The current legislation obliges organizations and individuals to annually notify the tax service about foreign companies controlled by them (CFCs). A CFC notification is submitted regardless of the financial result obtained by the foreign company.
Persons controlling a CFC are required to submit notices and pay taxes: on retained earnings of a CFC at the rate of 13% — personal income tax; corporate income tax — 20%. The amount of the tax depends on whether an individual or legal entity has become the controlling CFC. Let us clarify that it is possible not to submit information on the results of the year only in case of termination of participation in the CFC before the date on which its share in the CFC profit is determined: upon liquidation of the company; when selling a share in a CFC (in full or in part, in which the participant is no longer a controlling person) , — the press service of the department notes.
The deadline for filing a notice for citizens for 2021 year expires on May 4 2022 year. It is necessary to provide a notification in the form approved by order of the Federal Tax Service No. ED-7-/@.
Citizens, founders or owners of shares of foreign companies can submit a report on paper to the tax authority at the place of residence or send a notification via the electronic service
Filling out such an application is not at all difficult: for this, you need to select the appropriate “life situation” in the service. The taxpayer will be offered a simplified form with pre-filled individual indicators, as well as the necessary hints and control ratios. Also, information about previously declared CFCs is already reflected in your personal account, so you will not need to re-fill in the basic information.
Together with the notification, it is also necessary to submit documents confirming the existence of an exemption from taxation of CFC profits. If there is no such exemption, the controlling persons submit documents confirming the amount of profit or loss of the company. Supporting documents can also be submitted online along with the CFC notification.
More information on the procedure for submitting CFC notifications and supporting documents can be found in the section «2021Controlled foreign companies and controlling persons2021«.