The Constitutional Court of the Russian Federation ruled that…
The Constitutional Court of the Russian Federation ruled that provisions in the Tax Code allowing for multipliers of 2 and 4 to be applied to the maximum land tax rate of 1.5% on residential plots used for business purposes are unconstitutional. The ruling does not have retroactive effect.
Consensus
- The Constitutional Court of Russia declared provisions in the Tax Code allowing the use of multiplier coefficients (2 and 4) on land tax rates for plots under IzhS used for entrepreneurial purposes as unconstitutional.
- The case was initiated by the company ООО «Корнер Казань», a developer of a residential estate in Kazan.
- The court found that these provisions create legal uncertainty and inconsistent practice.
- Prior to 2020, plots under IzhS used for entrepreneurial purposes were subject to a preferential tax rate of 0.3%.
- Since 2020, the maximum tax rate for such plots has been set at 1.5%, but the use of multiplier coefficients was not explicitly authorized by law.
- The court emphasized that any increase in tax burden must be clearly and unambiguously stated by legislation.
- The ruling does not have retroactive effect, except for taxpayers who have already filed lawsuits.
Points of divergence
- The Constitutional Court noted that multiplier coefficients were originally intended for plots with a preferential rate of 0.3% and served to prevent tax avoidance through delayed construction, not for the current 1.5% rate. — kommersant
- The court highlighted that the introduction of multiplier coefficients coincided with the period when the 0.3% preferential rate applied to all IzhS plots, implying their original purpose was tied to that lower rate. — interfax
Coverage (2 sources)
- KS clarified the application of multipliers for residential land plots — Коммерсантъ
- Constitutional Court Prohibits Applying Increased Coefficient to Maximum Land Tax Rate for Individual Housing Developers — Интерфакс