09.04.2024, 10:01
The number of foreign companies controlled by Russians has increased dramatically
Source: OREANDA-NEWS
OREANDA-NEWS The number of foreign companies controlled by Russians ("controlled foreign company", CFC) as of the end of 2022 has increased dramatically — by 21 percent, to 45.6 firms. RBC writes about this with reference to data from the Federal Tax Service (FTS) of the Russian Federation.
In 2023, taxpayers reported for 2022. The number of such companies increases annually, but in the last reporting period, the maximum increase since 2017 was recorded — then it amounted to 33 percent. Of the total number of CFC declared by Russians, 98 percent are foreign organizations, and only 2 percent are foreign structures without the formation of a legal entity (for example, foundations and trusts).
A CFC is an organization that is not recognized as a tax resident of Russia and is controlled by a person (legal entity or individual) who is such. Persons with a stake of more than 25 percent, or more than 10 percent, if Russian residents account for more than 50 percent of the company, are required to declare a CFC. Those who exercise actual control over a foreign organization, even without a stake, should also report. In 2022, more than 18.3 thousand taxpayers filed declarations on the availability of CFC with the Federal Tax Service, most of whom (82 percent) are individuals. On average, there are 2.5 foreign companies for every one who reports.
The increase in the number of declared CFC is explained by the desire of domestic companies to take advantage of benefits under the capital amnesty, said Evgeny Vlasov, head of the GSL Law & Consulting tax practice. In the period from March 2022 to February 2023, citizens could voluntarily declare accounts abroad, property and cash, as well as submit a CFC notification, while such individuals were exempt from tax, administrative and criminal liability, he explained.
Earlier, Tatyana Astakhova, senior associate at Alimirzoev and Trofimov Law firm, recalled that tax residents of the Russian Federation are required to notify the Federal Tax Service about their foreign accounts and the movement of funds on them. This applies not only to Russian citizens, but also to foreigners and stateless persons with a residence permit in the Russian Federation, the expert clarified. At the same time, foreign currency residents living in the country for less than 183 days a year are not required to submit a notification to the Federal Tax Service, she added.
In 2023, taxpayers reported for 2022. The number of such companies increases annually, but in the last reporting period, the maximum increase since 2017 was recorded — then it amounted to 33 percent. Of the total number of CFC declared by Russians, 98 percent are foreign organizations, and only 2 percent are foreign structures without the formation of a legal entity (for example, foundations and trusts).
A CFC is an organization that is not recognized as a tax resident of Russia and is controlled by a person (legal entity or individual) who is such. Persons with a stake of more than 25 percent, or more than 10 percent, if Russian residents account for more than 50 percent of the company, are required to declare a CFC. Those who exercise actual control over a foreign organization, even without a stake, should also report. In 2022, more than 18.3 thousand taxpayers filed declarations on the availability of CFC with the Federal Tax Service, most of whom (82 percent) are individuals. On average, there are 2.5 foreign companies for every one who reports.
The increase in the number of declared CFC is explained by the desire of domestic companies to take advantage of benefits under the capital amnesty, said Evgeny Vlasov, head of the GSL Law & Consulting tax practice. In the period from March 2022 to February 2023, citizens could voluntarily declare accounts abroad, property and cash, as well as submit a CFC notification, while such individuals were exempt from tax, administrative and criminal liability, he explained.
Earlier, Tatyana Astakhova, senior associate at Alimirzoev and Trofimov Law firm, recalled that tax residents of the Russian Federation are required to notify the Federal Tax Service about their foreign accounts and the movement of funds on them. This applies not only to Russian citizens, but also to foreigners and stateless persons with a residence permit in the Russian Federation, the expert clarified. At the same time, foreign currency residents living in the country for less than 183 days a year are not required to submit a notification to the Federal Tax Service, she added.
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