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Tax-free transfer of assets from a CFC extended for 2023

DATE: July 27, 2023 | AUTHOR: AT

The bill introducing in 2023 the amendments creating a tax exemption from personal income tax (hereinafter – PIT) upon distribution by a CFC company (structure) of the assets on any grounds to the beneficial owner has been submitted to the Federal Council.
In accordance with the amendments the taxpayer’s income received in 2023 from a CFC is exempt from PIT if the following conditions are met:

• The taxpayer was a controlling person / shareholder of a foreign company (a settlor of a foreign structure) as of 31.12.2021; and

• One of the following conditions is met:

  • The CFC held the transferable assets (property (except money) or property rights) as of 01.03.2022; or
  • The CFC held the transferable claim rights and (or) property rights as of 01.03.2022; and

• The taxpayer filed to the Russian Tax Authorities:

  • A PIT tax return indicating the income generated by the transfer;
  • An application for exemption of such income from PIT specifying the characteristics of transferred property (property rights);
  • Documents confirming the value of the property (property rights) according to the CFC’s accounting as of the date of the transfer.

This tax exemption may be relevant if you are planning a group of companies restructuring or if you are interested preparation a foreign company for liquidation.

Please note that this benefit would be applicable if the asset has been transferred before the end of 2023.

We will keep you updated on this matter.

If you have any questions on this topic, you may contact our lawyers:
Tatiana Astahova and Vlada Kovaleva

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