In 2021, when submitting a Notice on Controlled Foreign Company (CFC Notice), one should take into account significant changes introduced by the Federal Law on Amendments to Parts One and Two of the Tax Code of the Russian Federation dated 09.11.2020 No. 368-FZ.
1. Deadline for submitting CFC Notice for individuals.
Taxpayers who are individuals submit CFC Notices no later than April 30 of the year following the tax period in which income in the form of the CFC's profit is recognized as the controlling person, or that follows the year that resulted in the CFC's loss (clause 2 of Art. 25-14 of the Tax Code of the Russian Federation).
Therefore, the 2020 CFC Notice must be submitted by 30 April 2021.
2. Which documents are required to be attached to the Notice?
Starting from the reporting for 2020, the controlling person confirms the amount of profit (loss) of the foreign company controlled by this person by submitting the following documents:
- the financial statements of the CFC, drawn up in accordance with the personal law of such a company for the financial year, or in the absence of financial statements, other documents confirming the profit (loss) of such a company for the financial year;
- an auditor's report on such financial statements of a CFC, if, in accordance with the personal law or the constituent (corporate) documents of this CFC, it is established that such financial statements are audited or the audit is carried out by a foreign organization voluntarily.
These documents are submitted regardless of whether there is an obligation to account for income in the form of a CFC's profit in the tax base of the controlling person for the relevant tax within the following periods:
by taxpayers - organizations - together with a tax return for income tax (i.e. for 2020 - until 28 March 2021);
taxpayers - individuals - together with a CFC Notice (i.e. for 2020 - until 30 April 2021).
Documents (copies) drawn up in a foreign language must be translated into Russian.
Thus, when submitting a 2020 CFC notice by 30 April 2021, the controlling individual must attach:
- copies of the CFC's financial statements (as well as, in established cases, the auditor's report on such CFC financial statements) for 2019, with translation into Russian;
- if there are no financial statements, then other documents confirming the profit (loss) of the CFC for 2019 with translation into Russian.
Failure to submit to the tax authority documents confirming the amount of profit (loss) of the CFC within the time period established by clause 5 of Article 25.15 of the Tax Code of the Russian Federation, or the submission of such documents with deliberately inaccurate information, entails the recovery of a fine from the controlling person in the amount of RUB 500,000.
3. The penalty for failure to submit or late submission of a CFC Notice has been increased.
The unlawful failure of the controlling person to submit to the tax authority a Notice of a CFC for a calendar year or the submission by the controlling person to the tax authority of a CFC Notice containing inaccurate information, shall result in a fine of RUB 500,000 for each controlled foreign company, information about which has not been submitted, or in respect of which false information has been submitted (Article 129.6 of the Tax Code of the Russian Federation).
4. New form of Notice
We remind you that from 1 January 2020, a new form of the Notice on Controlled Foreign Companies will be applied, as well as its format, procedure for filling out and submitting. For more details, see Order of the Federal Tax Service of 26 August 2019 No. ММВ-7-13 / 422 @ "On Approval of the Form and Format for Submitting a Notice on Controlled Foreign Companies in Electronic Form, as well as the Procedure for Completing the Form and Procedure for Submitting a Notice of Controlled Foreign Companies in electronic form and invalidation of the order of the Federal Tax Service of Russia dated 13.12.2016 No. ММВ-7-13 / 679 @ ".