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Compensation for loss of profits in case of temporary withdrawal of land subject to personal income tax
The
Company has entered into with natural persons contract under which she
temporarily withdrew his land for the construction of the pipeline. Up to this point the land was used selhoztselyah. The company reimbursed the losses of natural persons, both actual damages and lost profits. Whether these amounts are subject to personal income tax? The answer to this question - in a letter to the Russian Finance Ministry of 01.09.11 № 03-04-05/8-622.The
Land Code provides for mandatory reimbursement of losses caused by the
temporary withdrawal of land (Section 3, Article. 57 LC RF). Rules
of damages * (approved by RF Government Resolution of 07.05.03 № 262)
found that the offset should be losses due to premature termination of
obligations to third parties, including loss of profits, as well as
costs associated with the temporary occupation of land and the costs of remediation of soil quality. According
to paragraph 2 of Article 15 of the Civil Code, damages are made up of
actual damages (the cost of a remedy, loss or damage to property) and
lost profits (lost revenue that could be obtained under ordinary
conditions of civil turnover).Solving
the issue of taxation of amounts paid in the event of land acquisition,
officials were guided by paragraph 3 of Article 217 of the Tax Code. It exempts from taxation compensation under the law. The
Finance Ministry decided that compensation for actual damages for land
conversion corresponds to the nature of compensation referred to in the
above norm of the Tax Code. This means that the amount of damages do not have to pay personal income tax.At
the same time, the amounts paid as compensation for loss of profits
physical persons, according to the Ministry of Finance, should be
subject to personal income tax to the general procedure. The
reason is that the purpose of such compensation - compensation for lost
revenue of the natural person who, if they arise would be subject to
taxation.*
Full title of the document: "The rules of compensation land owners,
land users, land owners and occupiers of land losses caused by the
withdrawal or temporary occupation of land, restrictions on the rights
of landowners, land managers, landlords and tenants of land or a
deterioration in the quality of land as a result of other persons. "
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Category: My articles | Added by: AleksandroVSD (23.09.2011)
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