A controlled transaction - what is it and who is giving it away?

Taxpayers have mastered another form of providing information on their own income, which is called reporting on controlled transactions. In order for a transaction to be called controlled, it is necessary to check it against the criteria for compliance with this category, as well as compare the procedure for generating these documents with the basic rules.

Interdependent persons

The Tax Code clearly defines the basic definitions relating to the concept of “controlled transaction”. This recognition of both individuals and legal entities is interdependent, which affects the results of taxation. This definition is assigned only for those types of transactions where relations between the two parties have a direct impact on the conditions and final results of negotiations. This aspect is very important for tax legislation, since the financial component of transactions depends on the results of the agreements, some of which are always sent to the state treasury.

Recognition of persons as interdependent

In order for individuals to be officially recognized as interdependent, the degree of real participation in capital and the possibility of its change are analyzed. This aspect is usually influenced by the terms of a previously concluded agreement, as well as the ability of a certain person to otherwise influence decisions made by people important to the transaction.

Related parties include:

1. Organizations, if at least one of the companies involved in the transaction takes part in the work of another company. This aspect is taken into account only if the share of total material investments in a third-party company is more than 25%. Both direct and indirect participation matters.
2. Organization and individual, if any of these participants in the transaction has a share in another company. Of the total number of assets, it should be at least 25%.
3. Organizations, subject to the participation of any third party in their activities, in the presence of more than 25% of the assets. It is important that the stake in both firms exceeds this mark.
4. Organizations, if their structure includes executive bodies that have been appointed or approved to their posts by the same person. Only the sole executive bodies elected by one person or their groups matter, provided that a specific person supervised their formation in all the companies participating in the transaction by at least 50% of the total composition.
5. The organization and its executive body, which for any legal reason organized the transaction.

The parties to any transaction may recognize themselves as interdependent if they consider that the taxation procedure adopted for such cases is the most optimal for them. Moreover, they are required to prove that their relationship has a direct or indirect effect on the amount and outcome of the transaction.

Many firms quite often carry out controlled transactions. The criteria for their identification vary, but to ensure the validity of each contract, they should be taken into account. Where all the pretexts on which a controlled transaction can be carried out are fixed, this is article 105 of the Tax Code of the Russian Federation.

Procedure for recognizing a transaction as controlled

Price control is not always ensured, even though the parties to the transaction are interdependent persons. However, most often it is precisely between such defendants that they are held. There are exceptions to the rules by which a transaction is not exactly recognized as being controlled.

The highest limit of the amount has been assigned, beyond which it is impossible to say that this is a controlled transaction. This is possible only if all aspects of the transaction take place on the territory of the Russian Federation and the parties carry out all operations for the acquisition and profit-making also in Russia, while the amount of income of all parties does not exceed 1 billion rubles. It is not beneficial for one of the participants to be officially exempted from paying income taxes or not to be a tax payer. In this case, the transaction may lose reason, since the total income of all persons should not exceed 60 million rubles.

Procedure for recognizing transactions as controlled

The Ministry of Finance of the Russian Federation has approved the procedure, which states what legal relationship is called a “controlled transaction”. This concept is usually specified on the basis of the sum criterion, which is often the most important for the state as a whole, as well as for tax authorities. In order to calculate the total amount of income for one year, it is necessary to add all the material resources received from each counterparty who contributed money for the specified period.

Sometimes when calculating the total income for a calendar year, not only single transactions are taken into account, but also the income from a controlled transaction from agreements with different persons is summed up. The court, guided by Article 105 of the Tax Code of the Russian Federation, can confirm that the transaction is indeed controlled if the legal or natural person succeeds in proving that the particular transaction is part of a certain group of agreements, although it is considered independent.

If the persons are recognized as interconnected, and one of the parties to the transaction is not considered a tax resident of the Russian Federation, then any agreements concluded between persons in which such a person takes part are recognized as controlled. For this, the amount of income from the transaction will not be taken into account, it can be any. This fact confirms the information provided by the Ministry of Finance of the Russian Federation.

Article 105 of the Tax Code of the Russian Federation clearly states that a fixed amount regulating the possibility of recognizing a transaction as controlled applies only to those participants where everyone is a tax resident of the Russian Federation. In legal practice, this aspect decides the presence among the parties to the transaction of at least one person who is not an official resident. If such a person is present, then the amount of income from the transaction can be unlimited.

The ability to conduct a transaction between non-related parties as controlled

Equating a transaction concluded between persons not recognized as interdependent to those conducted among interdependent people or organizations is possible if it is conducted with the direct participation of intermediaries. The remaining participants undertaking controlled transactions, interdependent persons are required.

The Tax Code of the Russian Federation provides that when conducting a transaction involving intermediaries, persons may be recognized as interdependent if the aspects of the participation of intermediaries in them comply with the established rules.

1. They have a limited range of powers. They can only produce processes for the sale of goods, not claiming other functions.
2. They do not use assets on their own, do not have direct access to them, and do not bear any risks in the transaction.

It is impossible to perform any actions with non-interdependent persons within the framework of concepts where examples of controlled transactions are carried out. This is a very important rule, so the intermediary should always adhere to it.

The RF Tax Code does not consider the amount of income that is allowed for recognition of a transaction as controlled with the participation of an intermediary. In legal practice, there are not many cases of disputes about this, therefore, in the event of controversial situations and the refusal of state bodies to recognize the transaction as controlled, an appeal to the court is required for further decision making. It is impossible to predict the outcome of such a trial at this time.

The Ministry of Finance decided that there are no restrictions on the amount when concluding this transaction through an intermediary. If the transaction is concluded in accordance with all the rules, then the occurrence of nit-picking from state bodies or the refusal to assign status, which are regulated by examples of controlled transactions, is very rare.

Some questions nevertheless arise and the court rarely, but regularly has to deal with perplexed questions of persons participating in the transaction, since with very large amounts of income it is not always possible to give the agreement the status of controlled.

This difficulty arises due to the release of a later official letter from the Ministry of Finance, which indicates that the agency has a financial criterion, but applies it only to large-scale transactions. Depending on the nature of the transaction, as well as the direction of the enterprise, which affects the items being bought and purchased, its own income limit for each party is calculated.

Other transactions between non-related parties recognized as controlled

1. Foreign trade in goods that are on the main list of the most influential in the global stock market. These are oil and oil products, any metals, minerals that can be classified as mineral fertilizers, precious stones and metals.
2. Implementation of a transaction between persons, at least one of which is a permanent resident or tax resident of the country included in the list compiled by the Ministry of Finance, on the provision of benefits for the taxation of enterprises.

A transaction is easily counted as controlled if one of its participants is a resident or resident of a territory belonging to offshore zones. Therefore, notifications on controlled transactions must be included in the reporting. And it is a must. It is necessary to separately take a sample notification of controlled transactions and fill it in correctly. This gives the right not to disclose or publish information relating to financial transactions. This aspect also applies to representative offices of companies registered in Russia, which are located in such zones.

If the transaction becomes controlled due to the involvement of any of its participants in the offshore zone, then at least one organization must be registered in such territory. In order for a transaction to be recognized as legal, a notice of controlled transactions must be correctly filled out. Sample filling can not be changed or omitted any points.

What information is provided to tax authorities?

To understand whether a transaction is considered controlled, you need to check its concept and the circumstances in which it is conducted, for compliance with article 105 of the Tax Code. You should also look at notifications for controlled transactions. If they can be easily attributed to those, then in the preparation of tax reporting, special attention should be paid to the price of the contract.

Differences in value are especially important compared to contracts with other counterparties, as well as the degree to which the generally accepted market price for a particular period is consistent, which are described in documents for specific controlled transactions. Filling out the papers must be done carefully, all details are taken into account.

Companies that carry out transactions with related parties, that is, when the sum criterion is met, automatically fall under the concept that meets the definition of which transactions are controlled, are required to send special notifications of controlled transactions to the tax authority to which they are located. Anyone who submits documentation must always attach this paper to the shared folder. The need to adhere to this rule is evidenced by the order of the Federal Tax Service of Russia. You should always remember the concept that the notice of controlled transactions has, that this is a general report on the work done.

If employees of the Federal Tax Service want to check additional details of the transaction, then upon their request, organizations are required to provide all the necessary documentation. Article 105 of the Tax Code regulates this aspect and calls for the need to provide, upon request, specific pepper documents, which should contain basic information on the transaction.

Activities of a taxpayer having a specific transaction

The list of methods that were used to obtain and systematize information about one-time and total income is indicated. Additionally, explanations should be provided that substantiate the choice of a particular method, data on the sources of information from which the information was taken, indicate the exact amount of all income received for a particular transaction, and list an exhaustive list of expenses.

Reporting Rules

In order to immediately provide the most correct, systematized and genuine information, it is necessary to conduct price monitoring in advance during a controlled transaction. It is advisable to prepare documentation at a time when any agreements are directly concluded, a price is set for products, services, or a specific batch of goods is paid.

If you compile all the necessary documentation on time, taxpayers will be able to immediately independently evaluate the correctness of the controlled transaction. Who submits reports, he calculates the amount that the parties will be required to pay in tax. Timely calculations will allow you to make adjustments to the documents when any changes occur, and not to look for information after a certain amount of time. Do not forget to attach notifications of controlled transactions to the list of documents. Who submits the main documentation is responsible for compliance with this rule.

Information preparation stages

1. Analytical work on the costs of controlled transactions. Who passes, he must arrange the filling of papers on the analysis, scheduling.
2. Planning and calculating the required volume of all documentation that is necessary for reporting to the tax office. The necessary time is determined in advance for the preparation of all securities in order to submit a report on controlled transactions on time, to allocate time for their leisurely preparation, verification.
3. Description of all areas of activity of the person who is one of the parties in the transaction.
4. Verification and comparison of the financial terms of the transaction, analysis of all aspects of the activities of the parties to the agreement.
5. Compilation of full descriptions of all interdependent persons who take part in the transaction. You also need to choose a test party if the transaction is officially recognized as controlled or is suitable for the standards for assigning this status.
6. Pre-selected methods and basic principles of pricing.
7. A full economic analysis is carried out taking into account all aspects of the transaction, understanding its benefits and profitability for a particular participant.
8. A document base is created, which is checked by several specialists and staffed to compile a document called the “report on controlled transactions”.

Only information that is confirmed by data held by the company may be indicated in the documentation. At the request of the Federal Tax Service, the organization must provide all official confirmation of the information provided. Employees of this service can send such a request to confirm the completeness of information and to verify the payment of taxes.

When assessing the level of detail, the degree of detail in the documentation, you must be guided by paragraph 6 of Article 105 of the Tax Code. The amount of information provided should be commensurate with the degree of importance of the transaction, its scope, and also the size of the benefits for each participant.

Voluntary change in tax bases

Clause 6 of Article 105 of the Tax Code of the Russian Federation provides for the impossibility of applying prices that do not correspond to market prices when entering into transactions, if they are much lower than them. If a company has been convicted of intentionally reducing the official amount of payments in order to reduce the tax deduction, then its owners have the opportunity to independently correct the cost and make deductions in favor of the state in the framework of the standard ones.

All adjustments are made with the obligatory provision of a tax return, in which income taxes are already designated for payment for a specific period. If the company is not considered a tax payer, then a declaration is submitted, which must be paid on time for the delivery of all such documents.

Until all changes are written in the declaration, it should be submitted to the tax authorities along with an explanatory note, which details the entire amount that a particular person is required to add to the initial calculations.

The explanatory note must contain information about controlled transactions, in relation to which adjustments were made. The new tax amount, serial number of the contract, the date of its conclusion are indicated. , , , .

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