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Filing a CIC report
Filing a CIC report
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Controlled Foreign Company (CFC) - a foreign structure without forming a legal entity (ISBOJL) whose controlling (physical/legal) persons are residents of the Russian Federation.
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The controlling person of a CFC may be
- 01Relating to a foreign legal entity.
- Individuals/legal entities - tax residents of the Russian Federation who are shareholders in a foreign organization or who exercise control over a CFC with a direct/indirect interest of more than 25% or more than 10% if more than half of the company is controlled by tax residents of the Russian Federation.
- 02Relating to ISBOUL.
- Individuals/legal entities - tax residents of the Russian Federation who are founders of the structure or exercise control over it, as well as have the right to property (transferred to the structure), to receive profit and/or dispose of it.
Profit of CIC
- Calculated as profit of the controlling persons of a CFC (income of a legal entity/individual).
- Considered in determining the tax base (minimum amount - 10 million rubles).
- December 31 is the date on which the CIC's profits are received.
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Requirements for filing a CIC report
- 01Deadlines for notification of participation in the CEC / control over the CEC - 3 months.
- 02Deadlines for filing a CIC notice:
- legal entities - by March 20 of the year following the year in which the controlling person received income in the form of CFC profit
- individuals - by April 30 of the year following the year in which the controlling person received income in the form of CFC profit.
- 03The controlling person must also provide financial statements (simple or audited) for the foreign company.
Liability for failure to notify and pay tax on CFC profits
- Failure to pay tax: a fine of 20% of the amount of unpaid tax (not less than 100,000 rubles).
- Failure to submit a CFC notification within the prescribed time limit: a fine of 500,000 roubles.
- Failure to submit financial statements for a foreign company: a fine of 500,000 roubles.
Frequently Asked Questions
- 01The nominee shareholder of my company in Hong Kong holds 100% of the shares in my favor. Do I need to notify the Federal Tax Service of a CFC?
- Answer: The beneficial ownership register in Hong Kong is closed, but there is an automatic exchange of information with the Russian Federation. We recommend notifying the tax authorities, as in this situation you are a controlling person in relation to the company. Hong Kong is one of the most popular jurisdictions among Russian entrepreneurs, and, therefore, the close attention of the Russian Federal Tax Service is assured.
- 02I own a Cypriot company through a company in Belize. The exchange of tax information between the EU and Russia is now suspended. Is it possible not to notify the Federal Tax Service in this case?
- Answer: We recommend notifying the Federal Tax Service of your participation in two companies in order to comply with the CFC legislation. It is indeed difficult to exchange tax information now, but we recommend not resorting to dubious “tax planning” tools.
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