Advice on taxation of CFCs

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The Tax Compliance team had the task of analyzing the personal income tax risks that may arise for a shareholder of a large catering chain due to participation in a CFC. Since the establishment of the foreign organization, the client has not submitted a CFC notification to the tax authority. At the time of the opinion, the statute of limitations under the relevant article of the Tax Code had not expired. The client was interested in the analysis and cost estimate of tax risks for failure to submit CFC information.

• Result

  As a result of the analysis, Tax Compliance specialists prepared an opinion describing the tax risks and estimated their costs.

Services were rendered to the beneficiary of a construction company for retrospective disclosure of information on participation in a controlled foreign company and on the existence of bank accounts opened outside the Russian Federation.

• Employee involved

  Yulia Pavlova

• Process description

  At the time of drawing up and submission of notifications to the tax authorities the statute of limitations under p. 1 of Article 129.6 of the Tax Code had not expired, i.e. the client still had the risk of tax liability for untimely disclosure of information about the CFC. In order to exclude tax liability for failure to submit CFC notifications for previous tax periods, the client was provided with services to prepare a special tax declaration allowing to apply the tax amnesty under the Federal Law of May 29, 2019 № 110-FZ within the voluntary declaration of their assets. Also within the framework of the project we assessed the grounds for the absence of an individual's obligations to withhold personal income tax from the profit of a CFC.

• Result

  As a result of legal defense, tax liability and penalties for late submission of CFC notifications due to the application of tax amnesty provisions were avoided