Author of the article: Anastasia Ivanova Last modified: January 2021 18910
For individuals, the Civil Code provides for the possibility of an oral agreement. Enterprises and organizations are required by law to enter into contracts exclusively in writing. Gratuitous transactions between legal entities are a fairly common form of agreement. Let's look at specific examples of such transactions and the features of their conclusion.
Free transfer of property between legal entities
You can give something to each other from the bottom of your heart, without expecting anything in return. Or you can try to achieve some financial benefits for yourself in this way, for example, reduce the amount of tax. Individuals can transfer any property to each other without burdening themselves with additional registration if they do not wish to do so. But organizations must adhere to legally regulated procedures.
There are many nuances in the gratuitous transfer of property between legal entities that an entrepreneur must comply with in order to remain within the law. Let's consider which methods of transferring property can be classified as free of charge, how such a transfer is carried out and how to formalize it correctly, and also clarify the tax subtleties relating to this procedure.
Income tax on gratuitous transfer
What can be said about the income tax of companies that transfer property for use? Such transfer is carried out free of charge, without any further obligations. Accordingly, the transferring party does not have any income from such a procedure. And if there is no income, then there is no need to talk about taxation of profits. According to the same principle, costs do not include the cost of the transferred property and the costs of its operation.
For the recipient of the property, the picture is a little different. The gratuitous property received should be included in non-operating income. There are only three cases when property will not be included in such income. These are cases when the property transfers:
- Founder for the formation of additional capital
- An individual who has a 50% share in the company to which the property is transferred
- A company that owns half or more of the authorized capital of the organization to which the property is transferred
Gratuitous transfer or donation
An organization, while carrying out its activities, can accept from other organizations or transfer to them property belonging to the company, without expecting any reciprocal steps in return, that is, free of charge . This is expressly permitted by Art. 572 of the Civil Code of the Russian Federation.
Once the property has been donated, the organization receiving it does not in any way assume the following obligations.
- This or that form of payment for the received property.
- Counter provision of services, performance of work, reciprocal property barter.
A gift , in contrast to a gratuitous transfer, is the provision of property or money in an amount not exceeding 3 thousand rubles. and does not require documentation.
NOTE! From the point of view of the Tax Code, a transfer, even gratuitous, is a transfer of ownership of property from one legal entity to another, that is, the same implementation.
Free transfer of property rights as an object of VAT taxation
The provisions of tax legislation do not provide a clear answer to the question: is any transfer of property rights subject to VAT? An analysis of the provisions of the Tax Code suggests that only the transfer of property rights on a reimbursable basis is subject to VAT.
In paragraph 2, paragraph 1, paragraph 1 of Art. 146 of the Tax Code of the Russian Federation, which defines the types of transfers carried out on a gratuitous basis, recognized as sales, names the transfer of ownership of goods, results of work performed and the provision of services. Transfer of property rights is not included. Property rights (as was previously proven) are not included in the content of the concept of service, defined by the Tax Code of the Russian Federation.
The gratuitous transfer of property rights is not mentioned in Art. 155 of the Tax Code of the Russian Federation, which establishes the specifics of determining the tax base when transferring property rights, while the procedure for determining the tax base when selling goods (work, services) free of charge is established by clause 2 of Art. 154 Tax Code of the Russian Federation. All this allows tax legislation to be interpreted as not recognizing the gratuitous transfer of property rights as implementation, and therefore not subject to VAT.
This position regarding the gratuitous transfer of property rights was reflected in the decision of the Moscow Arbitration Court dated February 15, 2007 in case No. A40-75532/06-140-473. The court indicated that the provisions of Art. 40 of the Tax Code of the Russian Federation apply to goods, works and services and do not apply to the assignment of rights, including the transfer of property rights. The appellate and cassation instances left this decision of the arbitration court unchanged.
There are cases when courts made different decisions. Thus, the FAS Moscow District, in resolution dated February 15, 2006 No. KA-A40/97–06 in case No. A40-21676/05-127-183, recognized that the purchase price of gift certificates is the tax base for calculating VAT. According to the Supreme Arbitration Court of the Russian Federation, the norms of Art. 40 of the Tax Code of the Russian Federation are also subject to application in the case of gratuitous receipt of property rights (information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated December 22, 2005 No. 98, determination of the Supreme Arbitration Court of the Russian Federation dated April 1, 2009 No. 2944/09).
What can be donated?
Objects for gratuitous transfer may be:
- securities;
- intangible assets of the organization;
- goods;
- finished products;
- materials, raw materials;
- equipment, tools;
- real estate objects or the right to use them;
- vehicles;
- money in cash or non-cash form, as well as repayment of the financial obligations of the recipient.
IMPORTANT! If taking possession of the transferred property involves registration, for example, we are talking about a car or real estate, then the recipient party must register this property for themselves, and only then will a change of owner occur.
Capital contribution
This is the most well-known way of providing a company with property and property rights by its participants. A participant in any commercial organization (JSC, LLC, etc.) can make a contribution to the authorized capital (AC), both at the stage of registration of the company and during its activities.
In addition, a third party can make a contribution to the authorized capital of an LLC upon joining the company’s members. In a joint stock company, a third party can purchase shares during an additional issue, and this will constitute a contribution to the management company. Money, securities, other property or property rights can be contributed to pay for the authorized capital.
Tax consequences
A contribution to the authorized capital of a commercial organization is exempt from income tax (clause 3, clause 1, article 251 of the Tax Code). As for VAT, in a situation where the share in the management company is paid for with property, the transferring party to the OSN is obliged to restore the VAT previously accepted for deduction (clause 3 of Article 170 of the Tax Code of the Russian Federation) in an amount proportional to the residual (book) value without taking into account revaluation (in regarding fixed assets and intangible assets).
However, the receiving party, if it is also on the general taxation system, takes into account the same amount of tax as part of deductions after accepting the property for registration (clause 8 of Article 172, clause 11 of Article 171 of the Tax Code of the Russian Federation). As a result, the balance of VAT amounts paid and accepted for deduction is maintained, which actually means the absence of tax consequences for the business owner of the contribution of property to the authorized capital.
Naturally, if we make a contribution to the capital of a commercial organization under a special tax regime, it will not be possible to take VAT into account as expenses.
Additional expenses
To transfer property to the authorized capital, the law requires an independent monetary assessment of its value (clause 2 of Article 66.2 of the Civil Code).
Risks
The guaranteed amount of liability of a legal entity for its obligations to creditors is equal to the amount of the authorized capital. Also, a large management company can make the company attractive to unscrupulous third parties (for example, raiders).
However, a participant has the right to make a contribution to the management company in an amount exceeding the nominal value of his share. For example, to pay for a share in the authorized capital of an LLC of 10 thousand rubles, a participant may well contribute, for example, 15 million rubles. In this case, the nominal value of his share will be 10,000 rubles. This is exactly what will be indicated in the Unified State Register of Legal Entities. And this contribution (including in terms of the excess of the real amount of the contribution over the nominal value of the share) is not included in the tax base of the receiving party (paragraph 3, paragraph 1, paragraph 3, Article 170, paragraph 11, Article 171, paragraph 8 Article 172 of the Tax Code; paragraph 3, paragraph 1 of Article 251 of the Tax Code).
