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Declaration of CFC and foreign accounts

Any state is interested in tax payments from its residents to the budget. In this regard, the tax authorities of the states should receive all the necessary information about their residents for the purpose of full and correct administration of taxes.

The legislation on controlled foreign companies, which has been in force in Russia since 2015, established rules for the taxation of income of foreign companies and significantly changed the traditional Russian methods of conducting international business.

Recently, international cooperation in the exchange of tax information has intensified dramatically. According to new international agreements, in the coming years, the major developed countries of the world, as well as many offshore zones, are gradually switching to automatic exchange of tax information about their residents, including their accounts and the accounts of companies controlled by them.

Considering that every entrepreneur seeks to minimize their costs in order to increase the profitability of a business, the first place in our time is the need to comply with the rules for declaring foreign structures owned and / or managed by tax residents of Russia.

Controlled foreign company (CFC) is a foreign organisation, which satisfies all of the following conditions:
  • the organization is not recognized as a tax resident of the Russian Federation;
  • the controlling entity is a member organization and (or) a natural person recognized as tax residents of the Russian Federation. (Part 1, Article 25.13 of the Tax Code).
The following persons are recognized as the controlling entity of a foreign organization:
  • a natural or legal person whose share in this organization is more than 25 percent;
  • a natural or legal person whose share in this organization ( for individuals – together with spouses and minor children) is more than 10 percent, if the participation share of all persons recognized as tax residents of the Russian Federation in this organization (for individuals, together with spouses and minors here) is more than 50 percent. (Part 3, Article 25.13 of the Tax Code) .
  • a person who exercises control over such an organization in its own interests or in the interests of its spouse and minor children (Part 6, Article 25.13 of the Tax Code).

In more detail about what is covered by CFC rules, what are the rules of taxation and reporting to the regulatory authorities in the Russian Federation, we have repeatedly written in our articles.

For this range of services DSL-Service provides support in the following:
  • verification of foreign assets, companies and accounts;
  • definition and coordination with the client of strategies and tactics for each asset;
  • preparation of notices of participation in foreign organizations / notifications of controlled foreign companies;
  • preparation with a special declaration within the framework of capital amnesty;
  • other services (upon request).
  • timely prepared and submitted notifications and reports;
  • minimization of client risks in terms of fines and additional charges;
  • calculation of profits of a controlled foreign company.
Associated service
  • preparation of a foreign company under IFRS;
  • preparation of reports on the movement of funds in accounts.

Find more details on declaring accounts in a foreign banks in the section Currency regulation and control.

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