Donation between legal entities is a civil law transaction. When alienating valuables or property rights, the parties are required to follow a number of rules. Participants must adhere to the established form, remember the content requirements, and take into account the interests of third parties. Neglect of restrictions threatens the invalidity of agreements .
- Prohibition of donation between legal entities
- Legal bypass of restrictions
- Donation agreement between legal entities
- Tax consequences of gifts between legal entities
- Donation as a form of charity
Legal entity: concept, features
According to Article 48 of the Civil Code of the Russian Federation, a legal entity (hereinafter - LE) is an organization that owns property and is responsible for its obligations. Also, the company must maintain accounting records and have constituent documents. A prerequisite is registration in the Unified State Register of Legal Entities, this is done through the Federal Tax Service.
Public and private institutions are recognized as legal entities.
In turn, depending on the type of activity, they are divided into two types:
- commercial: LLC, CJSC, PJSC, etc., engaged in commercial activities and making a profit;
- non-profit: public associations, foundations, cooperatives, state companies, political parties, communities, religious associations (making a profit is not their goal).
Gifting between legal entities has a number of features and is not always permitted. Let's consider all the subtleties in detail.
Gifts between business entities
Article 575 of the civil legislation establishes a direct ban on the execution of deeds of gift between companies. This requirement is explained by the meaning of the work of a commercial organization. Its activities involve making a profit. In this regard, the gratuitous transfer of property rights is recognized by the court as illegal.
But in judicial practice there are cases when the registration of a deed of gift can become legal:
- Transfer of valuable objects for use by another organization with subsequent return and profit.
- Large firms may transfer ownership of an asset to their subsidiary. In this case, a number of procedures must be followed. For example, the transferring legal entity must have obligations to the receiving business entity.
- Firms often enter into agreements under which the donor transfers valuable property to a business entity. The latter sends the donor other property, which is not comparable in value to the accepted gift. The court recognizes such actions as illegal, but they do occur.
When is a gift between legal entities prohibited?
According to paragraphs. 4 clause 1 art. 575 of the Civil Code of the Russian Federation, donation between two organizations conducting commercial activities is prohibited. The exception is inexpensive gifts worth up to 3,000 rubles: you can give them.
When is it possible to transfer a gift between legal entities:
- between non-profit and commercial enterprises;
- between non-profit legal entities.
Commercial legal entities can make free transactions.
For example, draw up a loan agreement for free use (Chapter 36 of the Civil Code of the Russian Federation), if they do not contradict the essence of the transaction.
The ban is due to the fact that some institutions may try to cover up a compensated transaction with a gift agreement in order to avoid paying taxes:
according to clause 3.8 clause 1 art. 251 of the Tax Code of the Russian Federation, income received as a result of gratuitous assistance is not taken into account when determining the taxable base.
According to the law, compensated transactions disguised as donations are recognized as sham. Interested parties have the right to challenge them in court, referring to clause 2 of Art. 170 Civil Code of the Russian Federation. As a result, the recipient undertakes to return the donated property to the donor.
Important! The transfer of property between legal entities is not always recognized as a gift. For example, one organization can make a contribution to the authorized capital of another, and this is not considered a gratuitous transaction: such actions are possible as part of an investment, or when the composition of the founders changes.
How to draw up a gift agreement for an individual entrepreneur?
How to draw up a debt gift agreement?
Registration of deed of gift between companies
In most cases, the execution of a gift transaction between business entities is contrary to current legislation. But there are some exceptions.
For example, non-profit organizations can transfer to each other:
- immovable objects and technical devices
- technique
- vehicles
- copyright
- other valuables
According to Art. 575 of the civil legislation, legal entities whose activities relate to the educational or medical sphere are prohibited from accepting gifts of things more expensive than 3 thousand rubles.
It is prohibited to give gifts to both individuals and legal entities. Official powers do not play a role in this.
Taxation of gifts between legal entities
If a commercial organization donates property (money, car, real estate, goods, finished products) under a gift agreement (hereinafter referred to as DD) to a non-profit organization or vice versa, VAT is required to be paid. The rate is determined based on the market value of the gift.
The recipients are required to pay corporate income tax, and the gift is accounted for as unrealized income. When calculating tax, you need to focus on the market value of the donated property. It is confirmed by an appraisal report or checks.
When do you not need to pay income tax?
This tax is not paid if the donor’s authorized capital consists of at least 50% of the donee’s contribution, or vice versa, when the donee’s capital is formed 50% from the donor’s funds.
The parties are exempt from taxation in other situations:
- the gift is intended to ensure the safe operation of nuclear power plants;
- a donation agreement has been concluded; the transaction is of a charitable nature.
The tax is not paid if the property is transferred to the balance sheet of a subsidiary company.
Accounting entries
Having donated property to another legal entity, the organization needs to write it off from its balance sheet.
This will require accounting entries:
- First, the original cost of the gift is written off. Posting – “Debit account 01, subaccount “disposal of fixed assets, credit 01”.
- Stopping depreciation from the next month. For write-off, indicate “Debit account 02, credit account 01.”
- Entering other expenses in accounting. This is recognized as the residual value of the gift, written off according to the entry: “Debit to account 91.2, credit 01.”
Important! If additional expenses arose when transferring a gift (transportation, packaging, etc.), this is reflected in “other expenses” by posting “debit to account 91.2, credit 01.”
Rules for donation between legal entities
First of all, you need to make sure that there is no ban on the transaction.
It is further recommended to follow the following rules:
- It is allowed to draw up a donation agreement between legal entities if the recipient carries out activities in the medical, educational, social, charitable, cultural, religious sphere (Article 582 of the Civil Code of the Russian Federation). This is one of the forms of donation, but if the donor and recipient are a commercial institution, the amount still cannot exceed 3,000 rubles.
- If the donated item belongs to the legal entity by right of economic or operational management, the owner’s consent to the transaction will be required (Article 576 of the Civil Code of the Russian Federation).
- According to the DD, it is permissible to grant the right to claim a debt to the donee, but with prior notification to the debtor.
- The donor has the right to assume obligations to a third party under the DD, but the transaction will need to be agreed upon with the creditor.
It is important to take into account that a donation by a business entity is disputed by creditors if the transaction was completed in the last 3 years prior to the donor filing a bankruptcy petition (Clause 3 of Article 578 of the Civil Code of the Russian Federation).
When is the best time to draw up a donation agreement?
A donation is a transaction made for socially beneficial purposes. It is possible between legal entities, the key condition being gratuitousness. The advantage of such a transaction is the absence of the donor’s obligation to pay VAT (Article 149 of the Tax Code of the Russian Federation).
Commercial organizations have the right to donate amounts or property to each other, the value of which does not exceed 5 minimum wages. If the donation is made between NPOs, this rule does not apply.
Several features are relevant for donations:
- no consent or permission required;
- the donor has the right to indicate for what purposes the gift is intended and how to use it;
- the organization that accepted the donation undertakes to keep records of transactions using the donated property if the donor has previously determined its purpose;
- the donor has the right to cancel the transaction if the gift is used for other purposes.
Drawing up a donation agreement is relevant if the parties want to avoid taxation, and the gift is intended for generally beneficial needs and purposes.
Copyright deed
A business entity may transfer the right to use and dispose of copyright if the organization’s activities consist of creating:
literary works- logos
- slogans
- works of art
- inventions and other things
When concluding a transaction for donating related rights, the recipient should carefully study the terms of the agreement. Its clauses may provide for the use of an object taken into possession without attribution. All details are provided for in the contract.
How to draw up a gift agreement between legal entities: step-by-step instructions
According to Art. 574 of the Civil Code of the Russian Federation, giving a gift worth up to 3,000 rubles. done orally. Expensive items are donated under a written agreement.
The procedure consists of several stages:
- The deal is agreed upon by the parties. The recipient has the right to refuse the gift, so his consent is important.
- Drawing up a written DD.
- Notarization of the deed of gift.
- Removal of donated property from the balance sheet of the donor institution.
- Registration of ownership of the donee.
Let's look at each step in detail.
Step 1: approval of the deal
The parties need to agree on what kind of gift will be given. The initial decision on the transaction is made by the donor; only consent is required from the recipient.
You can donate any property that belongs to the donor by right of ownership:
- money;
- automobile;
- real estate;
- share in the authorized capital.
Important! If the organization has several owners and the charter provides for the alienation of property by prior agreement, you need to hold a meeting and listen to the opinions of the founders. Based on the results, a protocol is drawn up and a person is appointed to act on behalf of the company. A decision will be required from the sole founder.
Sample solution
The document must contain complete information about the owners and donee:
- name of the organization, full name, passport details of the founders;
- a reference to the desire to make a gift to a specific person;
- information about the gift: name, value, details of documents confirming ownership;
- signatures of participants.
Sample decision on donating a share in the authorized capital:
Step 2: execution of the contract
After the company participants resolve issues regarding the transaction, a deed of gift is drawn up in writing. If a share in the authorized capital is given, a notarization will be required.
The duty is 0.5% of the value of the share, but not less than 300 and not more than 20,000 rubles.
The personal presence of the parties at the time of signing the DD is mandatory, otherwise a notarized power of attorney will be required for another person who will act in the interests of the donor or donee.
One attorney does not have the right to represent the interests of two parties at the same time.
Sample contract
When registering a DD, information about:
- parties to the transaction: full name, name and address of the legal entity, passport data, information from the Unified State Register of Legal Entities;
- gift: value, name (car, real estate, etc.), details of property documents;
- resolution and minutes drawn up based on the results of the general meeting.
At the end there is a date of registration and signatures of the parties. The DD is drawn up in three copies: one each remains with the donor and the donee, the third is transferred to the notary. If the transaction is subject to state registration, a fourth copy will be required and submitted to the registrar.
Sample gift agreement between legal entities:
Documentation
To complete the DD, you will need all the documents related to the transaction:
- decision of the founders;
- documents for donated property;
- passports of the parties;
- registration documents of the organization;
- consent of the actual owner.
Step 3: making changes to organization documents
After signing the DD, you need to remove the donated property from the balance sheet of the enterprise and draw up accounting documents.
Step 4: re-registration of ownership
When donating a car, it is enough to indicate the new owner in the title and re-register everything with the traffic police. If real estate is a gift, both parties need to appear at the MFC or Rosreestr to submit documents to re-register ownership of the donee.
The transaction is registered in Rosreestr within 10 days. Based on the results, an extract from the Unified State Register is issued, where the donee is indicated as the new owner.
Legal consequences of prohibitions and restrictions
When concluding a donation prohibited by law, the transaction is considered void. The main consequence of its conclusion will be that the parties to the contract will not have any rights under it. The property will not receive a new owner under any circumstances.
If one of the parties applies to Rosreestr (when donating real estate, for example), the property of the donee will not be registered, and the rights to the real estate will not be transferred to the new owner.
If a deed of gift is concluded without the consent of people who have the right to do so, it will be declared invalid from the very moment of its execution. In this situation, the donee will either have to give the donated item to the previous owner or seek such consent in order to legitimize the donation transaction.
Judicial practice confirms these conclusions. For example, the Moscow City Court invalidated a land donation transaction. The court found that the donated land plot belonged by right of common ownership to citizens V., K. and O. Moreover, the decision to transfer it as a gift to the defendant was made only by citizen O. He did not notify the remaining owners and did not receive permission. Thus, citizens V. and K. went to court with a demand to cancel this transaction as concluded in violation of the requirements of the law. The court satisfied their demands.
Arbitrage practice
The practice of challenging DD and other gratuitous transactions between legal entities is small, but there are several examples of court documents confirming the real effect of the ban:
- FAS resolution of March 12, 2014 in case No. A43-16119/2011: donating money between enterprises belonging to the same group is not allowed;
- Resolution of October 27, 2015 in case No. A40-122437/2014: the restriction provided for legal entities when making a gift also applies to individual entrepreneurs.
