Russian law now allows for tax-free use of property by CSOs
Free use of property by CSOs will not be taxed
Changes to the tax code.
1 December 2020
On 1 December, the Society of CSO Accountants and Auditors reported that “the legislator has solved one long-standing tax issue faced by CSOs by making the free use of property tax exempt.
This change was incorporated into Federal Law no. 374-FZ on 23 November, 2020. “On Amendments to Parts One and Two of the Tax Code of the Russian Federation and specific Legislative Acts of the Russian Federation”.
In the new version of subparagraph 16 of paragraph 2 of Article 251 of the Tax Code of the Russian Federation, “Property rights in the form of the right to free use of any property received by non-profit organisations to enable them to carry out their statutory activities” were also included in the specific income stream. Previously, this included only “property rights in the form of the right to free use of state and municipal property authorised by state authorities and local government to enable non-profit organisations to carry out their statutory activities.”
The changes will come into effect from 1 January 2021.
“The adopted amendment will undoubtedly improve the life of most non-profit organisations in Russia, which will be able legally and without tax liability, to use property under the right to free use – for an hour, for a day, for a year, etc., enabling them to accept this property for temporary use from any legal entity or individual.
The only condition placed by the legislator on property rights in this situation is the use of the acquired rights to conduct statutory activities, says the Association of CSO Accountants and Auditors.