for the formation of the document.

The bottom of the page is divided into two sections. In the left one, you first need to indicate the notifier's code (the transcript is given immediately), then enter his personal and contact details, sign and fill out the date.

Filling out the second sheet

The second page of the notification is filled out if the speech is conducted on behalf of an individual. At the same time, as mentioned above, it does not matter whether he is a citizen of only the Russian Federation, has dual citizenship, or none at all. All information entered here must correspond to a passport or other identity document. If the notifier leaves this page blank, he must still put his signature and date under it (the same applies to other pages of the document).

Filling out the third sheet

The third page contains information about the foreign organization in question. First, you need to enter its name here, both in Russian and English.

The country code, company registration number and address of its actual location, other known data are entered below. Then it should be noted how the notifier is related to the organization: directly, indirectly, or both, the date, month, year of occurrence of participation, share and end date (the latter - if the document is submitted in connection with the withdrawal from the organization).

Filling out the fourth sheet

The fourth page includes information about a Russian company that is a member of a foreign organization. The information entered here must be identical to the constituent papers of the company.

Filling out the fifth sheet

Data on participation in a foreign structure without the formation of a legal entity are entered on the fifth page. person (i.e. partnership, foundation, trust, partnership, etc.).

Completing the sixth sheet

The sixth page indicates the status of a participant in a foreign structure without the formation of a legal entity. person (i.e. who is the applicant: the founder of such a company, the recipient of income or a controlling entity).

Completing the seventh sheet

Finally, the last - the seventh page - reveals the procedure for the notifier's indirect participation in a foreign company: all links of the chain, which includes a foreign organization, in which, in turn, the notifier participates, are indicated here, as well as the serial number of his participation and his share.

How to send a notification

To send a notification to the tax office, you can use one of several options:

1. The most reliable and simple is to take the completed form to the tax office in person and transfer it from hand to hand to a specialist.
2. You can forward the notification with a representative, provided, of course, that he will have a power of attorney certified by a notary.
3. And one more way: send the document by registered mail with acknowledgment of receipt via regular mail - this will take more time, but it guarantees that the notification will be received by the tax authorities.

> Preparation and submission of CFC notifications

Filing notices of participation in foreign entities and notices of controlled foreign companies (CFCs)

In accordance with Article 25.14 of the Tax Code of the Russian Federation

1) about your participation in foreign organizations (on the establishment of foreign structures without forming a legal entity);
2) about

These are TWO different types of Notices that must be filed (or may not be filed under certain conditions, which will be discussed below) with the tax authority by a person who owns a foreign company.

Let's consider both options in turn.

In accordance with paragraph 1 of paragraph 3.1. article 23 of the Tax Code of the Russian Federation, the taxpayer is obliged to notify the tax authority of both direct and indirect participation in foreign organizations if the share of such participation exceeds 10%. At the same time, the share of indirect participation in a foreign organization is determined in the manner prescribed by Art. 105.2 of the Tax Code of the Russian Federation.

It is also necessary to notify about participation in foreign organizations if participation in them is carried out through nominal persons.

Example.
You are the beneficiary of a Cyprus company - you are not a director or shareholder, you are a beneficiary whose rights to the company arise on the basis of a declaration of trust - the law nevertheless requires that you file a Notice as the person controlling the company. At the same time, "control" means the right to influence the decision on the distribution of the company's profits.

The obligation to notify also lies with taxpayers who have established the so-called ISBOYUL - a foreign structure without forming a legal entity (these include current British LLP and Scottish LP partnerships). In accordance with Clause 2, Article 11 of the Tax Code of the Russian Federation ISBOYUL means an organizational form created in accordance with the legislation of a foreign state (territory) without forming a legal entity (in particular, fund, partnership, fellowship, trust, another form of collective investment and (or) trust management), which, in accordance with its personal law, is entitled to carry out activities, aimed at generating income(arrived) in the interests its participants (shareholders, principals or other persons) or other beneficiaries.

Deadline for filing notice

In accordance with paragraph 3 of Art. 25.14 of the Tax Code of the Russian Federation:

Notice of participation in foreign organizations (on the establishment of foreign structures without forming a legal entity) is submitted no later than three months from the date of occurrence (change of share) of participation in such a foreign organization (the date of establishment of a foreign structure without the formation of a legal entity), which is the basis for submitting such a notification.

Procedure and form of notification

Form and format of notification of participation in foreign organizations approved Order of the Federal Tax Service of the Russian Federation dated April 24, 2015 No. ММВ-7-14/ [email protected]. It should be noted that in accordance with the literal interpretation of the norms of this order:

• legal entities must send notification exclusively
• individuals entitled to submit a notice on paper

* See the Resolution of the 9th AAC in case No. A40-24922/16 dated August 18, 2016 on the imposition of a fine under Art. 129.6 of the Tax Code of the Russian Federation, to a legal entity due to a violation of the deadline for submitting a notice of participation in foreign organizations in electronic form. On our own behalf, we will say that the case is quite interesting, because. the taxpayer-legal entity submitted the relevant notifications, however, only on paper. In electronic form, similar notices were submitted in violation of the time limit stipulated by the current legislation. The court took the side of the tax authority, pointing out that in relation to legal entities, the only PROPER form of filing a notification is an electronic form, and the only proper way is through the TCS.

Penalty for failure to submit or late submission of notifications

In accordance with paragraph 2 of article 129.6 of the Tax Code of the Russian Federation

Unlawful failure by a taxpayer to submit a notice of participation in foreign organizations to the tax authority within the prescribed period or submission of a notice of participation in foreign organizations containing false information,

entails a fine in the amount of 50,000 rubles in relation to each foreign organization, information about which is not provided or in respect of which false information is provided.

This penalty is a one-time fee.

In case of detection of incomplete information, inaccuracies or errors in filling out the submitted notice of participation in foreign organizations, the taxpayer is also entitled, on the basis of Clause 7 of Article 25.14 of the Tax Code of the Russian Federation submit to the tax authority amended notice.
In the event that an amended notice is submitted before the moment when the taxpayer has learned that the tax authority has established the fact that false information is reflected in the notice, the taxpayer shall be released from liability under Article 129.6 of this Code.

The cost of our services

* Depending on the complexity of the corporate structure. The indicated price includes an analysis of the ownership structure, as well as oral consultations related to the CFC

What is a "controlled foreign company" (CFC)?

After the issue has been analyzed in terms of the need to notify the tax authority about participation in foreign organizations, it is necessary to analyze the issue whether your foreign organization is a CFC - a “controlled foreign company”.
IMPORTANT! It is necessary to notify about participation in foreign organizations regardless of whether these organizations will fall under the signs of a CFC or not. If foreign organizations also fall under the CFC criterion, then TWO notifications must be submitted to the tax authority.

I. Consider which foreign organizations fall under the status of a CFC - a controlled foreign company. In accordance with clause 1 of article 25.13. Tax Code of the Russian Federation Controlled foreign company (CFC) recognized company:

1. Not being a tax resident of the Russian Federation;
2. Controlling person which are an organization and (or) an individual recognized as tax residents of the Russian Federation.

II. KIK-ohm in accordance with paragraph 2 of article 25.13. Tax Code of the Russian Federation also recognized foreign structure without formation of a legal entity (ISBOYUL), the controlling persons of which are organizations and (or) individuals recognized as tax residents of the Russian Federation.

"Controlling Person"

For the purposes of the above paragraphs under " controlling person" in accordance with item 3 of article 25.13. Tax Code of the Russian Federation understood:

1. An individual or legal entity whose interest in the organization is over 25%;
2. An individual or legal entity whose share of participation in this organization (for individuals - together with spouses and minor children) is more than 10%, if the share of participation of all persons recognized as tax residents of the Russian Federation in this organization (for individuals - with spouses and minor children) is more than 50 percent.

The controlling person of ISBOYUL the founder (founder) of such a structure is recognized - Clause 9, Article 25.13 of the Tax Code of the Russian Federation. Also controlling person of ISBOYUL another person is recognized who is not its founder (founder), if such a person exercises control over ISBOYUL and at the same time in relation to this person at least one of the following conditions is met - clause 12 of article 25.13 of the Tax Code of the Russian Federation:
1) such a person has the actual right to income (its part) received by such a structure;
2) such a person has the right to dispose of the property of such a structure;
3) such a person has the right to receive the property of such a structure in the event of its termination (liquidation, termination of the contract).

* Face NOT recognized as a controlling person foreign organization, if its participation in this foreign organization is realized exclusively through direct and (or) indirect participation in one or more public companies, which are Russian organizations - clause 4 of article 25.13. NK RF.

Which companies are not eligible for CFC status?

IMPORTANT! Founder (founder) of a foreign structure without forming a legal entity NOT recognized controlling person such a structure, if in relation to this founder (founder) simultaneously all of the following conditions are met:
1) such a person is not entitled to receive (require to receive) directly or indirectly the profit (income) of this structure in full or in part;
2) such person is not entitled to dispose of the profit (income) of this structure or its part;
3) such person has not retained the right to the property transferred to this structure (the property has been transferred to this structure on an irrevocable basis). Given atthe condition established in relation to a person who is a founder (founder) of a foreign structure without forming a legal entity is recognized as fulfilled if this person does not have the right to receive the assets of such a structure in whole or in part in its ownership in accordance with personal law and/or constituent documents of this structure throughout the entire period of existence of this structure, as well as in the event of its termination (liquidation, termination of the contract);
4) such person does not exercise other control over this structure.

Trusts, funds ("foundations") - a way out of the situation?

Under the ISBOYUL, first of all, are understood those created to protect and manage the assets of the beneficiaries. With proper structuring of a trust or fund, as well as subject to certain conditions when developing corporate documents of the ISBYUL data, it is possible to create a corporate entity that is NOT formally subject to the status of a CFC.

IMPORTANT! A controlling person may be recognized as a person who formally does NOT fall under the specified signs, but actually manages the organization, expressed in particular in the ability to make a decision on the distribution of profits received by the company in the course of its activities.

Thus, any foreign company in which a tax resident of the Russian Federation is the sole shareholder (or a beneficiary in case of a nominal shareholder) will fall under the status of a CFC for the purposes of tax law (except as described below). The most obvious situation in which a foreign company may not fall under the status of a CFC is the control of shares in the amount of no more than 25% of the company together with foreign partner investors. It is obvious that such a situation may arise when a “target” SPV company is established. At the same time, we remind you that control over the shares of a foreign company in the amount of LESS than 10% is NOT subject to notification.

Filing a CFC Notification: Deadline, Procedure, Form and Format

As noted at the beginning of this section, in accordance with Article 25.14 of the Tax Code of the Russian Federation tax residents of the Russian Federation - INDIVIDUALS AND LEGAL ENTITIES - are required to notify the tax authority at the place of place of residence or place finding an organization, respectively:

1) about controlled foreign companies of which they are the controlling persons.

In accordance with paragraph 2 of article 25.14 of the Tax Code of the Russian Federation

Notice of controlled foreign companies is submitted no later than March 20 of the year following the tax period in which the controlling person recognizes income in the form of profits of a controlled foreign company.

By calculation, it can be concluded that the first deadline for filing CFC reporting is March 20, 2017. Further, the controller must ANNUALLY by March 20every yearsend the specified CFC notification to the tax authority at the place of registration (for individuals).

EXAMPLE:
You registered a foreign company on October 27, 2017. The first CFC Notice must be submitted by you by March 20, 2019 based on the results of the CFC profit for 2017.
Comment:
If the company is registered in 2017, then its financial year ends on December 31, 2017. According to the results of the profit received by the company in 2017, dividends can be paid to shareholders in 2018, therefore, dividends received by shareholders in 2018 must be declared by them in 2019.

EXAMPLE:
You acquired shares in a foreign company existing since 2012 on October 27, 2017. The first CFC Notice must be submitted by you by March 20, 2018.
Comment:
Because If you became the owner of a company that already conducts its commercial activities in 2017, then you, as a new current shareholder, in the same 2017 are entitled to receive income in the form of dividends based on the results of the company's activities for 2016. Therefore, you are required to take this income into account when filing a declaration in 2018.

The form and format of CFC Notifications are approved by the Order of the Federal Tax Service of Russia dated December 13, 2016 N ММВ-7-13/ [email protected]. The requirements for the procedure for filing a notification of a CFC are similar to the requirements for filing notifications of participation in foreign organizations:

• legal entities must send a notification of a CFC exclusively in electronic form, only via telecommunication channels (TCS) and only if there is an enhanced qualified electronic signature (ECES) *
• individuals has the right to submit a notification of a CFC on paper

In case of detection of incomplete information, inaccuracies or errors in filling out the submitted CFC notification, the taxpayer is also entitled, on the basis ofClause 7 of Article 25.14 of the Tax Code of the Russian Federationsubmit to the tax authorityamended notice.
If an amended notification is submitted before the moment when the taxpayer has learned that the tax authority has established the fact that false information is reflected in the notification, the taxpayer released from liability provided for in Article 129.6 of this Code.

What documents need to be attached?

There are NO legal requirements for the mandatory attachment of documents to the CFC Notice. However, in one of the sheets of the Notice, it is necessary to indicate information about the date of preparation of the financial statements and the date of the auditor's report.

From which we can conclude that it must be prepared in any case without fail, either in accordance with local law and the financial reporting standard, or according to.

AUDIT must be carried out (even if it is NOT mandatory) in the event that the Notice is submitted in relation to the fact of ownership of a foreign company with which Russia does not have an agreement on the exchange of tax information.In this case, the audit report should not contain a negative opinion.

Example.
It is NOT required to conduct an audit of financial statements for, European jurisdictions and others, because Russia has agreements concluded with them for the avoidance of double taxation.
A voluntary audit is REQUIRED for all offshore companies: , etc.

After preparing reports and conducting an audit and submitting a Notice, you must be prepared for the fact that the employees of the Federal Tax Service "as part of the clarification of the information stated in the Notice" will request to provide documents confirming the declared information. After the receipt of these requirements, the Federal Tax Service will need to provide translated copies of the financial statements and the auditor's report (there are no requirements for an apostille and notarization of the translation). As practice shows, after the submission of these documents, the Federal Tax Service no longer receives questions.

Responsibility for late filing of a CFC notification

In accordance with Clause 1 of Article 129.6 of the Tax Code of the Russian Federation

Wrongful failure to present within the established term by the controlling person to the tax authority notification of controlled foreign companies for the calendar year or submission by the controlling person to the tax authority of a notice of controlled foreign companies containing false information,

attracts a penalty a fine of 100,000 rubles for each controlled foreign company, information about which is not provided or in respect of which false information is provided.

That is, if a taxpayer who has registered a foreign company with 100% participation does not send TWO notifications to the tax authority (as required by the new rules), then he will be liable in the form of a fine of 150,000 rubles. (50,000 rubles + 100,000 rubles).

The cost of our services

* Depending on the complexity of the corporate structure. The indicated price includes an analysis of the ownership structure, as well as oral consultations related to the CFC

On January 1, 2015, the Law “On Taxation of Profits of Controlled Foreign Companies” () came into force. In accordance with this law, tax residents of the Russian Federation must notify about their participation in foreign companies if the share of such participation exceeds 10%, as well as notify about controlled foreign companies with a share of participation in such companies of more than 50% before January 1, 2016.

Initially, the deadline for notification of participation in a foreign company was set for April 1, 2015. At the end of March 2015, amendments were adopted to postpone the deadline for notification of participation to June 15, 2015 .

Federal Tax Service of Russia Order No. ММВ-7-14/ dated April 24, 2015 [email protected] approved the form and format for submitting in electronic form a notice of participation in foreign companies, which can be found on the official website of the Federal Tax Service at the link.

At the same time, the form of notification of controlled foreign companies is still under development. Information on the preparation of relevant projects was posted on the Single Portal at the link .

1. Filling out the form of notification of participation in foreign companies. The Notice must contain information about the legal/individual taxpayer, about the foreign organization in which he has direct, indirect or mixed participation, about the foreign structure without forming a legal entity, and other information, including the procedure for participation in a foreign organization in case of indirect participation. Legal entities send notifications in electronic form (for this purpose, the software complex "Taxpayer of Legal Entities" has been amended accordingly). For taxpayers - individuals, it is possible to submit a notice on paper.

The cost of our services in filling out the form on the ownership of foreign companies is 7,000 rubles.

2. Advice on the preparation of financial statements of a controlled foreign company. The law provides for certain features when calculating the profit of a foreign company, depending on its location. So, if a controlled foreign organization has a permanent location in a foreign state with which the Russian Federation has an international agreement on taxation, and if its financial statements are subject to mandatory audit, then its profit is determined based on the data of such financial statements. Otherwise, the relevant rules of the Russian Tax Code apply.

The cost of consultations on the preparation and submission of CFC financial statements is from 10,000 rubles.

3. Tax advice on the law on controlled foreign companies. The specialists of our company are also ready to provide advice on other issues arising in connection with the adoption of this law, in particular, the analysis of the risks of recognizing a foreign company as a tax resident of the Russian Federation, the specifics of the application of agreements on the avoidance of double taxation and other issues of taxation of the activities of foreign companies.

The cost of individual tax consultations under the CFC law is from 5,000 rubles.

We are also ready to hold a seminar for you and your employees on the operation of the new law ()

Additional information on these services can be obtained from the specialists of our company.