Close attention to premiums
The tax authorities were more likely to pay attention to the cases when companies pay their employees large sums by deducting them from the tax base, said several lawyers. It’s not just about bonuses, but about bonuses when applying for a job, the premiums for professional holidays, says the head of the legal Department “MEF-Audit” Alexander Ovesnov. These amounts include the company’s expenses, which leads to a reduction of income tax. “Our customers, who are the tax audit, saying that verified payments, compensation for housing and transport, compensation for the rental of housing — all of which can be taken into account in the expenses when calculating profit tax”, — said the partner of the legal company Taxology Alexey Artyukh.
The tax authorities compare the amount of such payments from the profit of the company in the same period, with payments that are received by other employees or those workers in previous periods. The amounts that the tax authorities are trying to challenge (if allowances are included in expenditures) range from 300-500 thousand to 10 million rubles and more depending on the size of the company and number of employees, said managing partner of law Bureau “Business fairway” Roman Terekhin. In addition, tax inspectors may be tempted to personal income tax pay for food or rent to a valuable employee: the Tax code, all amounts of such payments shall be included in the tax base for personal income tax and must be taxed, he adds.
Judicial parity is aligned
Historically, the “attack the tax authorities on the payments to employees were associated with two types of claims, says a senior lawyer of tax practice of Goltsblat BLP Anna Zelensky. “This is, firstly, nitpicking to the formal discrepancy between the intricate requirements of the Tax code to payroll costs, which are often linked to restrictions in the labor legislation”. In particular, article 270 of the Tax code has a list of expenses that can be deducted from the tax base. This award to employees for the expense of a special purpose or targeted revenue compensation when moving (lifting) and several others. The amount of remuneration shall be deducted only if paid on the grounds prescribed in the employment contracts or contracts.
In addition, there are “known problems and limitations in accounting for tax purposes expenses that are part of the ordinary compensation package for top management, sometimes companies try to make the payment of these amounts as the prize, said Zelensky.
In the year several dozen companies in disputes with the tax authorities on such occasions end up in court and generally are resolved in favor of taxpayers, says managing partner Dmitry Taxadvisor Kostalgin, but the increasing number of such disputes, he does not see. Basically such business was conducted in the Moscow district, as in the regions of rare large payments in addition to salary, adds Alexander Ovesnov: “In a sense, this story of the last two or three years, but if the earlier court decisions were in favor of taxpayers, now “parity” at least starts to level off.
The case of the awards
Two of the interviewed tax Advisor pay attention to the business of the management company “Capital”, which is Jun 2015 trying to challenge in court the decision of the Interdistrict IFTS of Russia №50. “Business UK “Kapital” is very different from the standard practice for premiums for the worse. In this case, we evaluated the feasibility of bonuses that can not do neither the court nor the tax authority. Such an approach can be adversely affected by the further development of practice” — does not preclude Kostalgin.
The company paid to two managers of the award — a total of 21.97 million RUB — and considered these costs when calculating income tax. Tax authorities during the audit concluded that the payment of these premiums is uneconomic and that the company on the amount of underpaid income tax, and ordered to pay arrears, will pay penalties and fines. Also, the tax was reduced by 12.59 million RUB losses, calculated company tax on profit for the year 2011.
As follows from the court’s records, the IRS has decided that the premium was not paid to the employees over production results. Documents confirming the achievement of high production results”, the company has not provided, and the payments were transfers of costs within the group of companies”. The material is said that the results of trust management of NPF assets of the company (they were the source for the payment of premiums) were unprofitable, and the activity of one of the awarded managers led to the loss of assets in transactions with the offshore company Lorteck Ltd.
The company was guided by two articles of the NK — 252-th and 255-th. They spelled out, something to consider costs when calculating the tax in case they are proved, economically justified, and their assessment expressed in monetary terms. And in spending taxpayers to pay for labor shall include any accruals to workers in monetary and (or) natural the forms, stimulating charges and allowances, compensation mode, bonuses, the cost of maintaining these employees “provided for in the norms of the legislation of the Russian Federation, labour agreements (contracts) and (or) collective agreements”. The company emphasized that the payment of bonuses to employees was based on employment contracts, orders on bonuses, regulations on remuneration and material incentives for workers, as well as a list of production results of employees.
Ultimately, the court of first instance sided with the company, but on appeal she lost, and the appeal Arbitration court of the Moscow district has left without satisfaction.
The representative of the UK Capital reported that in the framework of the legally stipulated term, the company is considering further action. “We are surprised that the tax office undertake to determine whether the merits of the Manager of the commercial structure of remuneration paid to him. Especially if this fee was timely paid all taxes,” — said in comments the company.
A new trend
Judicial practice in similar cases contradictory. But basically it folds in such a way that the award take into account the tax expense on profit if you can prove their economic feasibility, says Roman Terekhin. In General, according to him, if sufficient legal grounds and in the presence of well-written documents for payment of premiums, bonuses and special services for top-managers of companies do not cause any claims from tax authorities. But the neglect of documentation, the tax authorities successfully challenge the understatement of income on premiums, adds Terekhin.
“We see that a few years ago it was possible to refer to the order of incentive payment [and problems with the tax was not] and to deliver such payments in the costs. But now the tax authorities look at the economic feasibility of such payments. This may mean that in practice you may turn” — does not preclude Artyukh.
The courts have rejected the tax claims if they are based only on the fact that the payment of top managers, according to them, excessive in amount, Zelensky adds: “For the recognition of economic feasibility of the payoffs matters is that they are aimed at receiving income, that is associated with the main activity of the employer, and not the order in which the amount of payment made”.
FNS representative did not comment on the judicial practice.