Contribution to property without increasing the authorized capital and a refinancing center in a group of companies

The economic activities of organizations are based on the use of property owned by it, which is reflected in accounting. From January 1, 2019, the movable property of an organization, according to amendments to the Tax Code of the Russian Federation (Article 374-1), is not subject to property tax, and since accounting data is the basis for calculating NU indicators, the criteria defining movable and immovable property acquire special significance. Postings for property accounting, forming the main balance sheet indicators, are also one of the most important in accounting.

How can an organization distinguish movable property from immovable property ?

Additional nuances:

Not possible for all legal forms.
The transferred funds cannot be taken into account as part of the costs of acquiring a share when receiving subsequent income (upon its sale, upon leaving the company or its liquidation). If the charter of the receiving party is standard and does not contain detailed norms, then contribution to the property is possible only in money and only in proportion to all participants (shareholders). If the charter is rewritten, then not all participants will be able to contribute to the property (or not in proportion to their shares of participation). In an LLC, the decision on a contribution to property is made by no less than 2/3 of the votes. In a joint stock company, making a contribution is possible on the basis of an agreement approved by the Board of Directors, or by decision of the general meeting of shareholders. The procedure for making a decision on making contributions to the organization’s property can also be worked out in detail in the corporate agreement.

The Tax Code provides for two preferential mechanisms

, which allow you to exempt inherently gratuitous contributions from taxation:

1) Gratuitous transfer of property and property rights on the basis of subclause 11, clause 1, article 251 of the Tax Code of the Russian Federation. It itself is possible in two forms:

• transfer of property in favor of an organization whose authorized capital directly and/or indirectly consists of at least 50% of the contribution of the transferring party (“mother”, “grandmother” or an individual participant (shareholder);
• "daughter's gift" This is a transfer from a subsidiary to the parent company, which directly and/or indirectly owns 50% or more of the authorized capital of the subsidiary.

2) Contribution to the property of a business company or partnership from its participant or shareholder, regardless of the share of participation. 3.7 clause 1 art. 251 NK Let's look at the mechanisms in detail. Moreover, since 2021, significant changes have been made to them.

Gratuitous transfer of property under clause 11, clause 1 of Art. 251 Tax Code of the Russian Federation

Firstly, the contribution can be property and, from November 23, 2020, property rights. Cash refers to property, non-cash money refers to property rights. Art. 128 Civil Code of the Russian Federation

Exemption from taxation in accordance with paragraphs. 11 clause 1 art. 251 of the Tax Code also applies to debt forgiveness. Letter from the Ministry of Finance of Russia dated December 14, 2015 No. 03-03-07/72930; Resolution of the Arbitration Court of the Central District dated January 27, 2015 in case NoA23-1634/2014

Secondly, it is impossible to transfer them to third parties within one year from the date of receipt of property, property rights (except for funds).

In other words, significant restrictions are imposed on the use of property: you cannot sell it, rent it out, or otherwise dispose of the received property, as well as assign property rights. The logic of the legislator is clear - some kind of assistance from a participant in his company is exempt from taxation, because he transferred the property (property right) for its use, and not for renting or assignment.

The undoubted “trick” of this tax-free basis is the opportunity, starting from 2021, to make a contribution to property not only from a direct participant, but also from a person who has an indirect share of participation through an intermediate company. For a contribution to be exempt from taxation, the share of indirect participation must also be at least 50%.

To calculate the share of indirect participation, it is necessary to multiply the shares of direct participation in each organization along the ownership chain. For example:

"Daughter's Gift"

The Tax Code allows tax-free transfer of property not only from “mother” or “grandmother”, but also in the opposite direction - from “daughter” to or to.
Exemption is provided under sub-clause 11, clause 1 of Article 251 of the Tax Code, subject to compliance with an important condition - the direct and/or indirect share of the parent company in the authorized capital of the subsidiary is at least 50%. Important!
It will not be possible to transfer a “child gift” to an individual participant without taxes. Such payment will be equivalent to dividends. A “subsidiary gift” in some cases is an alternative to paying dividends when the conditions for a tax-free transfer of profit from a subsidiary to the parent organization are not met, in particular:

• the holding period of 365 days has not been met;
• in addition to the majority participant with a share of 50% or more, there are minority shareholders,
• “distribute profits” in favor of whom you do not want: dividends are distributed in most cases proportionally, and such a requirement is not imposed on a “child gift”.

It is necessary to distinguish a “daughter gift” (we ourselves came up with such a name, it is not in the Civil Code) from a gift agreement, which is prohibited between commercial organizations. 575 of the Civil Code of the Russian Federation. Gifting is an agreement, a bilateral transaction, the recipient of which can easily refuse to enter into it (you have a felt-tip pen and you give it to a friend... and the friend responds: “you know where to go, with your felt-tip pen). A “child gift” is a corporate relationship. Unlike our children, a subsidiary cannot refuse to fulfill the will of the parent company.

For the meticulous:

“Economic relations between the main and subsidiary companies may involve not only investments of the main company in the property of the subsidiary at the stage of its establishment, but also at any stage of its activity. In addition, economic feasibility in relations between a subsidiary and the main company may necessitate the reverse transfer of property. At the same time, the absence of direct reciprocity is a feature of the relationship between the main and subsidiary companies, which from an economic point of view represent a single economic entity.”

Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation

How are balance lines 1170 and 1240 formed?

Line 1170 “Financial investments” is formed by adding the debit balance of the accounts:

• 58 (only for long-term financial investments, the period of which exceeds 12 months);
• 55 (only investments and deposits for a period of more than 12 months);
• 73 (only interest-bearing long-term loans to company employees).

The amount of debit balances on the above accounts is reduced by the balance on the credit account. 59 in terms of creating reserves for long-term investments.

The formation of the value of short-term financial investments occurs in a similar way. So, line 1240 is formed as the sum of the debit balance of the account. 58 (for short-term financial investments), reduced by the credit balance on the account. 59 (for reserves for short-term financial investments), debit balance of the account. 73 (regarding short-term loans to personnel) and account. 55 (in terms of short-term deposits).

Check whether you correctly reflect financial investments in your financial statements using the guide from ConsultantPlus. If you do not have access to the K+ system, get a trial online access for free.

More information about the rules for creating an enterprise balance sheet can be found in the article “Deciphering the lines of the balance sheet (1230, etc.).”

Contribution to property according to paragraphs. 3.7 clause 1 art. 251 Tax Code of the Russian Federation

pp. 3.7. clause 1 art. 251 of the Tax Code allows the investments of participants, both in the form of property and in the form of property or non-property rights, to be exempt from taxation. In this case, the size of the participant’s share does not matter.

For the meticulous:
Article 251. Income not taken into account when determining the tax base 1. When determining the tax base, the following income is not taken into account: <...>
3.7) in the form of property, property rights or non-property rights in the amount of their monetary value, which are received as a contribution into the property of a business company or partnership in the manner established by the civil legislation of the Russian Federation.

The provisions of this paragraph apply to virtually any method of increasing property, including increasing the assets of the company in the form of transfer of things, cash, shares/shares in companies or securities, or, for example, rights of claim under an assignment agreement.

! Clause 3.7 clause 1 of Article 251 of the Tax Code of the Russian Federation is relatively new and appeared in the Tax Code only in 2021. It replaced the famous clause 3.4, which was popularly called “contribution to increase net assets.” Clause 3.7 has a more concise content, referring to civil legislation - you can convey everything that is permitted by the Civil Code of the Russian Federation and special laws. The main thing is to provide for this in the individual charter of the company. Resolution of the Arbitration Court of the North Caucasus District dated 07/07/2020 in case No. A63-16832/2019

However, this method of tax-free transfer also has its limitations:

• Property, property or non-property rights can only be transferred from a participant (shareholder) to the relevant business company. That is, transfer in the opposite direction - from the subsidiary to the parent company - is impossible.
• Contributions to property are only possible in relation to business companies or partnerships. For example, such a contribution cannot be made to a production cooperative without tax consequences.

As we have already mentioned, sub. 3.7. clause 1 art. 251 of the Tax Code of the Russian Federation replaced subclause 3.4, which directly provided for the possibility of contributing to property by forgiving a debt by a participant in his organization. Currently there is no such clarification, although the possibility is still relevant.

Let's figure out whether it is now possible to forgive debt without taxes.

When the share of participation is 50% or more, then we can confidently refer to paragraphs already known to us. 11 clause 1 art. 251 Tax Code of the Russian Federation. If the share of participation in a subsidiary is less than 50%, then we can only be guided by clause 3.7, clause 1, article 251 of the Tax Code of the Russian Federation.

Neither the Ministry of Finance of the Russian Federation nor the courts have yet voiced their position directly.

We believe that you can get out of the situation in this way:

• At the first stage, the participant (shareholder) or the general meeting, as before, decides to make a contribution to the property. But not in the form of debt forgiveness, but by transferring funds, the amount of which is exactly equal to the debt formed to him (for example, the amount of an unrepaid loan). Makes a decision, but does not implement it.

• At the second stage, the participant (shareholder) - creditor signs an agreement with the subsidiary to offset counterclaims (in our example with a loan - obligations to repay the loan and make a cash contribution). As a result, the subsidiary's obligation to the participant is extinguished tax-free.

To be on the safe side, in the charter of a subsidiary company, as well as when applying subclause 3.4, which has become invalid, it is advisable to include a provision on the possibility of making contributions to property not only in money.

Minuses. VAT.

If the contribution to the property is made by the organization on the OSN and the property is transferred, then the “mother” must restore VAT from the residual value of the property. In this case, the restored value added tax can be included in expenses.

And the receiving party will not be able to deduct VAT, since it did not pay money for this property (remember that a contribution to property is a type of gratuitous transfer). Therefore, a property contribution is more suitable for transferring funds.

HOW TO RETURN YOUR INVESTMENT IN PROPERTY

A contribution to property made by an individual participant is irrevocable: unlike a loan, it cannot be demanded back. Some kind of return on investments made is only possible in the form of dividends. The same as for investments in the form of a contribution to the authorized capital.

However, unlike contributions to the authorized capital, the amount of contributions made to property will not count towards the costs of acquiring a share (shares) upon subsequent sale of the share (shares), exit or liquidation of the company.

There is an exception for participants - organizations - this is the opportunity to return, without income tax, an amount equivalent to a previously made contribution to the property of a business company or partnership (LLC, JSC, general partnership) clause 11.1 clause 1 of Article 251 of the Tax Code of the Russian Federation

Mandatory requirements:

1. The contribution must be made and returned exclusively in cash. If the initial contributions to the Company's property were made not with money, but with other property (buildings, land plots, equipment, shares (shares) in the authorized capital of the Company), then return these assets back to the participant who contributed them without paying tax on the basis of the provisions of paragraphs. 11.1 clause 1 art. 251 of the Tax Code of the Russian Federation will not work. Return of the deposit must also be made in cash. This eliminates situations of possible abuse associated with the disproportionality of the initial contribution and the method of its tax-free return.
2. The tax exemption applies to the extent of the previously made contribution. The amount within which the exemption applies under Subsection 11.1, Clause 1, Article 251 of the Tax Code of the Russian Federation is limited by the amount of the previously made contribution. In this regard, it is important for the participant to keep documents that would confirm the amount of contributions they made. These include decisions (minutes) of the general meeting of participants and payment orders for the transfer of funds.
3. It does not matter when the contribution was made. Tax-free returns are possible after 01/01/2019. The rule on tax exemption for the return of previously made contributions to property came into force on January 1, 2021. And it applies to all “old” contributions to property. The main requirement is their monetary form. This was confirmed by the Ministry of Finance of Russia. Letter of the Department of Tax and Customs Policy of the Ministry of Finance of Russia dated February 14, 2019 N 03-03-06/1/9345.
4. Legal successors can also take advantage of the tax exemption.

The benefit also applies to legal successors - both the participating organization and the subsidiary. So, if a subsidiary company that received a contribution to the property was merged with another company, then this other company will also be able to return the funds to the participant.

All other conditions apply to legal successors - the availability of supporting documents and the monetary form of the initial deposit.

The decision on the return of previously made contributions to property is made by the general meeting of participants of the subsidiary organization.

For convenience, we have compiled a comparative table that will allow you to choose between two types of property deposits and a loan to obtain repayable financing

.

Concept of financial investments

The concept and classification of financial investments are disclosed in two main legislative acts: PBU 19/02 (clause 3 of section I) and “Regulations on accounting…”, approved.
by order of the Ministry of Finance of the Russian Federation dated July 29, 1998 No. 34n (hereinafter referred to as the regulation on BU) (clause 43). Clause 2 of PBU No. 19/02 establishes conditions, the simultaneous fulfillment of which allows assets to be classified as financial investments. These conditions are:

1. Availability of ownership rights for financial investments.
2. Expectation of future economic benefit. This benefit can be received in the form of interest, dividends, an increase in the value of the asset as a result of the difference between the purchase price and the subsequent sale price, or as a result of an increase in the current market price.
3. Transfer to the investor (buyer) of the risks associated with the financial investment: the risk of decreased liquidity; the risk of loss of solvency of the issuing organization or debtor organization; risk of negative changes in asset values.

Instead of a summary, let us once again outline the MAIN THESIS:

• A property contribution is an expeditious method of tax-free transfer of funds and other property or property rights to a subsidiary. There is no need to visit a notary and make changes to the constituent documents, which is mandatory when increasing the authorized capital.
• The Tax Code of the Russian Federation provides for two preferential mechanisms - subclause 3.7 and subclause 11, clause 1, article 251 of the Tax Code of the Russian Federation. Each of them provides interesting opportunities, but is not without limitations. Therefore, we carefully read the law and choose the method that suits the specific situation.
• Do not forget that in order to make a contribution to property, the company’s Charter must provide for such an opportunity for its participants, including the opportunity to make contributions disproportionate to participation in the authorized capital, as well as with any property, property rights or through debt forgiveness.

• Clause 11, clause 1, Article 251 of the Tax Code of the Russian Federation also makes it possible to transfer it back - from a subsidiary to a participating organization (shareholder), whose direct and/or indirect share in the authorized capital is at least 50%. We called it the “daughter gift.” It can be an alternative to paying dividends, for example, when, in addition to the majority participant with a 50% share, there are minority shareholders in whose favor you do not want to “distribute profits”: dividends are distributed in most cases proportionally, and such a requirement is not imposed on a “child gift”.
• Parent organizations that previously made a cash contribution to the property of their “subsidiary” company can return it without incurring income tax.

Classification and evaluation of financial investments

Financial investments are classified into:

• short-term;
• long-term (with a period of more than a year).
• non-current;
• negotiable;
• assets purchased for the purpose of receiving interest income, dividends, or other forms of income as a result of their ownership;
• assets purchased for resale;
• participating in the formation of the authorized capital;
• participating in the formation of debt obligations.

The above classification is not complete, but reflects the most common modern approach to the classification of financial investments that exists in the Russian Federation today.

When accepted for accounting, financial investments are assessed at their original cost.

IMPORTANT! Organizations that have the right to use simplified accounting methods can carry out subsequent assessment of financial investments traded on the organized securities market at their original cost, regardless of changes in their current market value (paragraph 2, paragraph 19, paragraph 21 of PBU 19/02 , clause 10 of Information of the Ministry of Finance of Russia N PZ-3/2015).