Property tax: the Supreme Court of the Russian Federation has expanded the movable property criteria

The taxpayer has decided to classify woodworking machines and transformer substations as movable property. However, the tax authorities have expressed the opinion that these objects should be considered as a component of a single property complex subject to taxation.

The Supreme Court of the Russian Federation has concluded that there are no grounds for additional tax assessment:

• The use of property within the framework of the general production process and its inclusion in the property complex for transactions does not in itself indicate the need to tax the entire complex;
• The property recorded as separate inventory objects of movable property (including items that are not part of buildings and structures, but are part of constructively related objects) is exempt from taxation;
• The woodworking machine and transformers have the characteristics of movable property. They are not registered in the cadastre and did not require obtaining a building and commissioning permit;
• The inspection did not provide evidence that this equipment is an integral part of a capital structure or building. Moreover, the equipment was purchased at different times and installed at different sites;
• The substations do not meet the immovable property criteria (they do not have a strong connection to the ground and can be dismantled without significant damage).

The Federal Tax Service has recommended that its territorial subdivisions take this position of the Supreme Court of the Russian Federation into account when conducting inspections.

Documents: Decision of the Supreme Court of the Russian Federation dated 10.10.2024 No. 303-ЭС24-8693

Letter of the Federal Tax Service of Russia dated 17.10.2024 No. БС-4-21/11805@