Forgiving debts to citizens in legal practice is much more common than in ordinary life. Most often, debt cancellation occurs in the area of entrepreneurial activity, for example, in relation to an employee or founder. What features does the debt forgiveness procedure have, what form the relationship is formalized in, and what tax consequences they are associated with, all in detail in the article.
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The most common situation is when an employee borrows money or goods from the company. The procedure for debt cancellation will be regulated in in this case internal company rules.
For example, such a promotion may be announced in connection with certain events: payment of half of the debt by a citizen, a significant date in the activities of the enterprise - the anniversary of the formation of a holding company, etc. An employee also has the opportunity to forgive a debt if he has a difficult life situation or has been experiencing financial problems for a long time difficulties.
Borrowers' debts are not written off credit institutions any forms: banks, microfinance organizations, pawnshops, etc.
Debt forgiveness can also be applied to a citizen who is the founder of a company.
It is also possible to cancel debts owed by an enterprise in relation to an employee under contracts for the purchase of goods, works or services, assessed as the amount of the contract.
Debt forgiveness is also possible if the organization is declared insolvent – bankrupt. The procedure for canceling debt in this case is regulated by Law No. 127-FZ.
Elimination of debt is also possible by concluding a settlement agreement during the judicial review of the dispute. Again, the rules on forgiveness apply only in cases where such an action does not violate the rights of other creditors.
Peculiarities
Donation must be distinguished from debt forgiveness. While the donee loses material goods, and the donee receives, debt cancellation is mutually beneficial for the debtor and creditor.
In exceptional cases, the debt is eliminated credit organizations. The conditions of such promotions are stipulated in the loan program, which is implemented on a temporary basis and is available to certain citizens: those who find themselves in a difficult life situation (those without work, the chronically ill, etc.)
Banks and other lending organizations are forced to forgive the debt upon expiration of the term limitation period. The accumulated debt is written off as uncollectible and is not subject to collection. judicial procedure.
The debt write-off transaction is carried out in the same form as the conclusion of a loan agreement, that is, in writing.
The following indicates that the creditor plans to forgive the debt without trial:
- there is no legal proceedings on the issue of debt collection;
- the creditor does not receive property benefits from the debtor under other obligations;
- recovery is being carried out subsidiary company;
- in other cases when forgiveness does not have the characteristics of a gratuitous transaction.
How to apply for debt forgiveness under a loan agreement for an individual, sample
There are several options for obtaining debt forgiveness:
- Sending by the employer a notice of debt forgiveness to the employee due to the occurrence of certain circumstances.
- By concluding an additional agreement to the loan agreement or including the possibility of forgiveness in the original act.
- When signing the deed of donation.
The obligation to draw up an agreement in writing arises if the value of the transaction is determined to be more than 3,000 rubles. and one of the parties is a legal entity (clause 2 of Article 574 of the Civil Code of the Russian Federation).
Debt forgiveness transactions are documented with primary financial documents in accordance with Article 9 of Law No. 402-FZ. Their form is determined by the internal rules of the enterprise and approved by the person responsible for maintaining accounting.
The documentation must contain the following details:
- notification that the organization is ready to forgive the debt under the contract, indicating the date, in whole or in part;
- sum financial obligations which are subject to cancellation.
The donation agreement specifies the following details:
- details of the parties: full name of the employee, name of the organization;
- subject of the contract – one party gives, the other accepts. It is necessary to indicate in this part the date of conclusion and the number of the loan agreement;
- terms of the contract - a certain period of time.
The agreement comes into force from the moment of signing.
The following scheme applies to a founder who is forgiven a loan received from an organization. There is the possibility of novation of the agreement (Article 414 of the Civil Code of the Russian Federation) - changing the content of the subject of the transaction from receipt credit funds for the provision of financial assistance by the owner authorized capital companies.
Based on Article 251 of the Tax Code of the Russian Federation, when determining the income tax base, property received from the founder, whose share in the authorized capital is more than 50%, is not taken into account. This procedure applies only if this property is not transferred to third parties within 1 calendar year after the transaction.
A sample contract can be downloaded
Taxes
Debt forgiveness is associated with a number of tax consequences concerning both the employer and the employee.
Thus, when a debt is written off, the employee receives income from which he is obliged to deduct 13% of the amount received (forgiven) to the budget for income tax. In this case, the payment is made by the company with which the employment contract is concluded, since it acts as a tax agent. Taxes are not payable only in cases where the amount forgiven is no more than 4,000 rubles. In this case, there is no need to make personal income tax contributions.
The issue of payment of insurance contributions (for pensions, health insurance) quite difficult. If, when formalizing forgiveness as a gift, the answer is clear that you don’t need to pay anything, then in other cases the situation is ambiguous.
According to the clarifications of the Ministry of Health and Social Development of the Russian Federation in letters No. 1283-19 dated 05.21.2010 and No. 1212-19 dated 05.17.2010, when debt is forgiven in the amount of the liquidated debt, contributions to the pension and social insurance. The position of the regulatory authority on this issue is uniform.
Judicial practice proceeds from the fact that making contributions is not necessary in cases where:
- the contents of the loan agreement are not related to labor relations;
- responsibilities for credit relations are not related to the procedure for the employee’s fulfillment of labor obligations;
- The employment contract does not directly provide for the possibility of issuing a loan to an employee and forgiving him a debt under certain circumstances.
Therefore, for an enterprise, in order to avoid mistakes in maintaining tax and accounting records, it is better to enter into a gift agreement with an employee. For an employee, the form of debt forgiveness is not important.
Loan issuance transactions are not subject to VAT due to paragraph 15, paragraph 3, article 149 of the Tax Code of the Russian Federation.
Legislation
In order to demonstrate the procedure for applying regulations, the following situation from practice can be cited.
The company provided two employees with an interest-free loan. The debt was not repaid within the specified period. At the meeting it was decided to write off the debt Not distributed profits. Question: will they be charged? insurance premiums and taxes and in what ratio to the amount of debt being liquidated?
In order to forgive the debt, the company drew up a document containing the details contained in paragraph 2 of article 9 of Law No. 402.
The following legal basis was provided: an interest-free loan agreement with employees may qualify as a loan agreement by virtue of . Based on Art. it is stipulated that the loan can be either interest-bearing or interest-free. The absence of fees for the use of funds was provided for in the contract.
According to Article 415 of the Civil Code of the Russian Federation, one of the ways to terminate obligations is debt forgiveness. Such an action is permitted if the transaction does not affect or infringe upon the rights of third parties and does not contradict the fundamentals of law and order.
The Presidium of the Supreme Arbitration Court of the Russian Federation also gave a classification of relations between employees and enterprises in Resolution No. 104 of December 21, 2005. The debt forgiveness transaction has a content corresponding to clause 1 of Article 572 of the Civil Code of the Russian Federation, that is, it is regarded as a donation.
By virtue of clause 1 of Article 210 of the Tax Code of the Russian Federation, employees must pay personal income tax, since they generate income in the amount of the forgiven debt. According to paragraph 28 of Article 217, if the profit of citizens is less than 4,000 rubles, tax liability does not arise.
Debt forgiveness under a loan agreement: basic provisions
One of possible ways termination of obligations under a loan agreement is the forgiveness of the debt by the lender-creditor to the borrower-debtor. The parties to these legal relations are both legal entities and individuals. The procedure is regulated by the provisions of Art. 415 of the Civil Code of the Russian Federation.
In accordance with this article, the debt can be canceled either completely or partially, subject to certain conditions:
- there are no objections from the debtor;
- the rights of other persons related to the creditor’s property are respected.
Since forgiveness of a loan debt frees the borrower from property obligations to the lender, such an expression of the latter’s will can be qualified as a type of donation if:
- it is performed free of charge (Article 572 of the Civil Code of the Russian Federation);
- the court determined that the lender intends to release the borrower from paying the debt as a gift (clause 3 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation “Review of the practice of application...” dated December 21, 2005 No. 104).
IMPORTANT! Donations between businesses are not permitted. Exception— gifts worth no more than 3,000 rubles. (Subclause 4, Clause 1, Article 575 of the Civil Code of the Russian Federation).
In order for debt forgiveness to be distinguished from a gift, the lender, when carrying out such an action, must indicate that he has no intention of giving a gift to the debtor. This can be done by justifying the feasibility of writing off the debt, for example:
- to return part of the money without legal proceedings;
- in order to continue cooperation with the debtor (resolution of the FAS ZSO dated December 12, 2011 in case No. A46-5477/2011), etc.
Registration of debt forgiveness
Before formalizing debt forgiveness under a loan agreement, the lender must make sure that his actions do not violate the rights of persons related to his property (clause 1 of Article 415 of the Civil Code of the Russian Federation). Such persons may be the lender's spouse, co-founders, or in some cases counterparties to other transactions. Also, you should not forgive debts in anticipation of the upcoming bankruptcy (Article 61.2 of Law No. 127-FZ of October 26, 2002).
As stated in paragraph 2 of Art. 415 of the Civil Code of the Russian Federation, debt forgiveness requires mandatory notification of the debtor. Although the legislator does not impose specific requirements for this document, it is advisable to include information in it:
- about the initial agreement (in our case, the loan agreement);
- the amount of existing debt;
- intention to write off the debt in full or in a certain part;
- conditions or purpose of performing this action.
The notification can be sent in any way that allows one to reliably establish who it comes from and to whom it is addressed (clause 65 of the resolution of the Plenum of the Armed Forces of the Russian Federation “On the application...” of June 23, 2015 No. 25).
If the debtor is in reasonable time does not present his objections, then according to paragraph 2 of Art. 415 of the Civil Code of the Russian Federation, the obligation terminates from the date of receipt of the document. To determine the response time, it seems permissible to use the provisions of paragraph 2 of Art. 314 Civil Code of the Russian Federation.
If the debtor has any objections or clarifications after their approval, the debt write-off should be formalized by an additional agreement to the current loan agreement or a separate agreement.
Contract (agreement) on debt forgiveness
Based on the provisions of Art. 415 of the Civil Code of the Russian Federation, to forgive a debt, the will of the lender, expressed by notifying the borrower of complete or partial cancellation of the debt, is sufficient. However, in practice, they often draw up an additional agreement to the existing loan agreement.
The parties to the agreement can be both individuals and legal entities.
When making a decision to cancel a debt, it is advisable for the creditor to have an act of reconciliation of mutual settlements with the debtor. Next, you need to define and record the terms of the agreement:
- Clearly expressed intention of the creditor to cancel existing debentures(Clause 1 of Article 415 of the Civil Code of the Russian Federation).
- Information about the obligation (name, number, date and parties) terminated as a result of this action. In the absence of the specified information, the court may recognize the debt forgiveness agreement as not concluded (Resolution 2 of the AAS dated May 19, 2010 in case No. A31-4521/2009).
- The amount of debt forgiven (resolution of the Federal Antimonopoly Service of the Eastern Military District dated September 10, 2009 in case No. A39-1176/2009).
- Conditions for forgiveness (if any).
Writing off a debt to an individual can also be formalized through a gift agreement.
When an employer cancels a debt to its employee, it is permissible to issue an order or instruction.
Taxation of a debtor - an individual
According to the provisions tax legislation in the case of forgiveness of a debt under a loan agreement to an individual, the latter receives income - economic benefit (clause 1 of Article 41 of the Tax Code of the Russian Federation) in the amount of the loan written off and interest (when issuing a loan with interest). This amount subject to personal income tax at a rate of 13% (clause 1 of article 210, clause 1 of article 224 of the Tax Code of the Russian Federation, letter of the Ministry of Finance of Russia dated October 17, 2016 No. 03-04-07/60359).
When writing off debt on an interest-free loan, taxable income in the form of material benefit The payer does not experience savings on interest (letter of the Ministry of Finance of Russia dated October 28, 2014 No. 03-04-06/54626).
The creditor organization, being a tax agent, is obliged to make all relevant transfers to the budget.
If the creditor is the debtor’s employer, the amount of personal income tax due to be paid to the budget can be withheld from the money paid to the employee (clause 4 of Article 226 of the Tax Code of the Russian Federation).
If it is impossible to make the specified transfers tax agent is obliged to inform the payer and the tax authority at the place of his registration about this (clause 5 of Article 226 of the Tax Code of the Russian Federation, order of the Federal Tax Service of Russia dated September 16, 2011 No. ММВ-7-3/576@).
In this case personal income tax payment With indicated income individuals carry out on the basis of a notification from the tax authority (clause 6 of article 228 of the Tax Code of the Russian Federation).
IMPORTANT! If the amount of the forgiven debt is equal to or less than RUB 4,000. or the debt is forgiven as a gift, there is no need to pay tax on the forgiven amount (Clause 28, Article 217 of the Tax Code of the Russian Federation).
Contributions to state extra-budgetary funds
As a general rule, amounts transferred to an individual under civil contracts (in our case, under a loan agreement), the subject of which is the transfer of ownership of property (including money), are not subject to insurance contributions to the state off-budget funds(clause 4 of article 420 of the Tax Code of the Russian Federation).
This is consistent with the position of the judiciary. According to the judges, a debt under a loan agreement forgiven by an employer to his employee is not subject to insurance premiums if these relations are not related to the employee’s work responsibilities, and the debt write-off is formalized by a gift agreement (see resolution of the AS PO dated 05/07/2015 No. F06-22195/ 2013 in case No. A12-30165/2014, decision of the Supreme Court of the Russian Federation dated August 18, 2015 No. 306-KG15-8237).
A similar position is presented in the letter of the Federal Tax Service of Russia dated April 26, 2017 No. BS-4-11/8019.
However, as noted in the same document, if such non-repayable loans are issued by the employer to its employees systematically, this may mean that the employer is hiding labor benefits under the loans.
Issues of calculating corporate income tax when forgiving loan debt
According to Art. 247-252 of the Tax Code of the Russian Federation, the object of taxation for profit tax is the company’s income (including non-operating), reduced by the amount of expenses incurred (including non-operating).
For the debtor, the amount of the forgiven loan and interest on the loan is non-operating income that increases the tax base (clause 18 of Article 250 of the Tax Code of the Russian Federation).
For the creditor, the question of including the written-off debt in non-operating expenses, reducing taxable profit, is not solved so clearly:
- According to the judges, the creditor has the right to include a partially forgiven debt in non-operating expenses, since partial write-off is aimed at generating income, but in a smaller amount (resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated July 15, 2010 No. 2833/10 in case No. A82-7247/2008- 99).
- The Russian Ministry of Finance, on the contrary, believes that the amount of forgiven debt, including partially forgiven, cannot be taken into account as part of such expenses, since it is not a justified expense in the sense of Art. 252 of the Tax Code of the Russian Federation (see letter of the Ministry of Finance of Russia dated April 4, 2012 No. 03-03-06/2/34).
- The Federal Tax Service of Russia, taking into account the opinion of the judges, in a letter dated August 12, 2011 No. SA-4-7/13193, confirmed that the creditor has the right to include the written-off debt as part of non-operating expenses if it has taken measures to collect it in court and mutual demands were settled by a settlement agreement. Then these expenses will meet the requirements of paragraph 1 of Art. 252 of the Tax Code of the Russian Federation. If there are no attempts to collect the debt, it can be written off only when the statute of limitations expires (subclause 2, clause 2, article 265 of the Tax Code of the Russian Federation).
The nuances of forgiveness of a company's debt by its founder
Forgiveness by the founder of a loan provided to the company (in whole or in part) is formalized according to general rules. The taxation of the founder creditor also does not have any special features. But the payment of taxes by a debtor organization depends on what share in its authorized capital is owned by the founder who has forgiven the debt.
Here are the possible options:
- The lender owns 50% or less of the share capital. In this case, the canceled debt is included in the company's income as property received free of charge. The entire canceled amount must be taken into account when calculating income tax on the basis of clause 8 of Art. 250 Tax Code of the Russian Federation.
- The lender owns more than 50% of the authorized capital. In this case, the canceled debt is not included in the taxable profit of the company in accordance with subparagraph. 11 clause 1 art. 251 Tax Code of the Russian Federation.
The amount of interest written off is in any case included in the company’s income and, accordingly, increases the tax base (letter of the Ministry of Finance of Russia dated September 30, 2013 No. 03-03-06/1/40367).
Thus, debt forgiveness, being a way to terminate obligations, is not always clearly assessed in law enforcement practice. The tax consequences arising from the use of this method force participants in civil transactions to find other, more economically advantageous ways to release the debtor from obligations to the creditor.
Information about the company KSK GROUP
KSK group traces its history back to 1994. From its founding to the present day, the company has been one of the market leaders in consulting services in the fields of audit, taxes, law, valuation and management consulting. Over 20 years of work, more than 2,000 projects have been implemented for major Russian companies.
KSK Group offers comprehensive and practical solution the most pressing challenges facing financial and general directors companies and business owners. An individual approach, a deep understanding of the needs and goals of clients, combined with practical knowledge, allow us to solve these problems as efficiently as possible.
The KSK Group team is a team of more than 350 specialists with unique experience in implementing projects for both medium-sized and largest Russian corporations.
Currently, KSK Group offers a full range of services and solutions for business:
- audit according to Russian and international standards;
- tax and legal consulting;
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Debt forgiveness is often practiced in relationships between commercial organizations, and the reasons for this may be different. However, in any case, two key questions arise: is debt forgiveness legal in principle and what tax consequences will this operation entail for the parties? Let's consider similar situation using the example of goods supply operations.
Legality of concluding a debt forgiveness agreement
In practice, debt forgiveness is formalized either by concluding an appropriate agreement (bilateral transaction) or by sending a debt forgiveness notice to the debtor (unilateral transaction).
The agreement or notice sent to the debtor must specify:
- what debt is forgiven;
- reasons for the debt;
- amount of debt forgiven.
In order for the parties to confirm the amount of debt indicated in the agreement (notification) on debt forgiveness, it is advisable to first reconcile the calculations.
Let us now consider the peculiarities of taxation of profits for the creditor and debtor when making such a transaction.
Tax accounting with the creditor company
Forms of debt forgiveness transaction
Lender's income from the sale of goods
For a creditor using the accrual method, forgiveness of the debt to pay for goods sold does not entail an adjustment to the proceeds from their sale previously recognized for tax purposes (). If the cash method is used, in which the date of receipt of income is the day the taxpayer receives money or property, then the question of adjustment, of course, does not arise.
Losses of the creditor resulting from debt write-off
Amount voluntarily forgiven and written off accounts receivable the debtor to the creditor is not a bad debt in the understanding, therefore, take into account losses as part of non-operating expenses on the basis of subparagraph. does not seem possible.
With regard to accounting for profit tax purposes of debt voluntarily forgiven to the debtor, the following options are possible.
OPTION 1
Write-off of accounts receivable at the expense of net profit creditor.
According to the Russian Ministry of Finance, an organization cannot take into account when forming tax base for income tax, part of the debt written off on the basis of a debt forgiveness agreement, since these costs cannot be considered as justified expenses in accordance with (,).
Specialists of the Federal Tax Service of Russia on the issue of determining the tax consequences of debt forgiveness adhere to the following point of view: debt forgiveness for profit tax purposes should be considered as a gratuitous transfer of property rights, as a result of which the deterioration of the creditor’s position does not reduce its tax base for income tax in accordance with (letter of the Federal Tax Service of Russia dated November 22, 2004 No. 02-5-11/173@, ).
Accordingly, following the position of the Ministry of Finance and the Federal Tax Service of Russia, the resulting receivables must be written off at the expense of the net profit of the creditor company.
OPTION 2
Recognition of receivables as non-operating expenses of the creditor and reduction of the tax base.
The list of non-operating expenses that can be taken into account for profit tax purposes is open (), which means it is possible to recognize in tax accounting any costs that meet the requirements of validity and documentary exposure () and are not directly named in ("Expenses not taken into account for tax purposes ").
At the same time, in legal disputes arising over the legality of including in expenses amounts under debt forgiveness agreements, judiciary Often they make negative decisions. For example, the Fifteenth Arbitration Court of Appeal indicated that neither during the audit nor during the trial the taxpayer provided evidence of the direction of his actions to collect receivables and did not take actions to collect the debt in court. The statute of limitations for debt collection had not expired at the time the debt was forgiven. Having assessed the totality of these circumstances, the court indicated that the taxpayer did not provide evidence of the impossibility of collecting the disputed receivables (). Other courts (,) take a similar position.
Thus, the use by a creditor of this accounting option for profit tax purposes of a debt voluntarily forgiven to a debtor company is possible only if the creditor has evidence that the debt forgiveness is aimed at generating income. Let us note that the very fact of sending a debt forgiveness notice to the debtor in the absence of a commercial interest on the part of the creditor is not such evidence.
To avoid claims from tax authorities in the absence of evidence of a commercial interest, the creditor should write off the “forgiven” receivables at the expense of the net profit of the creditor company.
VAT
Forgiving the buyer's debt does not entail any VAT consequences for the creditor, since by the time the debt is forgiven, the tax base for the cost of the goods shipped has already been determined and there are no grounds for adjusting the calculated VAT amount (,). This position is confirmed by arbitration practice ().
Debt forgiveness also does not fall under the closed list of cases in which it is necessary to restore VAT (). Arbitration practice on the issue of VAT restoration when debt is forgiven has not yet been formed.
Tax accounting for the debtor company
Income tax
Income generated as a result of debt forgiveness
The Russian Ministry of Finance emphasizes that when a debt is forgiven, non-operating income is recognized on the basis of written off accounts payable ().
Costs for purchasing goods
If the debtor uses the accrual method, then when the debt is forgiven, the procedure tax accounting expenses in the form of the cost of purchased goods (works, services) are not adjusted, since these expenses are recognized regardless of the fact of payment ().
VAT
After accepting for accounting the goods purchased under a supply agreement, in the presence of a correctly executed supplier invoice, the buyer has the right to accept the amount of VAT as a deduction, provided that the purchased goods are intended for use in transactions subject to VAT (,). Debt forgiveness does not imply any adjustment to the tax deduction amount.
The list of cases in which a taxpayer is obliged to restore (in whole or in part) VAT previously legally accepted for deduction is given in. This list is closed and is not subject to broad interpretation (,).
The specified list does not provide for the restoration of VAT, previously accepted for deduction on goods supplied, when written off accounts payable to the supplier in case of debt forgiveness.
Thus, in our opinion, there are no grounds for reinstating VAT in the situation under consideration. Law enforcement practice on this issue has not developed.
Inna Batsyleva,
Head of Tax Consulting and Resolution Department tax disputes KSK groups
Forgiveness of any debt under a loan agreement is a fairly common procedure. But it is often carried out subject to the observance of certain conditions by the debtor. In addition, the execution of the agreement should not in any way violate the property rights of persons associated with the creditor (especially if they are still relevant, and money may well be recovered from the debtor in court). Write-off monetary obligations Banking and microfinance institutions do not practice it, but in other situations you can count on it, at least as an alternative to transferring obligations to a third party, which is described in more detail in the article on.
Debt forgiveness between legal entities
Economic entities that do business in Russia very rarely resort to the loan write-off procedure. This is due to significant difficulties in its implementation, as well as the possibility of conflicting issues related to the payment of taxes on legal entities.
Article 415 of the Civil Code of the Russian Federation debt forgiveness - basic concepts
According to Art. 415 Civil Code of the Russian Federation, debt amnesty tax inspectors and lawyers identify it with the implementation of a donation, which is based on an agreement between the parties.
The article does not provide for the mandatory consent of the person who took out the loan. Therefore, most often the issue is resolved by legal registration a written agreement that is unilateral in nature. If there is a legal transfer of rights, obligations or property of a counter nature, then the agreement is not considered a donation.
Tax consequences
After concluding a transaction to cancel the debt of a legal entity, the organization is obliged to reflect its consequences in accounting entries. Written-off funds are classified as non-operating expenses.
At the same time, their sum in mandatory must coincide with that specified in the agreement. It is from this that the lender, despite the losses, pays taxes. According to tax requirements in the Russian Federation, VAT is deducted only when the written off debt is represented in products necessary for areas subject to VAT.
Forgiveness of interest on loans between legal entities - tax consequences
Interest-bearing loans are most often repaid in equal payments, the amount of which includes the principal debt and interest for a certain period. The effect of a signed agreement on the legal cancellation of an interest-bearing loan, as a rule, applies only to the body of the loan. If the lender wishes to forgive the interest along with the balance of the debt, such actions are prescribed in the agreement as an addition.
Debt forgiveness between the founder and his company
If the founder forgives one or more debts to his company, then in accounting such debt is classified as income. The corresponding posting must be made on the day the contract is concluded. When an organization cancels the debt of the founder, additional expenses no one bears, since such costs are not provided for in Article 364.16 of the Tax Code of the Russian Federation,
Increase in net assets due to debt forgiveness
If there is a debt to organizations belonging to the same group, the most optimal way to increase net assets could be a debt write-off. According to paragraph 1 of Article 251 of the Tax Code of the Russian Federation, when the founder writes off debt to increase the assets of a subsidiary, income received as a result of such actions is not taxed.
Agreement on debt forgiveness under a loan agreement
Upon conclusion legal contract about loan write-off, it is necessary to accurately indicate all points and details of the parties. In addition, similar agreements for legal entities and individuals have significant differences, which should also be taken into account. If the agreement is not drafted correctly, it may be invalidated.
Debt forgiveness under a loan agreement for an individual
In the event that a loan write-off agreement is signed between an individual and the enterprise, the employee receives income that is subject to personal income tax. In other situations, such a need does not arise. At the same time, it is better to formalize loan forgiveness, which is conditioned by employment relations, as a gift agreement, so as not to pay insurance and tax contributions.
Can a bank forgive a loan debt and for what amount?
If a bank sees that a mortgage, car loan or other loan is bad, it can write it off. But in practice such situations occur quite rarely. Most often, the amount of a bad loan is returned through the court or sold to debt collectors.
In such a situation, the borrower must be aware of the statute of limitations, which is three years. If the bank does not initiate trial, then the debtor will be released from repaying the loan.
Cases of debt forgiveness of a parent or subsidiary company occur quite often in financial and economic activities. Let's consider the tax consequences of such an action.
In accordance with paragraph 2 of Art. 248 Tax Code of the Russian Federation, the funds received by the borrower, when the debt is forgiven, are recognized as property received free of charge (clause 2 of Article 248 of the Tax Code of the Russian Federation, letter of the Ministry of Finance of Russia dated December 14, 2015 N 03-03-07/72930)/
In this case, the amount of the forgiven debt is recognized as part of non-operating income on the date of debt forgiveness (regardless of the method of recognition of income and expenses used by the debtor in tax accounting).
However, if the debt is forgiven related party possible use special norms allowing you to avoid paying income tax. We are talking about sub-clause 11, clause 1 of Art. 251 of the Tax Code of the Russian Federation and sub-clause 3.4. Clause 1 of Article 251 of the Tax Code of the Russian Federation.
According to subparagraph 11, paragraph 1 of article 251 of the Tax Code of the Russian Federation When determining the tax base, the following income in the form of property received is not taken into account: Russian organization free of charge:
Received property is not recognized as income for tax purposes only if, within one year from the date of its receipt, the specified property (with the exception of Money) is not transferred to third parties.Accordingly, when a loan is forgiven to a related party (participation share is more than 50%), income is not taken into account when determining the tax base for income tax (see, for example, letter of the Ministry of Finance of the Russian Federation dated April 18, 2016 N 03-03-06/1/ 22282).
Borrower's debt in terms of interest, which was forgiven by the creditor, is included in the non-operating income of the debtor, regardless of the presence or absence of participation of the creditor (as a founder) in the authorized capital of the debtor. According to the Russian Ministry of Finance, in this case the norm of clause 11, clause 1 of Art. 251 of the Tax Code of the Russian Federation does not apply, since the fact of transfer of property, that is, the fact of the debtor receiving funds, is absent (see, for example,).
Based subp. 3.4 clause 1 art. 251 Tax Code of the Russian Federation when determining the tax base, income in the form of property, property rights or non-property rights in the amount of their monetary value, which are transferred to the business company in order to increase net assets, including through the formation additional capital, the relevant participants.
This norm also applies to cases of an increase in the net assets of a business company with a simultaneous decrease or termination of the business company’s obligations to the relevant participants, if such an increase in net assets occurs in accordance with the provisions provided for by the legislation of the Russian Federation or the provisions of the constituent documents of the business company, or was a consequence of the will of a participant in the business company company, and in cases of restoration in the retained earnings of the business company of dividends or part of the distributed profit of the business company that were not claimed by the participants of the business company.
Thus, in relation to the previously provided loan amount, which was subsequently forgiven by the participant in order to increase the net assets of the business company, it is possible to apply sub-clause. 3.4 clause 1 art. 251 of the Tax Code of the Russian Federation (see, for example,).
