A bill on settlements with members leaving a limited liability company

A bill has been introduced in the State Duma which clarifies the rules for determining the tax base under the simplified tax system when a participant withdraws from a limited liability company. The document was prepared in implementation of Resolution of the Constitutional Court of the Russian Federation No. 2-П of 21 January 2025, which we wrote about earlier.

The substance of the changes

When property is transferred to a participant, the company's income will now be recognised as the market value of that share, determined on the day after the property is transferred.

What this means in practice

Disputes used to arise over whether the income should be taken to be the residual value of the property, its book value, or the actual value of the share. The Constitutional Court held that the correct course is to recognise as income the market value of the share, so as to avoid uncertainty in the tax. The bill writes that approach into statute and removes the ambiguity.

In practice it remains unclear exactly how the value of the share will be determined, and what obligations will arise if the value of the property transferred turns out to be higher or lower than the real value of the share. This may be felt particularly sharply in a corporate conflict. For example, the participant who remains transfers an office to the departing participant on account of a share value agreed in advance, and then, on the next day, commissions a valuation under which the office is worth significantly more. After that, the remaining participant demands that the departing participant return the difference, although the settlement had seemed to be agreed, comments Sergei Pivovarchik, managing partner of Consul Group.

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