VAT on Property Transfer to Withdrawing LLC Members: Recent Russian Court Practice and Tax Base Determination

• The case concerns the VAT taxation of property transfers when members exit an LLC.
• The tax authority found that the LLC did not report the transfer of real estate to exiting members as part of the payment for their shares, resulting in additional VAT and penalties.
• The LLC agreed that VAT applies to the excess of the market value of the property over the actual share value but disputed how the share value was calculated.
• The court sided with the tax authority, stating that the share value should be based on the annual financial statements for the year preceding the exit, not interim reports.
• The court referenced relevant federal laws to support its decision.

Source: russiantaxandcustoms.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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