The calculation method does not save expenses through “technical” companies: the Supreme Court’s position

In its ruling dated 31 March 2026 No. 307-ES25-11805 in case No. A56-83561/2023, the Judicial Chamber for Economic Disputes of the Supreme Court of the Russian Federation formulated an important position on the limits of tax reconstruction for corporate profit tax.

The case is important for companies that engage contractors or personnel through chains of formal counterparties. The Supreme Court once again emphasized that the calculation method cannot turn payments to “technical” companies into confirmed expenses.

Essence of the dispute

The dispute concerned Vokfors LLC, which performed cleaning and packaging contracts. Following a field tax audit for 2018–2020, the inspectorate concluded that the company had created a scheme to minimize VAT and corporate profit tax using 11 controlled entities.

According to the tax authority, formal document flow with these counterparties concealed the withdrawal of funds from lawful business circulation. The actual work, which required substantial labor resources, was performed by employees directly or indirectly connected with the Megatex group of companies, including unregistered personnel.

At the same time, neither the taxpayer nor the disputed counterparties disclosed information about the real recipients of income or the amounts of wages paid to them.

Position of the lower courts

The courts of three instances agreed with the inspectorate on VAT, but supported the business on corporate profit tax. They considered that the tax authority should have taken a broader range of personnel-related expenses into account, including migration permits, housing, meals, medical support, as well as market-level costs and labor intensity of the work.

What the Supreme Court said

The Supreme Court disagreed with this approach. The Court recalled that the right to account for expenses under Article 252 of the Russian Tax Code is connected not only with the fact of real business activity, but also with the economic justification and reliable documentary confirmation of expenses.

If the final recipient of funds remains in the “grey zone”, transfers to “technical” entities do not become justified business expenses.

The key conclusion of the Judicial Chamber is that tax reconstruction for corporate profit tax is possible where the actual performer of the transaction is established and the real parameters of performance are disclosed. However, reconstruction cannot be used to recognize expenses transferred to fictitious counterparties under unreliable primary documents.

The Court also specifically noted that the calculation method under subparagraph 7 of paragraph 1 of Article 31 of the Russian Tax Code is not intended to legalize shadow costs. Chapter 25 of the Tax Code does not allow expenses to be recognized at a “minimum necessary” or “average market” level if the taxpayer cannot support them with documents.

Practical takeaway for business

• If a company uses “technical” structures and does not disclose the real performers, the risk of denial of corporate profit tax expenses remains high.
• References to market calculations, labor intensity and expert opinions do not replace primary documents.
• For tax reconstruction, it is important to disclose the actual performer, the scope of work, the flow of funds and the economic justification of expenses.
• The burden of proving the amount of expenses lies with the taxpayer.

For companies, this is a signal to review the quality of primary documents, the transparency of personnel arrangements and readiness to prove the real substance of transactions during tax control.