The need to generate a notification of participation in foreign organizations has appeared relatively recently - since January 2015. For a number of persons, this document is mandatory, and its preparation takes place according to a certain U-IO form.
FILES
Who is required to give notice?
This document must be submitted:
- citizens of Russia;
- persons with dual citizenship;
- those who have no citizenship at all;
- enterprises and organizations.
In addition, the obligation to prepare the document also lies with some foreign companies, including those that have divisions and branches within the Russian Federation and are considered, accordingly, taxpayers of our country.
The reason for filing a notification is both joining and leaving a foreign organization. When “reformatting” shares, you should also notify the regulatory authorities.
Where and when to submit the document?
The notification is submitted to the local territorial office of the tax service, no later than thirty days (according to the calendar) from the date of “entry”, change of share or “exit” from the foreign organization.
Refusal to accept a document
Sometimes tax authorities may refuse to accept submitted documents. Notification of participation in foreign organizations in this case is no exception. True, the list of reasons for refusal is not so long:
- incorrectly completed form;
- failure to provide originals of supporting documents;
- poor copy quality.
To correct the situation, you need to correct all the shortcomings and resubmit the application.
What if you don't give notice?
Failure to fulfill the obligation to transmit notification of participation in foreign organizations can lead to serious consequences in the form of a fairly large fine (up to several tens of thousands of rubles).
It should be remembered that deliberately concealing this fact will also not end well, since today tax authorities have access to various sources of information (including cooperation with the tax services of other states in terms of exchanging information).
Rules for filling out the notification
If you need to generate and send to tax office notification of participation in foreign organizations, we recommend using the tips below and looking at a sample of filling out the document.
To begin with, let us remind you that the notification form has a unified form and is mandatory for use.
- You can enter information into the form either by hand (but only with a blue, black or purple ballpoint pen) or in printed form on the computer.
- Words must be written in large capital letters, legibly, so that they are readable and understandable.
- You cannot make mistakes on the form or make blots. If a mistake does occur, you should not correct it; it is better to fill out another form. And, of course, it is prohibited to indicate knowingly false information in the notification - if such facts are discovered, the consequences can be the most unpleasant.
If, after the notification has been sent, the taxpayer suddenly discovers that there was some inaccuracy in it, he has the right to submit an updated notification - no sanctions are provided for this, the main thing is to comply with the deadlines.
Sample of filling out a notice of participation in foreign organizations
Filling out the first sheet
On the first page at the top of the notification, information about the taxpayer is entered: company details, its full name (with deciphered organizational and legal status). The adjustment number, tax authority code and taxpayer code, and the reason for generating the document are also indicated here.
The bottom of the page is divided into two sections. In the left one, you first need to indicate the notifier’s code (the decoding is given right there), then enter his personal and contact information, sign and fill out the date.
Filling out the second sheet
The second page of the notification is completed if the speech is conducted on behalf of an individual. In this case, as mentioned above, it does not matter whether he is a citizen only Russian Federation, has dual citizenship or none at all. All information entered here must correspond to the passport or other identification document. If the notifier leaves this page blank, he must still sign and date it (the same applies to other pages of the document).
Filling out the third sheet
The third page contains information about the foreign organization about which we're talking about. First, you need to enter its name here, in Russian and English.
Below is the country code, company registration number and address of its actual location, and other known data. Then it should be noted what relationship the notifier has to the organization: direct, indirect, or both, the date, month, year of participation, share and expiration date (the latter if the document is submitted in connection with leaving the organization).
Filling out the fourth sheet
The fourth page includes information about the Russian company participating in the foreign organization. The information entered here must be identical to the company’s constituent papers.
Filling out the fifth sheet
The fifth page contains data on participation in a foreign structure without legal formation. entities (i.e. partnership, foundation, trust, partnership, etc.).
Filling out the sixth sheet
The sixth page indicates the status of a participant in a foreign structure without legal formation. person (i.e. who the applicant is: the founder of such a company, the recipient of income or the controlling entity).
Filling out the seventh sheet
Finally, the last page - the seventh page - reveals the procedure for the notifier’s indirect participation in a foreign company: all links in the chain that include the foreign organization, in which the notifier, in turn, participates, are indicated here, and the serial number of his participation and the share belonging to him are also indicated.
How to send a notification
To send to tax service notifications you can use one of several options:
- The most reliable and simplest is to take the completed form to the tax office in person and hand it over to a specialist.
- You can forward the notification with a representative, provided, of course, that he has a power of attorney certified by a notary office.
- And one more way: send the document by registered mail with notification of delivery via regular mail - this will take longer, but it guarantees that the notification will be received by the tax authorities.
If an organization or individual recognized as tax residents of the Russian Federation controls a foreign organization that is not a tax resident of the Russian Federation, or a foreign structure without forming a legal entity, such a foreign organization (structure) is recognized as a controlled foreign company (CFC) (clauses 1, 2 of Art. 25.13 Tax Code of the Russian Federation).
What it means to control for the purpose of recognizing a CFC is specified in Art. 25.13 Tax Code of the Russian Federation. Control includes, for example, the ability to exert a decisive influence on decisions made by a foreign organization regarding the distribution of profits received.
For example, a controlling person of a foreign organization is an organization whose share of participation in a “foreigner” is more than 25%, and such share does not provide exclusively for direct or indirect participation through public Russian organizations.
The presence of a CFC in an organization or individual obliges them to notify the tax inspectorate about such “foreigners” (clause 3, clause 3.1, article 23 of the Tax Code of the Russian Federation).
CFC notification form 2018
The controlling organization submits a notification at its location, and an individual who controls a foreign company - at his place of residence (clause 3.1 of Article 23 of the Tax Code of the Russian Federation).
The above form of notification should not be confused with the Notification of participation in foreign organizations (on the establishment of foreign structures without forming a legal entity) (form according to KND 1120411) (approved by Order of the Federal Tax Service of April 24, 2015 No. ММВ-7-14/177@).
Organizations must submit a CFC Notification to in electronic format, and individuals can choose whether to submit it electronically or on paper (Clause 4, Article 25.14 of the Tax Code of the Russian Federation).
Notification about CFC: due date
When to submit a CFC notification? Is it necessary to submit a notification about CFC annually?
A notification about a CFC must be submitted no later than March 20 of the year following the year in which the controlling person recognized income in the form of CFC profit, which was subject to personal income tax or income tax (clause 2 of Article 25.14 of the Tax Code of the Russian Federation).
Accordingly, if such income was not recognized last year, you will not have to submit a notice of CFC this year.
Procedure for filling out the CFC notification
The procedure for filling out the CFC Notification is given in Appendix No. 2
TO general requirements By filling out the Notification, the following may be included:
- filled out in one copy by hand in black or blue ink or using a computer;
- It is not allowed to correct errors using a corrective or other similar means, double-sided printing on paper, or binding sheets that lead to damage to the paper;
- fields are filled in with the values of text, numeric, and code indicators from left to right, starting from the first (left) familiarity;
- Text fields are filled in with capital printed characters;
- When printing the Notification on a printer, it is allowed that there is no framing of the acquaintances and no dashes for empty acquaintances. Signs must be printed in Courier New font with a height of 16 - 18 points.
The notice consists of title page, sheet “Information about an individual”, as well as sheets A, A1, B, B1, C, D, G1, G2.
If the information in any sheets is not related to the reporting organization or individual, these sheets are submitted but not filled out.
If you need to fill out information about several foreign organizations or structures, fill out several sheets A - D2, respectively.
The detailed procedure for filling out each sheet of the Notification is given in Appendix No. 2 to the Order of the Federal Tax Service dated December 13, 2016 No. ММВ-7-13/679@.
Notification about CFC 2018: sample filling
Let us provide for the Notification of CFC in relation to a controlled foreign company in which the direct participation of a Russian organization is 75%.
The form and procedure for filling out the notification, as well as the electronic format and procedure for its submission, were approved by Order of the Federal Tax Service of Russia dated December 13, 2016 No. ММВ-7-13/679.
In the notification, indicate: the tax period for which the notification is submitted;
name of the controlled foreign organization; registration number of a foreign organization, code as a taxpayer or their equivalents assigned to it during registration (incorporation), its address; organizational form of a foreign structure without forming a legal entity, name and details of the document on its establishment, date of establishment (registration), registration number (other identifier); the last day of the period for which the annual financial statements of the foreign organization (structure) are prepared; the date of preparation of the annual financial statements of the foreign organization (structure), as well as the date of completion of the tax period for income tax in accordance with its personal law; the date of drawing up the auditor's report on the annual financial statements of a foreign organization, structure (in case of mandatory and voluntary audit); share of participation in a foreign organization; the grounds on which an organization (citizen) is recognized as a controlling person; the grounds on which the profit of a controlled foreign company is exempt from taxation.
Submit the notification no later than March 20 of the year following the income tax period (NDFL). For example, for income of a foreign organization received in 2016, the notification must be submitted no later than March 20, 2018. No later than March 20, 2017, a notification must be submitted regarding the income that the foreign company received in 2015.
The obligation to submit a notification does not depend on whether the profits of a foreign company are exempt from taxation or not. Give notice anyway.
Andrey Kizimov, Actual State Advisor of the Russian Federation, 3rd class, Candidate of Economic Sciences
What are the responsibilities of the controlling person (This recommendation is only available in the VIP version)
Notice of controlled companies
Notification of controlled foreign companies must be submitted by both organizations and individuals who act as controlling persons in relation to foreign organizations and structures without forming a legal entity.
The obligation to submit a notification does not depend on whether the profits of a foreign company are exempt from taxation or not. Submit a notification in any case (letter of the Ministry of Finance of Russia dated October 7, 2015 No. 03-08-05/57368).
However, if the controlling persons cease participation in the controlled foreign company before the time when it is necessary to determine tax base for tax on its profits, they no longer have to submit a notification (letter of the Ministry of Finance of Russia dated August 4, 2015 No. 03-03-06/44942).
When to submit
Submit notification of controlled foreign organizations (structures) no later than March 20 of the year following the tax period for income tax (NDFL). For example, for income of a foreign organization received in 2016, the notification must be submitted no later than March 20, 2018. After all, such income is included in the tax base in 2017 and declared in 2018. That is, no later than March 20, 2017, you need to submit a notification on the income that the foreign company received in 2015.
Controlling persons - organizations are required to submit a notification to the inspectorate in electronic form. And the controlling persons - citizens - at their own discretion: in electronic form or on paper (paragraph and clause 4 of Article 25.14 of the Tax Code of the Russian Federation).
In the notification please indicate:
- tax period for which the notification is submitted;
- the name of the controlled foreign organization (structure), the notification of participation in which (about the establishment of which) was submitted earlier;
- the last day of the period for which the annual financial statements of the foreign organization (structure) are prepared;
- the date of preparation of the annual financial statements of the foreign organization (structure), as well as the date of completion of the tax period for income tax in accordance with its personal law;
- the date of drawing up the auditor's report on the annual financial statements of a foreign organization, structure (in case of mandatory and voluntary audit);
- share of participation in a foreign organization;
- the grounds on which an organization (citizen) is recognized as a controlling person;
- the grounds on which the profit of a controlled foreign company is exempt from taxation.
With indirect participation, including through Russian organization or a foreign structure without forming a legal entity, indicate in the notification the procedure for such participation. To do this, provide information about each subsequent participant. Namely:
- name of the foreign organization (structure);
- registration number of a foreign organization, code as a taxpayer or their equivalents assigned to it during registration (incorporation), its address;
- organizational form of a foreign structure without forming a legal entity, name and details of the document on its establishment, date of establishment (registration), registration number (other identifier);
- share of participation in each subsequent organization through which you indirectly participate in a controlled foreign organization;
- name, OGRN, INN, KPP, if you carry out indirect participation through a Russian organization.
This follows from the provisions
Every year, legal entities and individuals must provide the tax authorities with information about controlled foreign organizations if, on the 31st day of the reporting year, the taxpayer was recognized as an equity participant in a foreign enterprise. Tax officials are only interested in profitable companies, but it is also necessary to submit a CFC notification for unprofitable organizations. We will tell you below what other details are worth considering.
KIC – what is it?
In Russian legislation, a controlled foreign company is understood as an organization in which there is participation of citizens of the Russian Federation and legal entities - residents of the country. Share presence for individuals– at least 10% of capital (if the share of other participants – citizens of the Russian Federation is equal to or more than 50%), for legal entities – at least 25%. It should be noted that the share of participation of citizens is considered both individually and together with their spouse, as well as minor children.
Based on the results of consideration of the notification about the CFC, the tax authority decides whether the profit is subject to taxation in the Russian Federation.
What information must be included in the notice?
Preparing the CFC notice will take some time, so it is worth starting at the beginning of the year in which the tax return is submitted. The form contains the following data (you can download it from this link), which partly coincides with the notification of participation:
- Sheet A – brief information about the foreign company (name, reporting period, date of registration of the enterprise).
- Sheet A1 – the grounds on which a person is recognized as controlling capital in a foreign organization.
- Sheet B - brief information about the foreign structure, if the organization is not a legal entity.
- Sheet B1 – the grounds on which a person is recognized as controlling capital in a foreign structure.
- Sheet B – translated and notarized financial statements of the controlled company.
- Sheet D – the procedure for indirect participation of a tax resident of the Russian Federation. Specified as a percentage up to 15 decimal places.
- Sheet G1 - information about legal entity which controls a foreign company.
- Sheet D2 – information about the foreign intermediary company through which influence is exerted on the CFC (if there is one).
It is worth noting that each sheet of the CFC notification form reflects a unique serial number, which the taxpayer independently assigns to a specific CFC. He should not deal with another company when the first one is liquidated. The code simply ceases to take part in the chain of numbers of controlled enterprises.
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