The Russian Supreme Court has issued a landmark ruling of importance for all small and medium‑sized enterprises (SMEs) that apply reduced insurance contribution rates. The dispute arose when a company and its founder were removed from the SME register for a technical reason (the register holder of the founder failed to submit information on time) and later reinstated. Tax authorities argued that during the period when the company was not on the register, it had no right to the reduced rates, and they assessed additional contributions. The Supreme Court, however, sided with the business.
The Dispute
The company and its founder were removed from the SME register on July 10 because the register holder of the founder had not submitted the required information on time. After the data was provided, the company was re‑entered into the register on October 10.
During an audit, tax authorities concluded that from July to September the company did not have SME status and therefore was not entitled to apply the reduced insurance contribution rate. The policyholder was assessed additional contributions. Three court instances upheld the tax authorities’ position.
The Supreme Court’s Position
The Russian Supreme Court disagreed with the lower courts and sent the case for a new hearing. The Court held that:
The absence of information about an entity in the register does not prevent it from receiving support measures. The register is of a recording and informational nature; it does not confer rights.
An entity qualifies as an SME if it meets the conditions of Part 1.1 of Article 4 of the Law on the Development of Small and Medium‑sized Enterprises. That provision does not require the entity to be recorded in the register, nor does the Russian Tax Code impose such a requirement.
Entering information into the register and removing it have no legal effect on the entity’s status. Therefore, the absence of data in the register for a certain period does not preclude the application of reduced insurance contribution rates.
Why This Matters for Businesses
This ruling is of fundamental importance for all SMEs that may be temporarily removed from the register for technical reasons (e.g., errors by the register holder). Companies now have a clear judicial precedent: even if the register does not show SME status for a certain period, that fact alone does not deprive the company of its right to reduced rates, provided that the substantive conditions for SME status are met.
Risks of Incorrect Application
Despite the positive ruling, businesses should not rely on an automatic right to benefits when they are not on the register. Tax authorities may still assess additional contributions, and defending the company’s position may require court proceedings, which take time and resources.
What Businesses Should Do
Regularly check whether your company is listed in the SME register.
If you discover an erroneous removal, take immediate steps to have the information restored.
If tax authorities assess additional contributions for a period when you were not in the register, rely on the position of the Russian Supreme Court.
Seek qualified legal assistance when necessary.
How Acsour Can Help
Acsour experts are ready to:
advise on the application of reduced insurance contribution rates by SMEs;
audit your insurance contribution calculations and assess the risk of additional assessments;
provide full legal support on SME benefit matters.
Contact us — we will help you protect your right to reduced insurance contribution rates.