11.05.08

According to the Ruling of Constitutional Court of the RF # 320-О-П from June 4, 2007, tax legislation does not use a concept of economic feasibility and does not regulate procedures of financial and economic activity.

In the given case, an organization had outsourced personnel services to other organizations a contract basis. Tax inspectors discovered that many of the ‘recent hires’ were actually already employed with the other companies in the same holding.

Although it may seem the tax authorities would have had a strong case, the court did not recognize this as a tax scheme. The ruling pointed out that the assignment of personnel to the taxpayer from other companies in the same holding does not indicate that expenses surrounding their recruitment are unreasonable. In the court’s opinion, even though the employees are staff personnel of other members of the same holding, it does not prevent them from performing services for the taxpayer on a part-time basis. (Resolution of the Federal Arbitration Court of the Northwest Federal District Feb. 28, 2008 with regard to case N А56-6940/2007.)

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Source: Российский налоговый портал