Third party services: postings and examples

What is included in the cost structure

The composition of costs is determined by Article 101 of the Arbitration Procedure Code of the Russian Federation and Article 88 of the Code of Civil Procedure of the Russian Federation. In particular, they include any costs arising from the proceedings, as well as state fees. Let's look at a sample list:

• Payment for the services of experts, lawyers and consultants.
• Amounts paid to experts, translators and others.
• Costs associated with the inspection.
• Postage costs.
• Other expenses deemed necessary by the court.
• Costs of representing a party.
• Compensation for lost time, paid on the basis of Article 99 of the Code of Civil Procedure of the Russian Federation.
• Expenses for transport and accommodation of persons participating in the proceedings (Article 94 of the Code of Civil Procedure of the Russian Federation).
• Duty.

Some expenses have a fixed amount. For example, this is a duty. Part of the costs can be of any volume. In particular, this is compensation for loss of time. Its amount must be reasonable and appropriate to all the circumstances of the case.

Agreement with a lawyer

There are three types of agreement with a lawyer:

1. 1. an agreement on the provision of paid services is concluded for the provision of legal advice or the preparation of legally significant documents;
2. 2. an agency agreement is concluded for a lawyer to represent the interests of the company in court;
3. 3. a mixed contract contains elements of both a contract for the provision of services for a fee and a contract of agency.

The agreement is drawn up in simple written form, then it must be registered in a lawyer’s office.

The contract states:

• information about counterparties;
• information about the lawyer’s membership in the bar association;
• subject of the contract;
• deadlines;
• the cost of a lawyer;
• procedure for covering lawyer's expenses;
• place of conclusion of the contract;
• date of conclusion of the contract and start date of the contract;
• liability of the parties for violation of obligations.

After execution of the contract, the parties draw up and sign the act. It is drawn up in free form, making sure to indicate the details of the parties.

The act of execution of the contract is attached to the contract with the lawyer. It is the primary document on the basis of which the costs of paying a lawyer are taken into account.

Tax accounting

Accounting for legal expenses differs in a number of rules. All costs must be confirmed. These papers can be used as confirmation:

• Checks and receipts.
• Agreements for the provision of legal services.
• Travel tickets.
• Extracts from investigative bodies.

It is recommended that the costs of pre-trial settlement be specified in the agreement with the lawyer. Costs are calculated on the basis of documents attached to the case.

The costs will be classified as non-operating expenses. Expenses that can be included in this composition are stipulated by Article 106 of the Arbitration Procedure Code of the Russian Federation and Article 94 of the Code of Civil Procedure of the Russian Federation. However, the list considered is not exhaustive. Sometimes the court recognizes legal expenses that are not included in the list. For example, these may be the costs of copying documents, translating them, or notarizing them. Expenses are not recognized when their connection with the proceedings is not obvious.

When expenses will definitely not be recognized

The conditions for recognition are specified in paragraph 1 of Article 252 of the Tax Code of the Russian Federation. In particular, these are:

• Validity.
• Availability of supporting documents.

Expenses are not recognized in the following cases:

• No connection to legal proceedings. For example, a company entered into a subscription service agreement with a law firm. During the trial, the manager contacted lawyers about something unrelated to the case. Related expenses will not be recognized. In this case, they will be taken into account as part of expenses for legal services on the basis of paragraph 1 of Article 264 of the Tax Code of the Russian Federation.
• The representative did not take part in the proceedings. For example, the company paid for representation services, but the representative did not take part in any meeting.
• The firm is not a party to the proceedings. That is, the subject must be either a plaintiff, or a defendant, or a third party. If the firm is not a party, there will be no basis for recognizing legal costs.
• It is not the company that is involved, but its employee. If a company employee is held accountable, it will be his personal matter. That is, the company does not have to take into account associated costs.

Sometimes the company resorts to pre-trial settlement of the case. Related expenses for lawyers and consultants will also not be recognized. The corresponding decision was given by the Presidium of the Supreme Arbitration Court in Resolution No. 9131/08 of December 9, 2008.

Recognition of state duty

The fee must be included as an expense on the date the claim is filed. The latter is determined on the basis of the court's note on acceptance of the claim. Some do this on the payment due date, but this is not correct. The duty must be included in non-sales services on the basis of paragraph 1 of Article 265 of the Tax Code of the Russian Federation.

The fee may be returned by court decision. The amount received must be included in the structure of non-operating income on the basis of paragraph 3 of Article 250 of the Tax Code of the Russian Federation. Inclusion is made on the date the decision on the refund of the duty comes into force.

On what date should expenses be taken into account?

Legal costs are considered non-operating, and therefore they will be recognized on these dates on the basis of paragraph 7 of Article 272 of the Tax Code of the Russian Federation:

• Settlement date based on the terms of the agreement.
• The date of presentation to the payer of the papers on the basis of which calculations are made.
• The final date of reporting or tax time.

The company has the right to set its own dates for reflecting expenses on the basis of Letter of the Ministry of Finance No. 03-03-04/2/149 dated May 26, 2006. Typically, this is the date the service agreement is signed. For example, a company entered into an agreement with a lawyer. The date of signing the document will be the date of recognition.

Legal expenses reduce taxable income, regardless of whether they are recovered through the court. What does this mean? If the entity wins the case, the person found guilty must pay all of the winning party's legal costs. However, expense recognition is done regardless of wins or losses.

IMPORTANT! The costs of a third-party lawyer are also taken into account when the organization has a full-time lawyer on staff. However, if the work is carried out by a full-time lawyer, the costs are reflected in the structure of labor costs on the basis of Article 255 of the Tax Code of the Russian Federation. Expenses for your lawyer cannot be recovered from the losing participant in the case.

Documentary confirmation

The largest portion of expenses is legal fees. Related expenses can be verified. The following documents can be used as confirmation:

• Agreement with a specialist.
• Certificate of completed work.
• Payment papers.

The documents must indicate a list of services provided and their cost. It is necessary to record services in such a way that their connection with the proceedings can be traced. It is also recommended to prepare documents for confirmation:

• Power of attorney for a representative.
• Claim.
• Protocol of the proceedings.
• Judgment.

IMPORTANT! The enforcement fee is not taken into account when determining income tax.

Legislative regulation of registration of services rendered

For each agreement, a registration card is created that records clients’ requests for legal advice, for example, in the following form.

Name of the Bar Association __________________________________Legal consultation N 5 The case is entrusted to the lawyer N.M. Kalugin Registration card N _________Name of the organization / full name of the client P.M. Smirnov Address of the applicant 120121, Moscow, block 50, 125 In the case of the organization / citizen _________________________________Brief description of the assignment, place of consideration or place, where the order is to be fulfilled ________________________________ Agreement for the provision of legal assistance. The applicant undertakes to pay a fee for providing legal assistance in the amount of 5,000 rubles. The fee is determined by agreement of the parties. Under the specified agreement, the following payments were made: An advance payment of 3,000 rubles was made. PKO {amp}lt;*{amp}gt; N 121267 dated June 10, 2001 Visiting places of deprivation of liberty ___ rub. PKO (PP {amp}lt;**{amp}gt;) N ___ from ___Travel allowance _____ rub. PKO (PP) N ____ dated ______Providing defense or representation ___ rub. PKO (PP) N ____from___Consideration of the case in the cassation court _____ rub. PKO (PP) N ____ from ____Consideration of the case in the supervisory authority _____ rub. PKO (PP) N ____ dated ______Defense or representation during additional investigation____ rub. PKO (PP) N ____ dated ______Head of legal consultation M.V. Ageev Client P.M. Smirnov The assignment was accepted by lawyer N.M. Kalugin.

Completed registration cards are stored in chronological order for a specified period of time, along with accounting documents. The completed registration card is registered in the registration card register and is issued by the accountant to the lawyer against signature.

The client of legal advice has the right to refuse the services of a lawyer at any stage of the assignment. In this case, the funds deposited into the cash register or the legal consultation account are returned with the deduction of part of it for the actual work performed. If it is impossible to complete the assignment or complete it for reasons beyond the control of legal advice, the unearned portion of the fee is also returned to the client or transferred to the personal account of another lawyer with the client’s consent.

In general, the fee is refunded at the request of the client in an amount determined by agreement of the parties. If any party disagrees with the refund amount, the refunded amount is determined by the head of the legal consultation.

The fee refund is reflected on the back of the registration card.

Result of the case________________________________________________________________________________________________________________________________ Lawyer ____________________________Pay ________________ rub.
____________ (date) Head of legal consultation ______________Refund of fee Client's full name _____________, amount ______________ rubles Address: _________, Passport series ___ number _______, issued _____Receipt for receipt of money. Money under the Expenditure Cash Order in the amount of _______ received. Date _________. I have no claims for completed (unfulfilled) work._____________________ (signature) To record the movement of lawyers’ funds, a personal account is opened monthly for each lawyer, which indicates the names of clients, numbers of registration cards for which agreements were concluded, as well as information about funds received. At the end of each month, the lawyer writes off the amounts on the registration card, which are reflected in the personal account. The lawyer's personal account contains the following information.

On each first day of the current month, the accounting department displays the balance of unearned fees on the personal account, which is transferred to the personal account of the next month.

M. Spitsyn

Ph.D.

25.12.2017

In accordance with paragraph 2 of Article 149 of the Tax Code of the Russian Federation, the sale of funeral services, work on the production of tombstones and the design of graves, as well as the sale of funeral accessories are not subject to taxation.

The list of funeral services exempt from value added tax is given in the All-Russian Classifier of Services to the Population, approved by Resolution of the State Standard of Russia dated 28.

This approach may make more sense than a complete exclusion for all services purchased by both businesses and households.

Even if states are moving away from tax services that are primarily purchased by businesses, there is a wide range of services to which a sales tax can apply.

As entrepreneurs perceive new profit opportunities, new services will continue to be invented. Lawmakers can expand service taxation in two different ways.

When opening a new business, you need to decide which tax system to choose. Choosing the right tax system will help you save not only on taxes, but will also save you from filing unnecessary reports.

Moreover, it is advisable to decide on the type of taxation before submitting documents to register a company, since it is possible to submit an application for the transition to special tax regimes (STS) only within five working days from the date of registration of the company.

A comprehensive approach is to apply the typical language used for tax goods to services. Under most state sales tax laws, all sales of goods are taxable unless they are expressly designated as exempt.

Hawaii, New Mexico and South Dakota take the same approach to service sales.

Hawaii and New Mexico have taken this approach since the beginning of their sales taxes; South Dakota did this to expand service taxation long before the sales tax was passed.

Common mistakes

Error No. 1: An attempt to establish a phased scheme for the delivery of work in the contract for construction work.

The legal regulation of accounting for the provision of services is based on the agreement that you have drawn up with the counterparty. Regulation is also carried out on the basis of tax legislation and the Civil Code. In addition, additional regulations apply in educational, security and some other areas.

Since both legal entities and individuals can provide services, settlements with counterparties can be carried out in both non-cash and cash forms. Expenses for services are processed in the same way as all other expenses. The accounting accounts in which transactions are carried out depend on the division, type of production and other factors.

• Invoice.
• Work completion certificate.
• Extract from current account.
• Extract from the payment order.

1. Before recording service transactions in accounting, it is necessary to obtain documents confirming that the work was completed. Sign an agreement with the company you are working with.

Features of accounting

As part of accounting, the state duty must be taken into account in the structure of other expenses on the basis of paragraph 12 of PBU 10/99 “Company Expenses”. Expenses must be recognized in the period in which they are incurred. This does not take into account the actual date of transfer of funds.

Fines and penalties are included in the structure of other expenses based on paragraph 8 of PBU 9/99 “Company Income”. Acceptance for registration is carried out in the amount awarded by the court. Analytical accounting of vessels with different counterparties and for different claims is carried out in separate sub-accounts.

The entries for accounting for legal expenses will be as follows:

• DT91 subaccount “Other expenses” KT68. Calculation of fees when filing a claim.
• DT68 KT51. Transfer of duties to the budget.
• DT51 KT76 subaccount “Calculations for claims”. Receipt of funds based on a writ of execution.
• DT76 subaccount “Settlements on claims” KT91 subaccount “Other income”. Reimbursement of duties and losses incurred.

All transactions are confirmed by primary documentation: writs of execution, receipts, and so on.

Resolution of controversial issues through litigation is accompanied by costs associated with the consideration of the claim. Legal costs include state fees and costs incurred in considering the claim. The amount of payment and the order of acceptance of costs depend on the characteristics of the claim. Before entering amounts into accounting and accepting them as expenses, you must have an idea of ​​the procedure for their formation. In this article we will talk about accounting for legal expenses and give examples of accounting entries.

Legal expenses in the form of state fees

The amount of state fees for each type of appeal is established by Ch. 25.3 Tax Code of the Russian Federation. State duty is a fee collected when filing a claim in court. The original payer is the plaintiff. The final payer of the amount is the losing party, who is awarded costs.

• Type of claim – economic, non-property, administrative.
• Categories of appeal – statement of claim, appeal or cassation complaint.
• The level of the judicial body - arbitration, general jurisdiction, higher body.

The most common cases are those of a commercial nature. The amount of the fee depends on the value of the assessed claim. For applications from persons without specifying the price of the claim, a fixed fee is provided.

Payment is made before filing an application with the court using the details provided by the authority. If the amount increases during the meeting, an additional payment is made. The legislation establishes a list of persons exempt from payment or who have the opportunity to reduce the amount of payment. When filing a claim, persons belonging to the preferential category confirm their right with documents.

Read more: Temporary registration of a child for school in Moscow

Legal expenses in the form of costs

The list of costs arising during the trial is defined in Art. 106 Arbitration Procedure Code of the Russian Federation. The list is open and individual in each specific case. Costs arise when considering a claim and are necessary for a more accurate decision. Costs are considered expenses only if they are determined by a court decision. Costs include:

• Remunerations paid to attracted specialists - translators, consultants, legal specialists.
• Compensation for current expenses of specialists and witnesses - travel, daily allowance, rental housing and other types of expenses.
• Payment for the cost of conducting an examination or inspection of the territory.
• Reimbursement of costs associated with postal expenses for notifying persons.

Amounts qualified as costs must meet the criteria of reasonableness. Rewards and compensation to individuals are assigned by the court in agreement with specialists in accordance with the time spent or established minimum wage standards. Payment of remuneration and compensation to the involved persons is made from the court's deposit account, where funds are deposited upon request to invite a specialist. Amounts spent on the initiative of the judicial authority are paid from the budget.

The costs incurred by the winning party to engage a lawyer and confirmed by the contract are compensated by the losing party, also based on the principle of reasonableness. The losing party also compensates for other expenses incurred during the proceedings. If the claim is partially satisfied, compensation for expenses is made partially.

Collection of legal costs from the losing party

In order to take into account the costs of conducting the process as expenses, it is necessary that the lawyer’s services were provided specifically to the legal entity, and not to its management, specialists or partners. The costs of a lawyer cannot be taken into account if the subject of the agreement concluded on behalf of the company was the provision of legal assistance to an official. Thus, costs include only work done for the company, and not its individual representatives, including the director.

Another important point: costs collected from authorities as compensation for losses are necessarily reduced by the amount of VAT accepted for deduction. According to Article 106 of the Arbitration Procedure Code, legal costs subject to reimbursement include the costs of a lawyer who provides assistance to the company. Article 110 specifies that expenses incurred by participants in the process are also reimbursed if the court takes the side of that party.

If the court rules on the company's side, it can count the award as income. According to accounting, they should be included in other income for the reporting period in which the court decision falls. From the point of view of tax accounting, these are non-sales income, which are recorded on the date of entry into force of the judicial act.

The package of documents to confirm expenses depends on the organizational form of the company that provides legal assistance. When concluding an agreement with a representative, payments are most often made in accordance with the requirements of the Law “On Accounting” and the procedure for conducting cash transactions.

If the documents do not formally comply with the requirements of regulations, this in itself cannot be a basis for refusing to satisfy the collection requirements. However, such decisions should be avoided, since these violations, coupled with the discrepancy between the details of the payment order and the data specified in the contract, may affect the court’s decision.

You can confirm the fact of payment for legal support using the following documents:

• payment order,
• account cash warrant,
• receipt.

Despite this, a receipt confirming the transfer of funds can formally be recognized as evidence of payment made under an agreement concluded with an individual, regardless of the presence or absence of a cash order. However, it is important to take into account that the enforcement fee does not reduce the taxable base for income tax. The amount of this fee is 7% of the amount collected in court.

Accounting for legal expenses

Acceptance of expenses when participating in court is carried out after their documentary confirmation and actual implementation. The date of acceptance of the state duty in expenses is the day of filing the statement of claim. The document will not be accepted for processing without presentation of a payment document or confirmation of release. If the claim is abandoned after filing the application, the amount will not be returned to the plaintiff.

To accept expenses in the form of expenses, you must have a court decision and documents confirming the expenses (clause 14.2 of PBU 10/99). When compensating for expenses incurred, the date of receipt of income is considered to be the day the court recognized the costs - made a decision (clause 16 of PBU 9/99). Court decisions are considered legal after they enter into force. To account for state duties, account 68 is used, and legal costs are accounted for in the subaccount “Settlements on claims” of account 76.

Legal advice: taxation and accounting

1 tbsp. 252 of the Tax Code of the Russian Federation). But local inspectors have a different opinion. And the courts, as a rule, support them. Thus, the Federal Antimonopoly Service of the North Caucasus District, in Resolution No. A53-27832/2011 dated May 28, 2013, considered that the recipient of services in the situation under consideration is an individual participant in the trial, and not the employing organization itself. Therefore, for the company, these expenses are unreasonable in tax terms. The Federal Antimonopoly Service of the Moscow District also made a decision in favor of the tax authorities in a similar situation (Resolution dated July 20, 2007, July 27, 2007 N KA-A40/6508-07). But we managed to find a court decision in favor of the taxpayer. Thus, in one of the cases, the company paid for the services of a lawyer who represented the interests of a director brought to administrative liability in court. The court noted the following (Resolution of the Federal Antimonopoly Service of the Volga District dated December 4, 2012 N A55-13194/2012, upheld by Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated July 23, 2013 N 1522/13): “The actions of an official as a body of a legal entity should be considered as the actions of the legal entity itself persons, including obtaining qualified legal assistance when challenging decisions of the federal executive body.” In this regard, the court found the company’s controversial expenses to be justified from a tax point of view. Editor's comment: we note that sometimes courts allow you to take into account the costs of hiring a lawyer to participate in proceedings to which the organization is not a party, if the economic benefit of the company will depend on the court decision. Thus, the Federal Antimonopoly Service of the North Caucasus District, making a decision in favor of the taxpayer, came to the conclusion that the law does not make the conclusion of contracts for the provision of legal services dependent on whether the taxpayer is a party to the transaction or not (Resolution dated November 21, 2011 N A63-1861 /2011).

If you do not find the information you need on this page, try using the site search:



Return to previous page

Latest news March 27, 2018 Draft federal law No. 424632-7 “On amendments to parts one, two and four of the Civil Code of the Russian Federation”

The purpose of the bill is to consolidate in civil legislation certain provisions, based on which, the Russian legislator could regulate the market of new objects of economic relations existing in the information and telecommunications network (in everyday life - “tokens”, “cryptocurrency”, etc.), provide conditions for making and executing transactions in the digital environment, including transactions that allow the provision of arrays of information (information).

March 20, 2013 Draft Federal Law No. 419090-7 “On alternative ways to attract investment (crowdfunding)”

The bill regulates relations for attracting investments by commercial organizations or individual entrepreneurs using information technology, and also defines the legal basis for the activities of investment platform operators in organizing retail financing (crowdfunding). The activity of organizing retail financing (crowdfunding) consists of providing services to provide participants of the investment platform with access to its information resources.

March 12, 2013 Draft Federal Law No. 410960-7 “On Amendments to the Criminal Code of the Russian Federation and Art. 151 of the Criminal Procedure Code of the Russian Federation"

The bill is aimed at strengthening liability for violations in the field of procurement of goods, works, and services to meet state or municipal needs. Analysis of law enforcement indicates the presence of certain gaps in the legislative regulation of liability for abuses in the field of public procurement by persons representing the interests of state or municipal customers, as well as persons executing state or municipal contracts.

March 7, 2021 Draft Federal Law No. 408171-7 “On the specifics of the participation of socially oriented non-profit organizations in the privatization of leased state or municipal real estate and on amendments to certain legislative acts of the Russian Federation”

The purpose of this bill is to provide socially oriented non-profit organizations with preferences in the alienation of real estate leased by these organizations from state property of constituent entities of the Russian Federation or from municipal property.

March 1, 2021 Draft Federal Law No. 403657-7 “On Amendments to Article 18.1 of the Federal Law “On the Protection of Competition”

The purpose of this bill is to clarify the grounds for appealing to the antimonopoly authority violations of the procedure for implementing procedures in relation to legal entities and individual entrepreneurs who are subjects of urban planning relations, procedures included in the exhaustive lists of procedures in the areas of construction, including during bidding. The changes made will allow the antimonopoly authority to quickly restore the violated rights of legal entities and individual entrepreneurs who are subjects of urban planning relations out of court.

Postings of the plaintiff and defendant using the example of payment of state duty

During the trial, M.’s organization filed a claim against the actions of IP K. of a non-property nature, the assessment of which cannot be made. The amount of state duty was 6,000 rubles. The amount of expenses reimbursed by the losing party is recognized as part of other income.

An example of reflecting expenses in the plaintiff’s accounting records

The Contractor enterprise did not receive payment for labor after completing work under a construction contract. The contractual terms set the terms of payments for the construction of the facility. Negotiations on payment for labor did not bring a positive result, which necessitated the need to resolve the issue in court.

When going to court, the company paid: a state fee in the amount of 2,300 rubles, the services of a lawyer in the amount of 5,000 rubles and an expert to confirm the compliance of the object with the terms of the contract in the amount of 7,000 rubles. According to the court's decision, the defendant must pay the plaintiff the cost of the contract and compensate legal expenses.

The court makes a decision on compensation for expenses based on documents confirming the expenses.

Features of accounting and taxation in the provision of legal services

The document must be correctly drawn up and reflect all services provided.

Determination of legal costs by the judicial authority

Recognition of costs incurred is carried out by the court in each specific case. Costs cannot be allocated to the losing party without filing a claim. The need to cover expenses must be addressed to the court and a request must be included in the statement of claim or in the form of additional demands stated during the hearing. When covering expenses, several repayment options arise.

Expenses incurred by the plaintiff in the course of pre-trial consideration of claims are not covered. Expenses often include costs for the services of lawyers. The courts do not recognize such expenses and do not attribute them to the losing party.

In some cases, the losing party may be able to avoid paying the winning party's costs. In order for the court to make a decision, it is necessary to apply to the court to provide documentary evidence of the difficult financial situation, the unintentionality of the motives for causing the damage, and to pay off the claims during the proceedings or upon receipt of a deferment.

Maintaining accounting records for a legal company

For accounting purposes, law firms either turn to accounting companies to outsource accounting or hire an accountant to join their staff. The first method of accounting for a lawyer is usually more cost-effective and is performed professionally, since the accounting company employs accountants (more than one employee), in the absence of your accountant, another employee can perform your routine work, and your expenses are also minimized and your taxes.

The activities of lawyers and legal offices are based on the provision of services. The main expenses of lawyers are, as a rule, office rent, software, payment of communication costs, Internet, advertising costs, but the main item of expense, which usually takes most of your profit, is the wages of your employees, as well as paying taxes from employee salaries in the amount of 30% and payment of taxes on activities.

Tax accounting of expenses

According to paragraph 10, paragraph 1 of Art. 265 legal expenses are included in non-operating expenses. The legislation does not specify the procedure for accepting expenses and the date of write-off. To confirm expenses you will need to have:

• documentary confirmation;
• economic feasibility of costs;
• connection with the legal process (being one of the parties);
• presence of a decision of a judicial authority that has entered into force;
• confirmation of payments using the cash method of accounting for expenses and income.

Enterprises that use the general tax system for accounting include legal expenses in calculating the tax base of profits. The costs may include any costs confirmed by the court. When reimbursement of expenses, the amount is included in non-operating income.

Availability of in-house lawyers

The economic feasibility of paying for lawyers' services largely depends on whether the organization has its own lawyers. If the firm’s staffing table includes the position of a legal adviser and his functional responsibilities include representing the organization’s interests in arbitration courts, the tax authority may doubt the economic feasibility of hiring lawyers to perform this work.

Arbitration courts also pay attention to such points, in particular, the FAS of the West Siberian District (Resolution of May 30, 2005 in case No. F04-3285/2005 (11681-A27-26)); FAS Volga District (Resolution of November 12, 2003 in case No. A12-9605/02-C46).

However, the fact that an organization has in-house legal advisers does not in itself mean that the involvement of lawyers in all cases is economically unjustified. Thus, the Ministry of Finance of Russia in Letter dated May 31, 2004 N 04-02-05/3/42 indicated that if there is a lawyer position in the staffing table, the issue of accepting expenses for legal services of lawyers for profit tax purposes should be considered in each individual situation . In this case, the provisions of paragraph 5 of Art. 252 of the Tax Code of the Russian Federation regarding the re-inclusion of expenses into the taxable base for income tax (for example, the range of responsibilities assigned to the organization’s lawyer, the scope of work performed).

Tax authorities note that if there are no employees on the staffing table of the legal department whose job responsibilities coincide with the list of services provided by a third-party law firm, the costs of paying for the services of this firm can be considered economically justified. These expenses can be taken into account for income tax purposes if they are incurred in activities aimed at generating income. This is stated in the Letter of the Federal Tax Service of Russia for Moscow dated December 7, 2004 N 26-12/78777.

In our opinion, even if the organization has a lawyer on staff, expenses for legal services can be attributed to a reduction in taxable profit if the functions performed by a third-party lawyer duplicate the duties of a lawyer, for example, due to a high level of specialization. In support, one can cite the Resolutions of the FAS Moscow District dated July 14-18, 2005 in case No. KA-A40/6315-05, the FAS Volga District dated December 2, 2004 in case No. A55-5119/04-31. Considering a similar dispute, the court indicated that the right to reimbursement of costs for engaging a lawyer is not made dependent on the presence of a specialist at the enterprise competent to represent interests in court (Resolution of the Federal Antimonopoly Service of the Volga-Vyatka District dated August 8, 2005 in case No. A82-11632/ 2004-37).

The requirement to justify costs is especially relevant for large corporations that have their own and, as a rule, numerous legal departments. Therefore, the involvement of third-party lawyers in a number of cases indicates that the costs incurred are economically unjustified. Let us illustrate this with an example from arbitration practice.

Situation 1. Based on the results of an on-site tax audit, the tax authority decided to hold the taxpayer accountable and assess additional income tax. According to the inspectors, the organization unreasonably included the costs of paying for consulting services of a law firm as expenses that reduce taxable profit.

The organization did not agree with the decision of the tax authority and appealed to the arbitration court.

The court's position. The court found that the organization (customer) entered into an agreement with the company, according to which it undertakes, for a fee in the amount of 35% of the amount of debt received to the customer’s bank account, to provide consulting services for the collection of this debt. The debt is confirmed by a writ of execution issued by the arbitration court. The customer paid for the services provided and included the costs as costs for consulting services.

During the trial, it turned out that the company was registered using the lost passport of citizen A, who is the sole founder of the customer organization and its director. According to the handwriting research report, this citizen did not sign either the application for registration of the organization, or the agreement for the provision of consulting services, or the invoice. In addition, the legal entity itself is not located at the place of registration, and its location has not been established.

The act of completed consulting services does not meet the requirements of the primary accounting document contained in Art. 9 of the Federal Law of November 21, 1996 N 129-FZ “On Accounting”, since it does not allow us to determine exactly what services were provided by the company in pursuance of the contract.

The court also took into account the fact that before the conclusion of the said contract, the customer himself actually completed all the claim work to recover the debt, received a writ of execution for forced collection, and the organization has three full-time lawyers. Based on this, the court decided that the taxpayer had not confirmed the economic justification of the costs, and upheld the decision of the tax inspectorate.

(Resolution of the Federal Antimonopoly Service of the Far Eastern District dated May 24, 2005 in case No. F03-A51/05-2/1021)

Composition of expenses in bankruptcy

The insolvency procedure is carried out under the supervision of the Arbitration Court. The body determines the stage of the procedure and the manager conducting financial control of the operations. Covering expenses is carried out at the expense of the debtor and is not compensated by third parties. Expenses subject to judicial approval include:

• Manager's remuneration.
• Payment for current activities in the form of postal, office, and transportation expenses.
• Amounts required for publication of notifications about the start of the procedure in the Bulletin.
• Funds spent on holding public auctions of the debtor's property.
• Payments for the services of appraisers, auditors, experts and others.

When determining the amount of expenses, the validity of the expenses, reasonable amount and proportionality to the result are taken into account.