Ekaterina Kopylova, Tax Compliance tax consultant, discusses in the EZh-Jurist newspaper current issues related to bringing debtor controlling persons (DCPs) to subsidiary liability at the request of the tax authority.

In 2017, Federal Law No. 127-FZ dated 26.10.2002 "On Insolvency (Bankruptcy)" (hereinafter - the Law) was supplemented with provisions establishing a number of presumptions, including with respect to the causal link between the actions of the KDL and the bankruptcy of the company in case the tax authority's claims amount to more than 50% of all claims of the 3rd priority creditors (subparagraph 3, paragraph 2, Article 61.11 of the Law). In addition, the tax authorities received the right to apply for subsidiary liability outside the bankruptcy case (Article 61.19 of the Law).

After that, the institution of subsidiary liability began to develop actively in practice, which naturally arouses keen interest and concern among businesses and their owners.

The number of satisfied applications on bringing to subsidiary liability increases every year (in 2021 - 3,356, in 2022 - 3,985, for 6 months of 2023 - 1,949). [1]

This year the Federal Tax Service of Russia launched a new service "Register of subsidiary defendants", which accumulates information on persons brought to subsidiary liability in bankruptcy cases where the tax service participates as a creditor.

In addition, cassation appeals of KDLs brought to subsidiary liability were quite often referred for consideration by the SCEC of the Supreme Court of the Russian Federation, and the Constitutional Court of the Russian Federation adopted several relevant rulings and definitions, which gave rise to widespread discussion among the professional community.

The analysis of court decisions shows the increasing importance of such an instrument as bringing to subsidiary liability. This can be explained by its high efficiency and peculiarities of proof related to the presumptions established by the Bankruptcy Law.

At the same time, in practice often arise issues related to:

• Competition of claims for bringing to subsidiary liability and for compensation for damage caused by a crime;
• Inclusion of the tax penalty in the amount of subsidiary liability of KDL;
• The need to take into account the behavior of a particular person when determining the amount of subsidiary liability;
• Prospects for reducing the amount of subsidiary liability, mainly formed at the expense of tax debts, at the stage of bankruptcy;
• Procedural opportunities for KDL to participate in a tax dispute and judicial defense of its rights.

In the article, Ekaterina Kopylova, Tax Compliance tax consultant, highlights a number of practical problems and issues based on interesting court disputes. The full text of the article is available here. 

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[1] Summary statistics of the Judicial Department at the Supreme Court of the Russian Federation.