Confirmation of the SME status
What does this status give?
It gives several preferences, and first of all – reduction of insurance fees from 30% to 15%.
How often is the confirmation needed?
How can SME status be obtained?
Or a Russian subsidiary LLC to receive the status of the SME (small or medium-sized enterprise) and be included in the Unified Register of Small and Medium-sized Enterprises, both the LLC and its foreign participant(s) must provide evidence of their status as small (medium-sized) enterprises. Powers to confirm such information and submit it to the tax authority are assigned to audit organizations (part 6.2 of article 4.1 of the Federal Law “On the development of small and medium-sized businesses in the Russian Federation”).
Procedure for confirming the SME status
- You analyze the indicators of the Russian LLC and the parent company (if its share / total share of several foreign founders is higher than 49%). Both the subsidiary and the parent company must meet the following criteria:
- have the total received income from business activities of no more than 2 billion rubles for the previous year;
- have an average number of employees of no more than 250 people for the previous year;
- confirm that the country of their permanent location does not belong to countries with preferential taxation (offshore zones);
- the Russian LLC must be created by December 1, 2019.
If these indicators fall under the specified criteria, you contact an audit company.
- You sign an agreement on the confirmation service with the audit company.
- The audit company forms a request for documents, analyzes and verifies the received documents for compliance with the criteria.
- During the period from 01.07.2020 to 05.07.2020, the audit company submits the received information independently to the tax authority.
- Data verification and entry into the register is performed by the tax authority on August 10, 2020.
Comments by Daria Pogodina, General Director of “Swilar” LLC:
“Based on our experience working with foreign parent companies, we recommend sending a request to your participant(s) right away: their terms for generating local financial statements may differ from Russian ones, and the participant(s) will need to speed up their processes to prepare the required set of documents on time. Besides, you need to reserve time for translation and apostille of documents, because they will be issued on the territory of another state and in a foreign language.
Also pay attention to the confirmation of the permanent location of your participant(s) (not an offshore zone) – to do this, you will need to request an extract from the trade register”.
Please note that, based on the legal wording given in articles 5 and 6 of Federal Law # 102-FZ of 01.04.2020 on the application of “preferential” rates of insurance fees in 2020, such benefits are established “for insurers recognized as small or medium-sized businesses under Federal law # 209-FZ of 24.07.2007 “On the development of small and medium-sized businesses in the Russian Federation” from 01.04.2020 to 31.12.2020. This means that the policyholders must be small or medium-sized businesses (must be included in the register of SMEs) as of 01.04.2020. Any amendments regarding the possibility of applying “preferential” rates in the current year by SMEs that were entered in the register after 01.04.2020 have not been made in the legislation. Clarifications that would allow it do not exist either. There is no judicial practice.