Changes to Corporate Real Property Tax


Legal Update No 718


Bryan Cave Leighton Paisner LLP, formerly Goltsblat BLP in Russia, advises that Federal Law No. 379-FZ1 (the Law) was passed on 28 November 2019 concerning corporate property tax.

Earlier this year, Federal Law No. 325-FZ dated 29 September 2019 introduced amendments into the Russian Tax Code2, replacing “residential buildings and premises not booked as fixed assets” on the list of items subject to property tax with “other real property recognised as taxable by Chapter 32 <…> of the Code”3, besides those expressly listed (for more detail, see Information Letter No. 708).

Should the September law be interpreted broadly, that change would result in virtually any other real property with a tax base equal to its cadastral value being subject to corporate property tax.

The Law eliminates this uncertainty by including in the Tax Code4 a closed list covering the following:

  • residential premises;

  • construction in progress;

  • garages, parking places;

  • residential buildings, garden cottages, amenities structures or ones located on land plots provided as allotments for subsistence farming, fruit and vegetable growing, gardening, or for private dwellings.

These changes come into effect on 1 January 2020.

The way such real property is taxed will depend on whether an applicable law is in place in a particular constituent entity of the Russian Federation and whether a cadastral value has been duly set. If it has not been set for real property listed in the Tax Code5, the taxation is based on the average annual value, as follows from another provision of the Code6 that also comes into effect on 1 January 2020.

The new regulation might necessitate revisions to the way corporate real property is taxed, among them a change to how the value of property is calculated or previously untaxable property becoming taxable. So we recommend that taxpayers review their real properties, focusing, in particular, on whether they are booked as fixed assets in order to identify any additional property tax implications of the new Law.


1 “On amending articles 333.33 and 378.2, part two, of the Tax Code of the Russian Federation”.
2 Clause 1, art. 378.2.
3 N.B.: Personal Property Tax.
4 Sub-clause 4, clause 1, art 378.2.
5 Sub-clause 4, clause 1, art 378.2.
6 Sub-clause 2.2, clause 12, art. 378.2.

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