Is the Federal Tax Service entitled to charge additional taxes to the organization on the basis of the foundation due to the creation by the organization of a dependent company engaged in the same activity and applying the STS? Acsour experts reviewed the resolution of the Arbitration Court of the Volga Region dated 05/28/2024 No. A12−7270/2023 and answered this question.
The essence of the case
A Russian company engaged in the purchase and sale of agricultural machinery has established a dependent organization. It is noted that
The charges brought
Based on the results of the inspection, the inspectorate established a business fragmentation scheme: the companies are interdependent and are actually one entity.
Additional income tax and VAT were charged in the amount of 31 320 967 rubles.
According to the tax service, the creation and operation of such a company allowed the organization to save on taxes by transferring part of its income to a dependent company that did not pay income tax and VAT, using a simplified taxation system.
Such a scheme of work indicates the artificial fragmentation of the business and the receipt of unjustified tax benefits by the organization.
Opinion of the judicial body
The Court of cassation rejected the arguments of the tax inspectorate and sided with the taxpayer organization.
The judges explained that interdependence does not indicate illegal fragmentation of activities in order to obtain unjustified tax benefits. In such disputes, the tax authorities must prove
The court also noted that:
As a result
The court concluded that the fragmentation of the business in the disputed situation was reasonable and was not aimed solely at obtaining tax benefits. In this regard, the judges satisfied the claims filed by the organization, canceling additional taxes.
Acsour experts note that this case is one of the few cases when a taxpayer manages to prove the legality of his actions. Stricter tax legislation, as well as thorough inspections by tax authorities, can often lead to large additional charges and fines: for issues of legally correct business conduct, contact Acsour.
The essence of the case
A Russian company engaged in the purchase and sale of agricultural machinery has established a dependent organization. It is noted that
- the founder and the head of the organizations are the same person;
- the companies conduct identical activities;
- the buyers were distributed among themselves;
- the equipment was purchased from one supplier;
- the offices are located in the same building;
- the workshops of the companies occupy one room and are not divided among themselves;
- individuals received income from two organizations at once;
- companies share a common website, phone numbers, and IP addresses;
- customers perceived organizations as a single entity.
The charges brought
Based on the results of the inspection, the inspectorate established a business fragmentation scheme: the companies are interdependent and are actually one entity.
Additional income tax and VAT were charged in the amount of 31 320 967 rubles.
According to the tax service, the creation and operation of such a company allowed the organization to save on taxes by transferring part of its income to a dependent company that did not pay income tax and VAT, using a simplified taxation system.
Such a scheme of work indicates the artificial fragmentation of the business and the receipt of unjustified tax benefits by the organization.
Opinion of the judicial body
The Court of cassation rejected the arguments of the tax inspectorate and sided with the taxpayer organization.
The judges explained that interdependence does not indicate illegal fragmentation of activities in order to obtain unjustified tax benefits. In such disputes, the tax authorities must prove
- relationships of interdependence;
- the fact of artificial division of a single activity into separate parts with their formal assignment to interdependent persons who are deprived of independence and do not actually carry out any activity.
The court also noted that:
- the main purpose of the creation of societies is to increase sales by attracting agricultural producers from neighboring regions who use special modes;
- suppliers partially matched (less than a third);
- family ties do not prove the fictitiousness of transactions;
- as for the coincidence of labor resources, only about 50% of the staff signed contracts in different periods. This does not prove the migration of workers, as in the case of business fragmentation;
- the control of organizations by the same persons does not indicate the dishonesty of companies;
- the transfer of revenue from one organization to the accounts of another has not been established.
As a result
The court concluded that the fragmentation of the business in the disputed situation was reasonable and was not aimed solely at obtaining tax benefits. In this regard, the judges satisfied the claims filed by the organization, canceling additional taxes.
Acsour experts note that this case is one of the few cases when a taxpayer manages to prove the legality of his actions. Stricter tax legislation, as well as thorough inspections by tax authorities, can often lead to large additional charges and fines: for issues of legally correct business conduct, contact Acsour.
