If it turns out that the contract with the self-employed covers up the employment relationship, the employer will have to pay income tax in full, without taking into account the amounts that the freelancer previously transferred to the budget. This is the conclusion reached by the Economic Collegium. This approach changes the established practice and the rule developed by the courts on the inadmissibility of "excessive collection" of money to the budget. How the new tax reconstruction mechanism will work is not entirely clear: it will only be developed by the first instance during the re-examination of the dispute.
Saving on taxes
During a desk audit of insurance premiums and personal income tax, the tax authority found that entrepreneur Farit Sadykov, instead of concluding employment contracts with 78 employees, hired them as self-employed and formalized relations with them with civil law contracts. Thanks to this, he saved 2.6 million rubles on income tax: employees paid only 6%, and not the 13% established for the businessman. The inspection demanded that Sadykov reimburse the amounts of personal income tax and insurance premiums that the budget did not receive, and pay fines. The entrepreneur did not agree with the calculation of the arrears in personal income tax, the fine for violating the duties of a tax agent, and decided to challenge this in court (case No. A76-20897/2023). He insisted that when reconstructing the personal income tax - calculating additional charges based on the real meaning of transactions - it is necessary to take into account the contributions that his employees have already paid as self-employed (professional income tax, NPD). In his opinion, the budget did not receive only part of the money, and not all 2.6 million rubles, which the entrepreneur did not transfer as a tax agent. Because of this, the fine should also be reduced, since it does not take into account the real amount of damage to the treasury. Approach of lower authorities
The courts confirmed the inspection's findings on unjustified savings, pointing to the following circumstances:
In 2021, the entrepreneur worked with 78 self-employed individuals who had previously worked for an affiliated company under employment contracts.
The contracts with the self-employed individuals were drawn up immediately after their dismissal from this company.
In the contracts, the self-employed individuals indicated their logins and passwords for their personal taxpayer accounts.
After being dismissed from the company, the self-employed individuals continued to perform the same functions at the entrepreneur's production facility.
Some contracts spell out conditions on vacations and sick leave, and there are references to the entrepreneur's local regulations.
At the same time, the courts agreed with the plaintiff's position and reduced the amount collected from the entrepreneur by 794,000 rubles. They proceeded from the inadmissibility of "excessive collection" of money to the federal budget. The courts accepted the inspection's conclusion about Sadykov's illegal savings on taxes, but in the final calculation they took into account the amount of the professional income tax that the employees themselves paid to the budget. The courts did not take into account the tax authority's objection about the different tax regulations.
The courts also adjusted the amount of the fine, reducing it threefold: from 65,000 to 19,800 rubles. They took into account the actual budget losses in the form of the difference between the accrued personal income tax and the taxes paid by the self-employed.
Different taxes: conclusions of the economic board
Challenging the decisions of lower courts in the Supreme Court, the inspection insisted: personal income tax and professional income tax are different taxes, it cannot be offset, and the fine cannot be reduced, because the businessman deliberately evaded paying taxes.
The Supreme Court, discussing the abuse of rights and circumvention of the law, recalled the peculiarities of calculating the tax on professional income. According to the law, the taxpayer is the freelancer who manages the overpayment. Therefore, the courts do not have the right to offset the paid tax against the personal income tax, which the tax agent is obliged to withhold, without his consent. This differs from the mechanism of reconstruction during business splitting. There, the Federal Tax Service has the right to offset the tax automatically, since there is actually only one taxpayer. In this part, the court sent the decision for review.
In terms of the fine, the court indicated the following: according to paragraph 1 of Article 123 of the Tax Code, if the tax agent fails to transfer the payment on time, the penalty for him will be 20% of the amount subject to withholding. The court explained that the tax agent is punished not for failure to pay the tax, but for failure to fulfill obligations, and the fine should be calculated from the amount that the agent did not withhold from the employee. This position is enshrined in paragraph 21 of the Resolution of the Plenum of the Supreme Arbitration Court of July 30, 2013 No. 57 "On Certain Issues Arising in the Application of Part One of the Tax Code by Arbitration Courts". Consequently, the courts had no grounds for reducing the fine.
New Approach
The Economic Collegium made a tough but fair decision, says Ekaterina Shansherova, lawyer at S&K Vertikal. Previously, in similar disputes, the courts carried out tax reconstruction and credited taxes previously paid incompletely towards the arrears (cases No. A60-29092/2023, No. A46-2537/2023, No. A35-6550/2022). As a rule, the court acted based on the rule on the inadmissibility of "excessive collection" of money to the budget.
In this dispute, the lower courts credited the previously paid professional income tax, citing the similar nature of the personal income tax and the tax for the self-employed, since they coincide in the subject composition and object of taxation, explains Shansherova. The Supreme Court decided otherwise, indicating that automatic tax reconstruction is unacceptable when replacing labor relations with civil law relations.
The Economic Collegium noted that the overpayment of professional income tax cannot be credited against the payment of personal income tax if there is no corresponding expression of will of the person, says Anton Stepanov, partner of the Kept tax dispute resolution group. After all, the tax agent and the self-employed pay different taxes.
It is not entirely clear how the first instance will interpret this provision, says Alexey Stanchin, head of the tax practice direction of Tax Compliance. It can be expected that the accounting of professional income tax payments when additionally charging personal income tax will be recognized as impossible.
