The return of over RUB 650 million of taxes collected in excess with RUB 120 million of interest accrued

The team represented the client in a tax dispute. In the tax authority's opinion, the company devised a tax evasion scheme under which the real estate which the company uses is owned by individuals who are the actual beneficial owners of this business and who apply the simplified taxation system. This real estate is leased to the company. The bulk of the company's expenses are lease payments. The tax authority also referred to the lease payments being formal because individual entrepreneurs were granting interest-bearing loans to the company and thus “returning” the monetary funds received from the company. Making reference to articles 54.1(2)(1) and 252 of the Russian Tax Code, the tax authority refused to deduct for profit tax purposes the entire amount of the lease payments and interest on the loans.

The courts of the first and second levels upheld the tax authority’s position. Our lawyers joined this project at the cassation stage, after the cassation appeal had been filed. At first, they prepared a supplement to the cassation appeal and clarifications on questions asked by the cassation court. Later, they represented the client in the court hearings. The cassation court referred the case for re-examination.

In the second cycle our specialists prepared procedural documents and represented the client in court hearings of the first instance, appellate and cassation courts. When the case was re-examined, we succeeded in proving that the tax authority had refused the deduction of the taxpayer’s expenses without a valid reason. Courts of all levels were on the client’s side: the tax authority's decision was invalidated in full, the amounts which had been unreasonably collected by the tax authority were returned to the company including the payment of over RUB 120 million of interest.