At present, tax legislation does not explicitly say whether the corporate shareholder is in a position to reduce the income from the alienation of shares in case of liquidation of a company or exit from it by the amount of contribution to property (as opposed to contribution to the authorized capital, in respect of which this opportunity was always recognized). In practice, the tax authorities’ approach to this question is negative.
New amendments to the Russian Tax Code that recently came into force introduce the possibility to reduce the income received from the sale of shares by the amount of contribution(s) to property of the company. A similar possibility is provided for the cases of the company’s liquidation or withdrawing of the shareholder from the company. The amendments will apply to income received starting from January 01, 2021. There should be no limitation as to the date when contributions to property were made. These amendments will apply to both Russian and foreign shareholders. This novelty should increase the investment attractiveness of the Russian business, since it will guarantee to the investor that all investments will be taken into account in the event of exit from the business project.
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NAZALI TAX & LEGAL |