FTS EXPLAINED HOW EMPLOYEES OF COMPANIES PRETEND TO BE SELF-EMPLOYED

The Federal Tax Service has published a letter containing clarifications regarding the practice of employees turning into the self-employed, which is gaining popularity in Russia.  This is done to evade taxes and minimize the financial costs of employing companies.  However, the state intends to fight this practice.

According to the information from the letter of the Federal Tax Service (available to Rusbankrot), the document contains a detailed list of signs that may indicate that a person actually works in an organization, and is legally registered as self-employed.

It is important to note that the self-employed's reporting of income they receive is based on information that they themselves provide to the tax authority. In particular, these are agreements with clients to whom certain services were provided. In the event that such contracts do not contain a specific scope of work, and also determine the same income from month to month, fixing a certain labour function instead of heterogeneous ones, we can say that the person is actually an employee of the company.

The Federal Tax Service lists evidence that can be accepted to confirm the existence of an employment relationship.

These include pay slips, work and vacation schedules, invoices, medical examination certificates for employees, and a number of others.

If such violations are detected during a desk tax audit, the inspectorate must apply Article 54.1 of the Tax Code of the Russian Federation, which prohibits taxpayers from reducing the tax base if the information provided in the reporting is distorted (Letter of the Federal Tax Service dated April 15, 2022 № EA-4-15 / 4674@).