A tax inspection conducted an on-site audit of a company. Following the audit, a decision was made to reassess VAT, corporate income tax, property tax, and impose penalties on the taxpayer.
The Federal Tax Service (FTS) discovered that the organization, in conjunction with an interdependent counterparty, had implemented a business splitting scheme. The taxpayer controlled the revenue of both companies to adhere to income limits that qualify for the Simplified Tax System (STS). According to the tax authority, these entities operated as a single economic subject.
Disagreeing with the inspection’s decision, the organization filed a lawsuit demanding that the decision be declared unlawful.
However, the courts rejected the plaintiff’s claims, citing the following evidence:
- The interdependence between the organization and its counterparty was proven;
- Both organizations applied the STS;
- They engaged the same individuals under both employment and civil law contracts;
- The founders and officials of both companies, being members of the same family, benefited from the use of this business splitting scheme.
The request to transfer the case to the Judicial Collegium for Economic Disputes of the Supreme Court of the Russian Federation was denied.
