Donation to RLE by a legal entity

Donation to RLE by a legal entity

 

 

Question:

Hi, I want to ask a question about donation. A legal entity wants to donate a regulated property for which it did not use a tax credit, because when it was acquired it was a PI. The land was acquired in order to build a production workshop, but since the municipality subsequently regulates the property and determines that it will be there for residential development, the legal entity no longer needs this property. On the other hand, the builder offers compensation for the land, but the owner of the legal entity wants to acquire the ready-made apartments for his children. We do not want the company to acquire property subsequently from this land, we want the natural person who is also a related party in the case to become the owner of the property and to receive the compensation from the builder. , writing off the land, declaring. Will we charge VAT with a protocol even though it is not used? Will we write off at book value and increase our financial result with the market price? We do not aim to avoid taxation, we just want to do it without making mistakes because of our lack of experience in doing so.

Thanks!

 

Answer:

Hello,

1. Under the VAT Act - Since no tax credit has been used for the purchase of YES, the company will also not owe VAT on its donation. (Article 50, Paragraph 1, Item 2 of the VAT Act)

2. Under CITA - Since the donation in question is not in favor of the ones defined in Art. 31 of CITA, but in favor of third parties (even more related party), the reported expenses for donation will increase the accounting financial result for tax purposes, and this increase forms a permanent tax difference. (Art. 26, item 7 of CITA) Actually, when you make a market valuation of the asset, you will have income or expense from the difference between the market valuation of the licensed valuations, which will lead to an increase or decrease in the carrying amount of the asset. Then, the new balance sheet value formed at the time the asset is written off will form the expense that will generate a permanent tax difference.

Please note that in order to determine the market price, it is necessary to make an assessment by a competent person (licensed appraiser), since the donor and donations are related persons (according to the description of the case).

We hope we have been helpful.

Greetings!