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Accounting For Legal Awards Abroad In Favor Of Russian Organizations
Damages awarded by a foreign court in favor of a Russian organization are subject to inclusion as non-operating income for tax purposes in Russia. The amounts should be recorded in the period when the court decision enters into force. This is according to Letter No. SD-4-3 / 16391 @ of 24.08.2018 from the Russian Federal Tax Service.
The award can also be that given by a document certifying a debtor's obligation to pay fines, penalties, other sanctions for breach of contractual or debt obligations and/or to compensate losses based on the terms of a contract signed by both parties (so this can be an agreement on the termination of a contract, a reconciliation report, etc.), or a letter or other document confirming violations and determining the amount to be paid as recognized by the debtor.
In this case, the amounts actually paid by the debtor are subject to inclusion by the creditor as non-operating income.
Translated by Alinga Consulting Group.
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