A consolidated group of taxpayers is...

Advantages for taxpayers when creating a consolidated group

The biggest advantage for members of a consolidated group (hereinafter referred to as the CG) is that the burden of paying income tax is significantly reduced.
The loss-making and profitability indicators of all CG participants are summed up. The tax base of all companies that are members of the group is added up (consolidated). In this case, transactions carried out between the parties to the agreement on the creation of a corporate group cannot be the object of transfer pricing. The only exceptions are transactions concluded in relation to extracted minerals.

Participating companies merge without creating a legal entity in order to reduce the tax burden on income tax. This tax is calculated as a whole for the CG and is paid on the basis of the norms prescribed in Chapter. 3.1 Tax Code of the Russian Federation.

IMPORTANT! Since September 2022, tax authorities no longer register agreements on the creation of consolidated groups of people, and agreements concluded in 2022 are considered unregistered (Law “On Amendments...” dated 03.08.2018 No. 302-FZ). Thus, contracts registered before 2018 are valid until the end of their term, but no later than 01/01/2023.

For more information about which persons are taxpayers for income tax, read our article “Who are payers of income tax?”

ConsultantPlus experts answered the most frequently asked questions from taxpayers about the payment of income tax by corporate group members:

Study the material by getting trial access to the K+ system for free.

Consolidated group of taxpayers - what is it in the target segment?

If the founders of the enterprises have decided to unite, then in this case, as they say, they are obliged to share all the joys and sorrows equally. So, for example, the base for paying income tax will be the usual arithmetic sum of all income of group members minus their combined expenses. Moreover, if in the final account the base turns out to be a negative amount, then it is generally accepted that the association operated at a loss in this reporting period. In other words, if one of the group of enterprises takes up a significant share with its working capital, and at the same time has no profit, then this fact can play a decisive role in calculating the tax base.

Therefore, it should be understood that a consolidated group of taxpayers is a direct path to optimizing the ways of accruing and paying their own obligations to the state treasury.

Another additional and very pleasant bonus in the list of goals for the merger is the fact that any of the participants in the cooperative organization does not submit separate declarative data to the fiscal authorities if it does not have other income not included in the consolidation. This category can include profit at other rates, as well as other revenue arising as a result of withholding or transferring direct income tax.

Therefore, a simplified tax reporting system is a pretty good reason to unite into a consolidated group. The level of errors when drawing up declarations in this case will decrease by as many times as the number of business entities cooperate in a particular organization. Agree, it is much easier to show in reporting the results of the activities of branches than of separate structures with full administrative responsibility.

Conditions for creating a consolidated group

The main requirement when creating a CG was that the responsible participant in the consolidated group indirectly or directly managed 90% of the shares in the authorized capital (hereinafter referred to as the authorized capital) of each enterprise included in the group. It is important that this requirement is met throughout the entire duration of the contract for the creation of the group.

How to determine the share of participation of one company in another is stated in Art. 105.2 Tax Code of the Russian Federation.

It is also important that each of the enterprises included in the CG has the following indicators for the entire past year:

The value of net assets, according to information from accounting records, must be greater than the value of the authorized capital (subclause 3, clause 3, article 25.2 of the Tax Code of the Russian Federation).
The total amount of revenue received by the company from the sale of inventory and materials and the provision of services and other income must be greater than or equal to 100 billion rubles. (Subclause 2, Clause 5, Article 25.2 of the Tax Code of the Russian Federation).
The total amount of taxes paid (VAT, profit and mineral extraction) and excise taxes must be greater than or equal to 10 billion rubles. (Subclause 1, Clause 5, Article 25.2 of the Tax Code of the Russian Federation).
The total value of all assets on the balance sheet as of December 31 must be greater than or equal to 300 billion rubles.

Read about the new procedure for calculating assets in our article “A new procedure for calculating net assets has been approved.”

In addition, the enterprises should not have been in the process of liquidation, bankruptcy or reorganization.

The CG must be created for a period of at least 2 years. In this case, options for terminating the effect of CG are possible (we will discuss this below).

Obligations of participants to the state

As noted earlier, taxation of a consolidated group of taxpayers is carried out through the interaction of the responsible participant with the fiscal authorities at the place of legal registration. In this case, the proper reserve intended for transferring funds to the state budget is paid by the members of the association to the selected business entity in accordance with the frequency established in advance. At the same time, in accordance with the current legislation, namely Article 251 and Article 270 of the Tax Code of the Russian Federation, financial receipts received by the responsible participant are not considered income from the activities provided for by the charter.

The very base of profit for calculating taxation has the right to be determined by a designated business entity for other members of the group. This calculation is made based on the average data on the number of employees and the total cost of fixed assets when taking into account depreciation charges.

When it comes to the direct payment of taxes and duties, the chosen business entity must comply with the following principles:

the transfer of funds at the advance stage is carried out based on the location of the responsible participant, which means that they are not distributed in any way among the members of the group;
if there is an actual basis for taxation of profits, funds are transferred to the treasury of the fiscal authorities at the location of each of the members of the cooperation with the calculation of the share of all participants in the cooperation fund, which is what the concept of a consolidated group of taxpayers as such suggests.

If the obligations have not been paid in full, then the collection of the missing funds is carried out, first of all, from available funds from the current accounts of the elected member of the association, then from other participants, and, lastly, in the appropriate manner from existing property .

Who cannot participate in a consolidated group

Under no circumstances could the companies listed below take part in the CG. It's about:

about clearing companies;
insurance organizations;
residents/participants of special and free economic zones;
credit consumer cooperatives;
participants of other CGs;
microfinance companies;
companies under special tax regimes;
organizations exempt from income tax or not recognized as taxpayers;
educational or medical institutions that apply a zero income tax rate;
gambling tax payers.

As for banks, non-state pension funds, professional participants in the securities market or insurance companies, their participation in the CG is possible only on the condition that all other participants are also banks, funds, brokers or insurers.

The concept of a consolidated group

Probably, only a stupid businessman does not seek to minimize his obligations to the state in a legal way, finding various loopholes in the current legislation.

Several years ago, the term “consolidated group of taxpayers” was introduced. An example of such a merger can be seen in such major holdings as Rosneft and Gazprom. Why they? Because it is convenient, profitable and completely legal.

So, a consolidated group of taxpayers is a very specific association, which is characterized by voluntary agreements between income tax payers. Such a syndicate is very interesting because business entities can distribute obligations both by subject area and combine them into a single whole, thereby recreating a single branch. A striking example of the latter is the consolidated group of taxpayers Rosneft.

Also, do not forget that in such associations a significant role is played by the imperative form of management and its implementation as a whole. And this also entails the legal subjectivity of legal processes in the form of the area of responsibility of one or another participant in such an organization as a consolidated group of taxpayers. There are always pros and cons, so we cannot say unequivocally that such associations are always good, since there are a lot of pitfalls, which we will try to bring to the surface.

Who is a Responsible Participant?

A responsible member of a consolidated group (RCG) is a company that is a party to the CG agreement. He is entrusted with the responsibility (in accordance with the terms of the agreement) to calculate and pay income tax for the group as a whole.

ConsultantPlus experts explained how to fill out an income tax return for a consolidated group of taxpayers. If you do not have access to the K+ system, get trial online access and switch to the Ready Solution for free.

OUCG has the same rights and obligations to the fiscal authorities as an ordinary income tax payer.

The authority of the OUCG is confirmed by the signed and registered agreement on the creation of the CG by everyone. One of the responsibilities of the OUCG is to register the concluded agreement on the creation of the CG. In the event that the UKG is the largest taxpayer, the agreement must be registered in the tax service where this participant is served.

You will find more information about the OUCG in our article “Tax rate for income tax according to the provisions of Art. 284 of the Tax Code of the Russian Federation."

Creation procedure

Since a consolidated group of taxpayers is a completely state-controlled association, the procedure for its creation is regulated by current legislation, namely Art. 25 Tax Code of the Russian Federation. As a rule, with an approved list of participants in an organization, an agreement on its creation is concluded, and it must be valid for at least two calendar years.

A responsible business entity is selected from among the members of the group, to which all current rights and obligations for the payment of the accrued total amount of taxes and fees are assigned, while this person has the same powers as are usually vested in the most standard income tax payer. The document drawn up is registered with the fiscal authority located at the place of registration of the allocated enterprise.

Since it is customary to create a consolidated group of taxpayers from the beginning of a new reporting year, care should be taken to familiarize yourself with the documents in advance: according to current legislation, they must be submitted to the relevant tax organizations before October 30 of the previous period. The correctly executed agreement itself can be submitted before January 1, that is, before the date from which the association plans to begin its joint activities.

How to conclude an agreement to create a consolidated group

The agreement on the creation of the CG indicated the following important points:

item;
list of parties to the agreement and their contact/registration information;
company name - OUKG;
information about the responsibilities of each member of the group and separately OUKG (timing and procedure for execution), as well as information about the responsibility that arises due to failure to fulfill the terms of the contract;
the validity period of the CG, and, accordingly, the contract;
the amount of information provided by each member to determine the tax base and pay income tax.

You may find the tax information contained in the article “What is the object of taxation for income tax?” useful.

The agreement on the creation of a corporate group was subject to mandatory registration with the tax authority. In order to register it, the OUKG had to collect a complete package of documents. It included:

the contract itself (in 2 copies);
statement of establishment signed by all members of the CG;
documents confirming the powers of the signatories of the agreement;
accounting and financial documents confirming that all members of the group have the right to create a group of companies (information requiring confirmation is specified in subparagraphs 2–3, 5 of article 25.2 of the Tax Code of the Russian Federation).

The data that needs to be confirmed is certified by the OUKG. This list includes copies of financial statements, payment slips confirming the payment of taxes and excise taxes.

All these documents had to be submitted by October 30, so that starting next year, group members could work and pay taxes within the CG. After submitting documents to the tax authority, a decision was made within a month to register the agreement or refuse it.

If the Federal Tax Service has discovered correctable violations that can be corrected within the allotted month, the OUKG is notified of this and is obliged to eliminate them in a timely manner.

If all formalities regarding compliance by participants with the requirements of Art. 25.2 of the Tax Code of the Russian Federation, and there is also a full package of documents, the agreement on the creation of the CG is registered. Within 5 days, 1 copy of the agreement is issued with a note about the registration.

Next, the Federal Tax Service that carried out the registration notifies all territorial tax authorities in which the participants of the group are registered about their status. The same notifications are sent to the INFS, where separate divisions of companies that are members of the CG are registered.

If all the described formalities were observed, the CG was recognized as created on January 1 of the year that occurred after the registration of the agreement on the creation of the CG.

When is it possible to refuse registration of an agreement?

The tax office could refuse to register the agreement for a number of reasons, the list of which is closed:

if a member of the CG does not meet the conditions specified in Art. 25.2 Tax Code of the Russian Federation;
if the agreement on the creation of a corporate group does not contain the mandatory conditions that are listed in paragraph 2 of Art. 25.3 Tax Code of the Russian Federation;
if the deadlines for submitting documents for registration of the agreement on the creation of a corporate group have been violated or an incomplete package of documents has been submitted, and correctable violations have not been eliminated within a month (clauses 5–7 of Article 25.3 of the Tax Code of the Russian Federation);
if the documents were signed by persons other than authorized participants.

If the tax authorities refused to register the contract for the creation of a corporate group, this does not deprive the UKCG of the right to re-submit documents for registration.

A copy of the decision containing the refusal is sent by the fiscal service to the OUCG within 5 days and handed to its authorized person.

At the same time, the OUCG may appeal such a refusal within the time limits that apply for appealing acts of tax authorities. If the complaint against the refusal to register is satisfied, then, in the absence of other obstacles, the tax service will have to register the agreement. The CG will be able to function starting from January 1 of the year that occurred after the submission of documents for registration.

How to make changes to the agreement on the creation of a consolidated group

Amendments to the contract are mandatory due to one of the following situations:

one or more participants find themselves in the process of liquidation;
reorganization of one of the participants is expected in the form of accession, merger, division or spin-off;
Another company joins KG;
one of the participants decides to leave the CG, incl. in case of violation of the conditions specified in Art. 25.2 Tax Code of the Russian Federation;
it is necessary to extend the contract period.

Changes are made to the agreement in the form of a separate agreement, which is signed by all parties to the CG agreement, incl. those who have just joined. This agreement is also submitted to the Federal Tax Service at the registration address of the OUCG to complete the registration procedure.

When submitting an agreement for registration, it is important to comply with the provisions established in paragraph 4 of Art. 25.4 of the Tax Code of the Russian Federation deadlines. This action must be completed no later than one month:

which remained until the beginning of the new tax period;
when the concluded agreement on the creation of the CG will end (if a decision has been made to extend the agreement);
during which reasons arose due to which changes are required (they are listed in clause 1 of Article 25.4 of the Tax Code of the Russian Federation).

To register an agreement to amend the contract, the OUCG must submit the following documents to the fiscal service:

a message that changes are being made;
agreement signed by all participants of the CG, in 2 copies;
decision to extend the contract term in 2 copies;
documents confirming the authority of the signatories;
documents confirming that the participants adhere to all requirements (taking into account changes made to the agreement) specified in Art. 25.2 Tax Code of the Russian Federation.

Registration of changes is made within 10 days after submission of a complete package of documents. As a result of registration actions, the OUKG representative will receive 1 copy of the agreement with a mark of completed registration.

Changes made to the agreement on the creation of a corporate group usually come into force on January 1 of the year following the one in which the package of documents for registration was submitted. This applies to cases where changes were made related to:

with the addition of new participants;
withdrawal of one or more participants for various reasons.

In other situations, changes to the agreement come into force on the date approved by the parties, but not earlier than the registration of the agreement on amendments with the tax authorities.

Features of accepting a new member into a consolidated group

The main condition for accepting a new participant into the CG is the compliance of its results and areas of activity with the norms of Art. 25.2 Tax Code of the Russian Federation. The decision to accept a new participant must be signed by all participants, in addition, it will be necessary to make changes to the agreement on the creation of the CG.

This agreement is also signed by all participants of the CG, incl. new member. If the performance indicators of the new company do not correspond to those declared in the Tax Code of the Russian Federation, the tax authorities will refuse to register the agreement to amend the agreement on the creation of a corporate group.

Procedure for a participant to leave the group

When leaving the CG, the participant will have to:

calculate and pay income tax for the tax period in which the company was no longer a member of the Group;
change the tax policy for paying income tax from the new reporting date;
submit tax returns on profits for the period when the company was no longer a member of the Group.

The procedure for filling out tax returns is given in our article “What is the procedure for filling out an income tax return (example)?”

If the OUKG leaves the CG, its responsibilities include:

making changes to your tax accounting for income tax;
recalculation of advances on income tax for completed tax periods and submission of clarifications for the tax year.

You will learn about the specifics of filling out clarifications in our article “Clarified declaration: what does an accountant need to know?”

When a company leaves the group, it retains the need to fulfill all obligations assumed during its membership in the group to pay income tax.

You will learn about advance payments from the article “Advance payments for income tax: who pays and how to calculate?”

Who will not be able to carry out consolidation

So, we have found out that a consolidated group of taxpayers is an association of business entities, each member of which meets the stated requirements.

Among other things, the current legislation of the Russian Federation also identifies a number of business representatives who will never become such an organization. These are:

business entities that are registered and carry out their main activities in the territory of special economic zones;
enterprises whose activities are subject to separate tax regimes;
those business representatives who are already part of another consolidated group of taxpayers;
organizations that do not have obligations to the state to pay income tax;
those legal entities whose profits are subject to a zero rate, in other words – medical and educational institutions;
business entities involved in the gambling business;
enterprises engaged in clearing activities.

In addition, the current legislation provides special conditions for uniting business entities into consolidated groups of taxpayers, which can be classified as financial institutions, insurance companies, securities market participants, as well as non-state pension funds. Such entrepreneurs can create their own organizations, but the participants must be involved in the same industry.

Rights and responsibilities of group members

The rights of OUKG KG include:

submission to the tax authorities of explanations related to the calculation and payment of income tax according to the CG;
the opportunity to attend all on-site tax audits;

Read about the timing of such tax audits in our article “What is the deadline for conducting an on-site tax audit?”

Our article “Procedure for conducting an on-site tax audit (nuances)” will help you understand the procedure for conducting such an audit.

receiving inspection reports, decisions and other documents on the business activities of the Group from the Federal Tax Service;
participation in the consideration of tax audit materials;
receiving from the fiscal service information constituting a tax secret about the participants of the group;
appealing against inspection reports and actions of tax officials related to the performance of their duties to collect profit tax;
filing an application for a credit for income taxes paid in excess of the required amount.

The responsibilities of the OUKG include:

maintaining tax records, calculating and paying income tax based on the results of CG activities;

You can learn more about paying income tax on behalf of a group of companies from our articles:

“We correctly indicate the status in payment orders in 2020”
“Indicate the originator’s status in the payment order”
“How to fill out a payment order in 2022 - sample?”
“Main payer statuses in a payment order”
submission to the tax office for registration of an agreement on the creation of a group of companies or an agreement to amend the agreement, a decision to terminate the group’s economic activities;
filing an income tax report, as well as submitting documents that were received from the participants of the Group;

Use the advice from ConsultantPlus and check whether you are filling out income tax payments correctly. Get trial access to the system and go to the Tax Guide for free.

Read about the specifics of disclosure of CG information in our article “The procedure for disclosing information in consolidated statements has been clarified.”

upon leaving the group or terminating the activities of the group, transferring to the group information on the calculation and payment of income tax and other information;
payment of penalties imposed in connection with non-compliance with tax legislation;
bringing to the attention of participants within 5 days information about the receipt of demands for tax payment;
requesting primary / tax accounting registers as part of tax control;
submission of primary tax records/registers to the Federal Tax Service upon request.

CG participants have the right:

appeal to a higher authority or court acts of fiscal officials or certain actions of their officials;
receive from OUKG copies of all documents from the tax office;
fulfill voluntarily the assumed obligations of the OUCG;
participate in tax audits at home, as well as be present when reviewing the materials of such audits.

The responsibilities of the CG include:

presentation of calculations of the tax base for income tax, data from registers and other documents of the OUCG;
submission to the Federal Tax Service of documents and information that fiscal officials need to carry out tax control;
fulfillment of obligations to pay taxes, penalties in the event of failure by the participant responsible for the activities of the corporate group to fulfill his obligations to the tax authorities;
immediate notification of the OUKG about all cases that may lead to a violation of those specified in Art. 25.2 NC conditions;
maintaining tax records for income tax.

Tax audits in consolidated groups

When it comes to a regular desk audit, it is no different from those carried out at other enterprises. Submitted reporting declarations and other clarifying documents are taken as the basis. However, if, to complete the information being studied, there are not enough acts confirming certain business transactions, then the responsible participant of the consolidated group of taxpayers provides them in response to a request from authorized representatives of the fiscal authorities. Only an elected member of the association answers any questions and provides various types of clarifications.

As for the on-site tax audit of a consolidated group of taxpayers, it is regulated by current legislation - Art. 89 of the Tax Code of the Russian Federation. The following key aspects can be highlighted in this legal act:

the procedure is carried out on absolutely any territory owned by one of the members of the association;
Only the fiscal authority located at the location of the responsible participant in the organization can initiate an on-site tax audit, and all business entities included in the group can be audited without exception;
it is not prohibited to carry out parallel identical procedures with respect to other participants, aimed at those taxes that are not part of the association;
the results of the audit are provided to an elected member of the organization, and he also has every right to raise various types of objections within the period established by law.

Conditions and procedure for terminating the business activities of a consolidated group

The grounds for terminating the activities of a CG may be:

expiration of the validity period or termination by agreement of the parties to the agreement on the creation of the CG;
invalidation of a contract in court;
failure to submit a package of documents on amendments to the contract dictated by the withdrawal of one of the participants who violated the requirements set out in Art. 25.2 of the Tax Code of the Russian Federation, or avoidance of making changes for various reasons;
liquidation or reorganization (except transformation) of OUKG;
opening a bankruptcy case against OUKG;
violation by the participant responsible for the activities of the CG of the terms of Art. 25.2 NC.

At the same time, the CG cannot be terminated if changes have occurred in the participant’s charter capital that do not violate the conditions of clause 2 of Art. 25.2 Tax Code of the Russian Federation.

Find out about calculating the price of shares after reorganization from our article “How to determine the value of shares during reorganization”

If the participants of a group of companies make a joint decision to terminate the agreement, the OUCG must, within 5 days, send to the Federal Tax Service the original agreement on the creation of the group of companies with a registration mark, as well as the decision to terminate the agreement, signed by all participants.

The original agreement on the creation of a CG is also sent to the tax office in a situation where the CG has ceased to exist due to the expiration of the contract, invalidation of the contract, as well as non-compliance with the requirements of Art. 25.2 of the Tax Code of the Russian Federation of CG participants. Along with the agreement, OUKG also sends a notice drawn up in free form, indicating such circumstances.

After receiving the above documents, the Federal Tax Service, which controls the activities of the group, notifies the local tax authorities, in which all participants of the defunct company are registered, within 5 days.

The date of termination of the activities of the CG is the 1st day of the tax period that followed after the occurrence of the circumstances specified when notifying the tax office.

Results

Consolidated groups of taxpayers were registered until 2018.
They were voluntarily created by several organizations for the purpose of paying income taxes by one responsible participant. To create a KGN, many requirements had to be met. In 2020, there are only 18 KGN operating. Their period of existence is limited by the contract and cannot exceed 01/01/2023. You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.

Classification of consolidated groups

After several years of implementation of this project, it’s time to take a more substantive approach to considering it as such. Therefore, we can safely say that the consolidated group of taxpayers as a financial institution has certain varieties that have certain characteristics.

They can be distinguished from each other both by the classification of tax obligations, and by sectors of activity, and even by the typology of cooperative payers. However, as practice shows, the distribution of groups according to the types of obligations to the budget will be closest to our reality. Undoubtedly, the most significant and popular among consolidated associations are value added and profit taxes.

In second place among the grouped payers of state obligations can be identified organizations with an integrated management structure (the consolidated group of taxpayers "Gazprom"), in which the head office assumes responsibility for paying the obligations of subordinate branches in part or in full. Most often, in this case, it is the income tax that falls under the group, since it is the most significant among other payments.