Transfer of property within a group of companies: how to reduce taxes

Why transfer property within a group of companies

There are the following main reasons why owners of a holding may want to “move from one pocket to another” their property.

Safety. In this case, business owners want to withdraw property from the company, which may be subject to claims from creditors or regulatory authorities.

Reorganization. The owners of the holding may decide to change the direction of activity of a particular company in the group. For example, previously the organization was engaged only in trade, but now production will be added to its functions. Naturally, in this case, the corresponding assets.

Development. This option is similar to the previous one, the difference is that we are not talking about the redistribution of existing functions within the holding, but about the launch of a new project. For ease of doing business, in this case it is logical to create a separate legal entity, which will also require fixed assets.

Free contracts between legal entities

3. The parties may enter into an agreement that contains elements of various agreements provided for by law or other legal acts (mixed agreement). The relations of the parties under a mixed contract are applied in the relevant parts to the rules on contracts, the elements of which are contained in the mixed contract, unless otherwise follows from the agreement of the parties or the essence of the mixed contract.

12. An agreement has been concluded between legal entities for the free use of non-residential premises. Is it possible for the second party under an agreement to which the premises were transferred for free use to be subleased to another legal entity?

22 Jun 2021 uristlaw 253

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Property transfer options

Most groups of companies are built according to approximately the same scheme. Externally, structures may look complicated, but this is most often due to the fact that the actual business owners do not want to “shine the light.” But the essence of the legal structure of a holding is almost always the same: the founders, individuals, control the group’s organizations directly or through a management company.

Thus, property can be transferred:

From the founder - subsidiary company.
From a subsidiary to the founder.
Between two related companies that have common founders.

Next, we will consider various methods of transferring property in relation to the status of the transferor and receiver of the purchase and sale of property

This method makes sense to use only when transferring property between two legal entities related by a common owner, because In the relationship between parent and subsidiary companies, there are more interesting options.

Let's consider the tax consequences of such a sale.

Income tax or simplified tax system

To avoid paying these taxes, you need to minimize your revenue. If the seller works for OSNO, then the price should be equal to the residual value of the object or slightly exceed it. When the seller uses the simplified tax system “Income minus expenses”, one must proceed from the costs of purchasing or creating the object being sold.

However, tax authorities always closely monitor transactions within holdings. If the income from transactions between interdependent Russian companies exceeds 1 billion rubles per year, these transactions are subject to mandatory control. But “smaller” transactions may also attract the attention of inspectors. For example, if one of the parties to the agreement pays income tax, and the other uses one of the special regimes (Article 105.14 of the Tax Code of the Russian Federation).

Therefore, you need to prepare a justification for the selling price in advance. For example, a decrease in the cost of equipment can be explained by a high degree of wear and tear, defects discovered during inspection, etc.

VAT

If both organizations work for OSNO, then in general there are no VAT expenses for the holding. The tax charged by the seller will be reimbursed by the buyer.

It’s worse if the receiving party uses one of the special modes. Then the VAT that the seller will charge will be “lost” for the business. Only if the buyer uses the simplified tax system “Income minus expenses,” VAT can be taken into account in costs and partially compensated (in the amount of 15% of the amount).

Accounting for gratuitous transfer of fixed assets

Transactions on the gratuitous transfer of fixed assets are reflected in accounting entries provided for in paragraphs 12 and 28 of Instruction No. 174n*(1).

The choice of accounting entries to record the transfer of fixed assets will depend on to whom the property is transferred.

When transferring fixed assets to state (municipal) institutions of the same public legal entity, the following correspondence accounts are applied:

Debit X 401 20 281 Credit X 101 XX 410 - reflects the transfer of the book value of the accounting object;
Debit X 104 XX 411 Credit X 401 20 281 - reflects the transfer of depreciation accrued on the object.

When transferring fixed assets to state (municipal) institutions of another public legal entity (interbudgetary transfer), the following correspondence accounts are applied:

Debit X 401 20 251 Credit X 101 XX 410 - reflects the transfer of the book value of the accounting object;
Debit X 104 XX 411 Credit X 401 20 251 - reflects the transfer of depreciation accrued on the object.

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The transfer of fixed assets is reflected on the basis of primary documents prepared by the transferring party and the Notice.

Please note the use of KOSGU code 281 in account number 401 20 when reflecting the transfer of fixed assets. This KOSGU code is referred to as “Free transfers of capital nature to state (municipal) institutions.” Using the KOSGU code 281, transactions on the gratuitous transfer of non-financial assets that make up fixed assets within one budget are reflected (clause 10.8.1 clause 10 of Procedure No. 209n * (2)).

If the transfer of fixed assets is carried out by state (municipal) organizations (we usually include unitary enterprises among them), then the following correspondence accounts are applied:

Debit 2 401 20 284 Credit 2 101 XX 410 - the transfer of the book value of the accounting object is reflected;
Debit 2,104 XX 411 Credit 2,401 20,284 - reflects the transfer of depreciation accrued on the object.

When transferring fixed assets free of charge to individuals, the following transactions may be used:

Debit 2 104 ХХ 411 Credit 2 101 ХХ 410 - the transfer of an accounting object is reflected in the amount of depreciation accrued on it;
Debit 2 401 10 172 Credit 2 101 XX 410 - the transfer of the accounting object is reflected in the amount of its residual value.

Their use is not regulated by Instruction No. 174n, and therefore requires agreement with the founder and financial authority.

Contribution to the authorized capital and contribution to property

These two methods are only suitable when transferring property from a parent company to a subsidiary. From the point of view of registration, a contribution to property is simpler. In general, if the possibility of making contributions was initially stated in the Charter, there is no need to change the constituent documents for this. However, to save on taxes, it will be more profitable to replenish the authorized capital (AC).

Income tax and simplified tax system

Income from income tax and the simplified tax system does not arise for both options for depositing fixed assets (clauses 3 and 3.7, clause 1, article 251 and clause 1.1, article 346.15 of the Tax Code of the Russian Federation).

If a fixed asset is contributed to the authorized capital , then its initial value from the subsidiary is taken equal to the residual value from the founder at the time of transfer (clause 2, clause 1, article 277 of the Tax Code of the Russian Federation).

And when making a contribution to property, the receiving party, according to tax authorities, cannot depreciate the received object for tax accounting. Officials believe that the initial cost in this situation should be taken equal to zero, or only the recipient’s costs for delivery and installation, if any, should be included in it (letter of the Ministry of Finance of the Russian Federation dated May 14, 2018 No. 03-03-06/1/31986).

VAT

When making a contribution to the authorized capital, VAT is not required, because transfer of property for investment purposes is subject to a benefit ( subclause 1, clause 2, article 146 and subclause 4, clause 3, article 39 of the Tax Code of the Russian Federation). But the founder who works for OSNO is obliged to restore the tax in proportion to the residual value of the transferred object (clause 3 of Article 170 of the Tax Code of the Russian Federation). If a subsidiary also works with VAT, then it can take this amount as a deduction (clause 11 of Article 171 of the Tax Code of the Russian Federation). Then no additional costs will arise within the holding. But if the recipient works in a special regime, then the VAT will be “lost”. In this case, the higher the wear and tear of the transferred object, the more profitable the deal will be.

When investing in property, the situation with VAT is more complicated. Officials believe that property investments that are exempt from VAT are only contributions to the management company. If the authorized capital does not change, then there should be no VAT benefit (letter of the Ministry of Finance of the Russian Federation dated July 15, 2013 No. 03-07-14/27452). And the recipient of the fixed asset cannot deduct VAT, since the transaction was free of charge.

The position of the tax authorities can be challenged. After all, any investment of property in a subsidiary company is clearly of an investment nature, even if the charter capital does not change. But in this case, the businessman needs to be prepared for litigation. There are prospects for a positive outcome of the case (Resolution of the Federal Antimonopoly Service of the Eastern Military District dated December 3, 2012 No. A29-10167/2011).

Agreement for the Transfer of Goods Free of Charge Between Legal Entities

Ministry of Internal Affairs of the Russian Federation true information about yourself and your actual place of residence at the time of submitting documents. Before making a decision on whether or not to provide a temporary residence permit, all this information can be verified by the relevant authorized bodies. The procedure for registering a temporary residence permit in 2021 has not changed compared to the previous period. It can be divided into 5 steps:

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Thus, labor productivity is the reciprocal of labor intensity. Based on the specifics of the source data, it shows how many products are actually produced by a given production under actual production and economic conditions per unit of living labor expended in production. 2 To analyze the development potential and viability of an enterprise within an industry, economic theory uses such indicators as available and potential labor productivity. Available productivity is calculated similarly to the actual one, but the maximum amount of products produced during the period with minimal labor costs is taken as the initial data, that is under conditions when production operates in conditions of minimizing and eliminating associated costs and downtime.

Free transfer of property

This option is convenient to use if you need to transfer objects from a subsidiary to the parent company.

A “daughter gift” is not subject to income tax in accordance with paragraph 11 of Art. 251 Tax Code of the Russian Federation. To do this, the receiving company must own more than 50% of the authorized capital of the transferring one.

It is important to remember that the parent company, having received the property, cannot transfer it to third parties within a year. Otherwise, you will have to pay income tax.

Sometimes tax authorities try to reclassify a “daughter gift” as a payment of dividends, but the courts, including the highest authority, in this case are on the side of taxpayers (Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated December 4, 2012 No. 8989/12).

The approach of the inspectors to VAT here is generally similar to the contribution to property, which was discussed above. But since the transfer of an object from a subsidiary to a parent company can hardly be considered an investment, then most likely the businessman will have to accept the position of the tax authorities. Those. the transferring company charges VAT, but the receiving company cannot deduct it.

Selection

If a new project is launched, a separate legal entity is often created within the holding. It can not only be opened from scratch, but also separated from an existing company by transferring the necessary assets.

From a tax point of view, this is a very profitable option. The transfer of property during reorganization is not subject to either income tax or VAT. The transferring company also does not have to recover VAT. Naturally, the receiving party cannot deduct VAT.

Risks here arise only if the original company uses OSNO, and the receiving company will work on the simplified tax system. It turns out that an organization purchased an object on OSNO, received a VAT deduction, and then transferred it to a dedicated one. Those. in the future, this fixed asset will be used in activities not subject to VAT.

Although according to the norms of the Tax Code of the Russian Federation, it is not necessary to restore VAT during reorganization in any case (clause 8 of Article 162.1 and subclause 2 of clause 3 of Article 170 of the Tax Code of the Russian Federation), inspectors may accuse a businessman of receiving an unjustified tax benefit.

To reduce risk, it is better not to carry out reorganization immediately after purchasing those objects that are planned to be transferred.

What methods of transferring property are best used in different situations?

We will show in the table possible options for transferring property, depending on the relationship between the parties to the transaction.

Transfer options/parties to the transaction	Sale	Contribution to the management company	Contribution to property	Free transfer	Selection
From founder to subsidiary	+ —	+ +	+ —	+ —	+ +
From subsidiary to founder	+ —	— —	— —	+ —	— —
Between companies with a common owner	+ +	— —	— —	— —	— —

«+ +» - acceptable from a legal point of view and beneficial in terms of taxes

«+ —"- acceptable from a legal point of view, but unfavorable from a tax point of view

«— —» – unacceptable from a legal point of view

A businessman will have the most options if he transfers property from the founder to a subsidiary company. In this situation, the most profitable would be a contribution to the authorized capital or allocation.

If the object is transferred in the opposite direction - from the subsidiary to the parent company, then the only choice left is between sale and gratuitous transfer. The advantages of one method or another will depend on tax regimes and the ability to justify a low price.

In the case when both companies work for OSNO and the property is sold at its residual value, there will be no need to pay income tax and VAT for the group as a whole. Then buying and selling property will be more profitable.

And if the market price of a fixed asset significantly exceeds the residual value, or the receiving company operates on a special regime and cannot refund VAT, then it is better to use a gratuitous transfer.

If you need to transfer property between two companies that are connected only by a common owner, then there is only one option left - a standard purchase and sale agreement.