Are dividends subject to insurance premiums in 2021? 

The founders of the organization, having invested money or property in the authorized capital at one time, receive the right to income in the amount of a portion of the profit proportional to the amount of the investment. In this article we will tell you whether dividends are subject to insurance premiums and answer common questions on this topic.

The decision on how to distribute the organization's net profit is made by the board of founders. This can be like transferring money to special funds, developing production, paying dividends, etc.

Procedure for paying dividends

The procedure for paying dividends step by step is as follows:

conclusions

So, are dividends subject to insurance premiums in 2019?

1. Cash income received by investors, depositors, and shareholders as profit is not subject to contributions to the Unified Social Tax, because it is accrued not for work, but for investments.
2. The amount of payments depends on the amount of funds invested in the company by each participant. The contribution may be expressed in value, number of shares, denomination of bonds or other securities held by these persons.

The rule is valid for deductions to the Pension Fund and other public funds.

Dividends are not subject to insurance premiums in 2021 on the basis of: clause 1 of Art. 236, paragraph 4 of Article 420 of the Tax Code of the Russian Federation, as well as Letter of the Federal Tax Service No. 015-03-11/08-13985. The only tax paid is personal income tax for individuals and income tax for legal entities.

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Taxes payable on dividends

The following taxes must be paid on dividends:

Restrictions on payment of dividends to founders

We must never forget that every operation within the framework of the activities of any organization is subject to clear regulation by the relevant authorities. Therefore, before making a decision on the distribution of profits, it is necessary to make sure whether the organization has the right to take this action. There are a number of restrictions under which dividends cannot be paid:

• the authorized capital has not been fully paid up; depending on the situation, the share may be redistributed among the remaining founders or, in the worst case, the organization may be liquidated due to a claim from the tax authorities;
• the organization did not repay the debt to one of the share investors who expressed a desire to leave the share ownership;
• the organization, for some reason, is on the verge of bankruptcy or there are obvious reasons that could lead to it;
• the amount of net assets after the closing of the reporting period according to accounting data turned out to be less than the amount of the authorized capital, this condition is mandatory for all organizations and is enshrined in a regulation approved by the Ministry of Finance;
• at the end of the reporting period there is an uncovered loss.

What to follow

As a general rule, the amount not subject to insurance premiums in 2021 should be directly mentioned in Article 422 of the Tax Code of the Russian Federation. Recently, it is she who regulates this issue.

This article fully lists the amounts exempt from insurance contributions in 2021. Here's what this means in practice. If an accountant is overcome by doubts about what amounts are not subject to insurance premiums, you need to check Article 422 of the Tax Code of the Russian Federation. If they are mentioned there, then there is no need to accrue contributions on them.

Tax authorities do not welcome a broad interpretation of Art. 422 of the Tax Code of the Russian Federation. Therefore, they usually have the final say on what amounts are not subject to insurance premiums.

Also see “New chapter of the Tax Code of the Russian Federation from 2021 “Insurance premiums”.

Accounting for reflecting dividends

When taxed, the following transactions are charged:

An example of calculating tax withholding on income from equity participation

Initial data: Balanov O.P. owns a 10% share of Severny Wind LLC, O.P. Balanov. is an employee of this organization. owns a 20% share of Severny Wind LLC. The net profit for 2021 amounted to 4 million rubles. At the board of founders, it was decided to direct all net profit to pay dividends.

Calculation:

• Amount of payments for O.P. Balanova = 4,000,000.00 * 10% * (100% – 13%) = 348,000.00 rubles
• Amount of payments for CJSC "Cotton swab" = 4,000,000.00 * 20% * (100% - 13%) = 696,000.00 rubles
• Explanations: The income tax rate for income from equity participation in other enterprises is 13%.

Rules for reflecting income in 4-FSS

4-FSS is compiled based on contributions for injuries. The form used in 2020-2021 and the procedure for filling it out were approved by order of the Federal Social Insurance Fund of the Russian Federation dated September 26, 2016 No. 381.

The rules for calculating contributions for injuries are regulated by the law “On Compulsory Social Insurance...” dated July 24, 1998 No. 125-FZ, in which an indication of the types of income subject to contributions is contained in paragraph 1 of Art. 20.1. These are payments and other remunerations accrued to persons working for the policyholder under contracts:

• labor;
• GPC (if they have a condition on the payment of contributions for injuries).

In 4-FSS, all accruals made in favor of employees are reflected in line 1 of Table 1 (clause 7.1 of Appendix No. 2 to Order No. 381). However, these also include those that are not subject to contributions.

The amount of income not subject to contributions should be subtracted from the total accruals. In 4-FSS, line 2 in Table 1 is reserved for non-taxable income (clause 7.2 of Appendix No. 2 to Order No. 381). The result of the deduction (i.e., the taxable base) is reflected in line 3 of the same table (clause 7.3 of Appendix No. 2 to Order No. 381).

The types of income that make up the amount entered in line 2 are listed in Art. 20.2. There are no dividends on this list. They should not be included in the total amount of payments, since the relationships arising when they are calculated do not relate to those regulated by an employment contract or a civil process agreement.

This means that dividends do not need to be reflected in 4-FSS either in 2020-2021 or in other periods.

But there is a situation when dividends will have to be reflected in 4-FSS. And this will need to be done retroactively. Find out what this case is in ConsultantPlus. If you do not already have access to this legal system, a full access trial is available for free.

Payment of insurance premiums from dividends

A common question that has been actively discussed lately is whether it is necessary to pay insurance premiums on dividends. As already mentioned, dividends are income from equity participation, on which, under Russian law, recipients must pay appropriate taxes. It should be understood that dividends are not remuneration for the founders for performing any duties as management companies; they are their income from investments in cash or property.

In accordance with existing legislation, the basis for calculating contributions to extra-budgetary funds are:

• Income received under an employment contract concluded for the performance of agreed work and provision of services to the organization by the employee;
• Payments and rewards within the framework of fulfilling contract orders, licensing agreements, etc.

To summarize, we can conclude that only payments for specific work and services are subject to insurance premiums.

That is, if the founder does not have an employment contract with the organization, then the payments due to him cannot be the basis for charging contributions to extra-budgetary funds. Consequently, income from equity participation is not subject to the calculation of insurance premiums transferred to extra-budgetary funds.

Are dividends subject to insurance premiums in 2021?

No. Insurance deductions from dividends were not made in the past; nothing has changed in 2021. Art. 420 of the Tax Code of the Russian Federation defines objects subject to insurance premiums, and dividends do not apply to them.

Are insurance premiums paid on dividends if the recipient is a company employee?

The director of the company is at the same time its founder; the shareholder works in the company whose shares he owns. This is not that uncommon. Why not add interest on contributions to the organization to your salary? In this case, they would be subject to mandatory deductions.

But! Profit from investments and wages should not be confused. Payments on shares are not included in the wage fund; they must be taken into account separately. They are also not subject to contributions.

Directions for using profit by an individual entrepreneur

The income of an individual entrepreneur is his net profit, which remains after deducting all expenses, paying all prescribed taxes and other obligatory payments. According to existing legislation, an entrepreneur has every right to freely dispose of his income, since he is the sole owner of all money earned from business activities. Also, there is no regulation of the areas of use of profit; accordingly, payment of income from equity participation to oneself in this situation cannot be.

Typical errors in dividend calculation

Mistake #1. Exemption from taxes for organizations applying special regimes

The application of any special taxation regime does not constitute a basis for exemption from payment of the corresponding taxes established on income from equity participation. Although the special regime itself acts as an alternative to paying three taxes, including income tax, this applies only to the main activity. An exception may be the situation when dividends are paid in kind and are essentially sales.

Mistake #2. Refund of personal income tax paid to the budget

On dividends that are required to be paid to a non-resident, the organization must calculate personal income tax at a rate of 15%. In a situation where a non-resident has changed his status of residence in our country and has completed all the documents for obtaining residency, he has the right to apply for a tax recalculation for the current year in which he received a new status at a rate of 13%. However, the tax office will recalculate and return it.

Mistake #3. Payment of income from equity participation in kind by an organization using a special tax regime (UTII)

In the case where an organization applies UTII, the transaction for the transfer of property as income from shared ownership must be taxed within the limits established for the special regime.

Current list of payments not subject to insurance premiums

The table below shows which payments are not subject to insurance premiums in 2021.

In 2021, there have been no global changes regarding payments that are not subject to insurance premiums. Their composition was almost mirrored in the Tax Code of the Russian Federation from the Law on Insurance Contributions No. 212-FZ.

The amendment affected only daily allowances. Their sizes remain the same:

• up to 700 rubles – in Russia;
• up to 2.5 thousand rubles – for foreign trips.

But starting from 2021, contributions will have to be calculated for excess of these amounts.

For more information about this, see “How per diem is assessed in insurance premiums from 2021.”