How to formalize the sale of a share in a company?

Question

Startups

Good afternoon!
M.b. Has anyone come across a similar situation. I would be grateful for any information.
The situation is the following.
The Russian company, which is the founder of the American company, sells its share in the American company to an individual (the founder of the Russian LLC).
There are a couple of questions:
1. What is the best way to arrange this sale so that there is a minimum of costs? In my opinion, it turns out that this is a transfer of rights within the same person. Costs should be minimal...
2. How to deal with the tax authorities, what documents should be submitted there? How to formalize the fact that a Russian company has ceased to control a foreign company?

Answer 1

Tax consequences in Russia and what to do:
1. It is better to arrange the sale at the price of an equal investment (everything that you made in the company) made by the LLC in the American company. In this case, the LLC does not have taxable income. The sale must be formalized by a share purchase and sale agreement and a share certificate for the new owner must be drawn up. In this case, the old certificate must be revoked. The size of the investment must be determined taking into account the initial contribution to the foreign company, as well as subsequent contributions.
There are no value-added tax consequences of the transaction. The sale of shares in the authorized capital of organizations is not subject to VAT on the basis of paragraphs. 12 p. 2 art. 149 of the Tax Code of the Russian Federation.
For income tax, an LLC recognizes income from the sale of a share in the authorized capital of a foreign company in the amount of the contract price of the share (clause 1, clause 1, article 248, clause 1, article 249, clause 3, article 271 of the Tax Code of the Russian Federation) and at the same time , makes a deduction for the value of the investment on the grounds that, in accordance with paragraphs. 2.1 p. 1 art. 268 of the Tax Code of the Russian Federation, when realizing property rights (including shares), the taxpayer has the right to reduce the income from the sale by the acquisition price of these property rights (including shares) and by the amount of expenses associated with their acquisition and sale. If the sale price is equal to the size of the investment, no income arises.
Despite this, income and expenses from this transaction must be reflected in the income tax return. Proceeds from the sale of property rights (shares in the charter capital of another organization) are recognized as income from the sale in aggregate with other income and are reflected in Appendix N 1 to sheet 02 on line 010, including in the breakdown on line 013 (revenue from the sale of property rights). The total amount of income from sales is shown on line 040 (clause 6.1, section VI of the Procedure for filling out a tax return for corporate income tax, approved by Order of the Federal Tax Service of Russia dated November 26, 2014 N ММВ-7-3 / [email protected] (hereinafter referred to as the Procedure for filling out a declaration) ).
Expenses for the purchase of sold property rights are reflected in line 059 of Appendix No. 2 to sheet 02. The total amount of recognized expenses is shown in line 130 (clause 7.1, section VII of the Procedure for filling out the declaration).
2. An LLC must submit to the tax authority a "Notice of its participation in foreign organizations" in connection with the termination of participation in a foreign organization within 3 months from the date of sale of the share.
In addition, the LLC must file with the tax authority a “Notice of Controlled Foreign Companies” for the period in which the LLC was the controlling organization and report on the income received, as well as provide the financial statements of the foreign company. Such notification shall be submitted to the tax authority “not later than March 20 of the year following the tax period in which income in the form of profit of a controlled foreign company is recognized as a controlling person in accordance with Chapter 23 or 25 of this Code.”
At the same time, on the basis of Art. 25.13-1 of the Tax Code, the profit of a controlled foreign company is exempt from taxation if, in particular, the effective rate of taxation of income (profit) for this foreign organization is at least 75 percent of the weighted average tax rate for corporate income tax. US companies pay income tax on a progressive scale, starting with a minimum tax rate of 15%, which corresponds to 75% of the Russian corporate income tax rate of 20%. On this basis, CFC income will not be taxed in the Russian Federation.
It is also worth bearing in mind that on the basis of clause 7 of Art. 25.15 of the Tax Code, the profit of a CFC will not be taxed if its amount does not exceed 10 million rubles. (30 million rubles for 2016). The fact that the profits of a CFC, for one reason or another, are not taxable income of a controlling person does not exempt from the obligation to file a Notice of Controlled Foreign Companies.
Simultaneously with the provision by LLC of the Notice of termination of participation, the individual - the purchaser of the share, must submit the "Notice of his participation in foreign organizations" on his own behalf in connection with the acquisition of the share.
Since an individual acquires control over a foreign company, he is required to annually declare his participation and control, as well as the income and accounting reporting of a controlled foreign company.
I wish you success in the implementation of your plans!

Answer 2

It would be better, of course, not to register an American company for a Russian one (on the contrary, it is possible, but since it is better not to be needed now, it is unsafe). You haven't specified the type of company in the US yet, but I suspect that S Corp.
In the American database, now the founder is a Russian LLC, and there will be an individual, i.e. the clearance must also be on the American side.
Perhaps this is the only thing I can say, because. in your question only the Russian component appears. I would go to an American corporate lawyer. The procedure is quite simple, but a small mistake on the American side will cost a lot.
Regarding the Russian tax. If you notified the tax office on the CFC, then you need to notify that you no longer control it.

Answer 3

Changing ownership to a Russian LLC, which is the founder, is quite simple. And this operation cost less than 2,000 Russian rubles.
How to do it? Damn, when I was still young and green, I did this in 40 minutes. Really, really possessing all these jur. persons you can not solve this problem?
Or just consult an accountant or lawyer. It's quite inexpensive.

Answer 4

Re-register a Russian LLC for a new owner and do not soar your brains.