In the year 2025, new tax regulations will come into effect regarding the purchase of shares in a limited liability company (LLC) at a reduced price

The State Duma has passed a bill in the third reading that amends the Tax Code that will affect business interests.

Currently, under the Tax Code, savings on interest and low-priced purchases are considered material benefits that are subject to personal income taxation. Savings on interest refers to the non-payment of interest on loans, as this constitutes a savings. A low-priced purchase is defined as a savings on goods, services, or works from a related party, or as savings on the acquisition of securities or financial instruments.

According to current legislation, it is possible to purchase a pre-existing company with multimillion-dollar assets for the face value, i.e., based on the size of its authorized capital. Responsibility for paying personal income tax arises from the seller of a share. Personal income tax is calculated based on the difference between the acquisition cost of a share and its sale price. If ownership of a share exceeds 5 years, no tax liability arises. The legislature proposes to introduce a material benefit in the form of a tax exemption when purchasing shares in Russian limited liability companies at their nominal value and to shift the responsibility for paying personal income tax from the seller to the buyer.

The market value of the purchased share of participation in the company’s authorized capital will be determined as a proportion of the total value of the company’s assets as reported on the most recent balance sheet. Personal income tax will be calculated on the basis of the material benefit, which is the difference between the nominal value of the share and its market value.