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Since the start of 2023, the state duty for the registration of supplementary agreements to real estate leases has been reduced

20.12.2022
3 min read
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Pepeliaev Group advises of the adoption of Federal Law No. 493-FZ 'On amending article 333.33 of Part II of the Russian Tax Code' dated 5 December 2022. The law establishes the new amount of state duty for registering supplementary agreements to real estate leases.

As of 1 January 2023, the state duty for entering in public registers an agreement to amend or terminate a lease, if such lease is registered in the Unified State Register of Real Estate, is RUB 350 for individuals and RUB 1,000 for companies.

Background

The Russian Tax Code does not contain any special rule on the amount of state duty for registering supplementary agreements to real estate leases. When supplementary agreements are registered, the state duty is charged in the amount set for the state registration of transactions with real estate facilities, specifically: RUB 2,000 for individuals and RUB 22,000 for companies.

Owners of real estate have been attempting for years to persuade registration authorities and courts that entry into a supplementary agreement to a lease does not result in a new encumbrance being created on a real estate item and thus the registration of such agreement should attract the same amount of state duty that is charged for amending an entry in the Unified State Register of Real Estate (i.e. RUB 350 for individuals and RUB 1,000 for legal entities).

Yet, the Russian Finance Ministry has not upheld this position. Pursuant to its Letter No. 03-05-04-03/87113 dated 6 October 2020, given that a supplementary agreement constitutes a transaction, which has to be registered by law[1], the state duty for registering it must be calculated in the same way as for the lease itself. The above letter of the Finance Ministry was challenged in court, but, in its Judgment No. AKPI20-932 dated 15 January 2021 upheld by Appellate Ruling No. APL20-487 dated 2 February 2021, the Russian Supreme Court refused to repeal the letter.

In its Ruling No. 307-ES21-8633 dated 1 November 2021 in case No. А13-6071/2020 the Supreme Court’s Economic Panel confirmed that state duty of RUB 2,000 for individuals and RUB 22,000 for companies was lawful with respect to the registration of supplementary agreements to leases.

Comment

The state duty being apparently excessive (primarily for legal entities), parties to leases often refuse to register amendments to leases altogether. In turn, the absence of up-to-date information in the Register of Real Estate results in legal uncertainty, makes it difficult to evaluate companies’ assets and may give rise to disputes.

What to think about and what to do

The amendments that have been adopted considerably reduce registration costs for parties to leases.

The positive effect of the new regulation will be especially noticeable for companies whose core line of business includes leasing out real estate properties (such as owners of shopping malls and business centres), as well as major tenants (such as retail chains).

Help from your adviser

The lawyers of Pepeliaev Group provide comprehensive legal support for parties to leases, advise on matters of state registration of rights to real estate and provide legal support in transactions with real estate facilities. 


[1] Articles 164, 452 and 609 of the Russian Civil Code.

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