Refund/Credit of Excess Tax Payments

As follows from the letter of the Russian Ministry of Finance dated July 6, 2015, No. 03-05-04-02/38796, in accordance with the provisions of Article 24.20 of Federal Law No. 135-FZ of July 29, 1998 "On Valuation Activities in the Russian Federation" (hereinafter - Federal Law No. 135-FZ), which came into force on July 22, 2014, stipulating that in the event of a change in the cadastral value as decided by a commission or court in accordance with the procedure established by Article 24.18 of Federal Law No. 135-FZ, information regarding the cadastral value determined by the decision of the commission or court is applied for purposes provided by Russian legislation starting from January 1 of the calendar year in which the corresponding application for reassessment of the cadastral value was submitted, but not earlier than the date of entry into the state cadastre of real estate of the cadastral value that was subject to dispute.

According to paragraph 1 of Article 391 of the Tax Code of the Russian Federation (hereinafter - the Code), the tax base for calculating the land tax is determined for each land plot as its cadastral value as of January 1 of the year which constitutes the tax period.

Federal Law No. 284-FZ of October 4, 2014 "On Amending Articles 12 and 85 of Part One and Part Two of the Tax Code of the Russian Federation and on Declaring Obsolete the Law of the Russian Federation 'On Taxes on Property of Individuals', which came into force on January 1, 2015, added to paragraph 1 of Article 391 of the Code provisions similar to those provided in Article 24.20 of Federal Law No. 135-FZ.

According to paragraph 4 of Article 85 of the Code, bodies responsible for cadastral registration, maintaining the state cadastre of real estate and registering rights to real property and transactions therewith are obliged to provide information about real property located on their territory (rights and transactions registered by these bodies) and its owners to tax authorities at their location within ten days from the date of the corresponding registration, as well as annually by February 15 to submit such information as of January 1 of the current year.

It should be noted that in the case where during a desk audit of the declaration for 2014, the tax authority receives from the taxpayer a decision of the commission or court determining the cadastral value of the land plot at the market price dated in 2014, but such information has not been received from the registering body to the tax authority, the tax authority must within the framework of inter-agency cooperation contact the Rosreestr bodies to confirm the information provided by the taxpayer regarding the change in cadastral value.

Thus, tax authorities when administering the land tax must rely on information contained in the state cadastre of real estate.

The Federal Tax Service of Russia in its letter dated December 18, 2015, No. BS-4-11/22243@ "On Property Taxes for Organizations" notes that according to paragraph 15 of Article 378.2 of the Code, in the event of a change in cadastral value as decided by the commission considering disputes regarding the results of determining the cadastral value (hereinafter - the commission) or court decision in accordance with the procedure established by Article 24.18 of Federal Law No. 135-FZ of July 29, 1998 "On Valuation Activities in the Russian Federation", information regarding the cadastral value determined by the decision of the aforementioned commission or court decision is taken into account when determining the tax base for property tax on organizations starting from the tax period in which the corresponding application for reassessment of the cadastral value was submitted, but not earlier than the date of entry into the state cadastre of real estate of the cadastral value that was subject to dispute.

Regarding the identical provision of paragraph 1 of Article 391 of the Code, which applies to the procedure for applying the revised cadastral value in the context of calculating the land tax, the Russian Ministry of Finance clarified in its letter dated July 6, 2015, No. 03-05-04-02/38796 the procedures for tax authorities in the case where the taxpayer submits a decision by the commission or court determining the cadastral value at market price and such information is not received from Rosreestr bodies to the tax authorities.

In this case, according to the Russian Ministry of Finance, tax authorities must within the framework of inter-agency cooperation contact Rosreestr bodies to confirm the information provided by the taxpayer regarding the change in cadastral value.

Taking into account the above, the Federal Tax Service of Russia considers that the provisions of the letter from the Russian Ministry of Finance dated July 6, 2015, No. 03-05-04-02/38796 should also be applied in order to implement the provisions of paragraph 15 of Article 378.2 of the Code.