Dialogue Opportunities: Settlement Agreement Between Business and Tax Service

Dialogue Opportunities: Settlement Agreement Between Business and Tax Service

Taxology's lawyers completeda dispute over the right of leasing companies to apply a thin capitalization ratio of 12.5.

Let us remind you that clause 2 of Art. 269 of the Tax Code of the Russian Federation allowed organizations "exclusively engaged in leasing activities" to apply an increased thin capitalization ratio up until 2017. The tax authorities and courts interpreted this condition literally, refusing to apply a capitalization ratio of 12.5 to leasing companies referring to any income other than in the form of lease payments.

Taxology lawyers represented the interests of OOO “DLL Leasing” in the Supreme Court of the Russian Federation in January 2021. The Court confirmed the position of the taxpayer and noted that such a restrictive application of paragraph 2 of Art. 269 of the Tax Code of the Russian Federation does not comply with the law. The lower judicial acts were canceled in full and the dispute was sent for further investigation.

The Moscow Arbitration Court settled the dispute and approved a settlement agreement between the parties on June 30, 2021. The company's right to apply a thin capitalization ratio of 12.5 was recognized under this settlement agreement.

The total number of amicable agreements is usually insignificant. Therefore, the possibility of an open constructive dialogue with the tax service and the result achieved by the parties becomes even more significant for us.

Svetlana Samokhvalova, Taxology advisor, maintained the agreement process.

We congratulate our colleagues, the client and all taxpayers on this victory. The final confirmation of the leasing companies’ right to apply a capitalization ratio of 12.5 will be significant in their activities.