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Case of Metkombank


On October 31, 2011, a loan agreement was concluded between PJSC Metkombank and E3 OCM-Asset LLC, and in 2014 the Metkombank was notified of the conclusion of the assignment agreement between the LLC and the defendant, WINTERLUX LIMITED (Company), a company registered in Cyprus. Pursuant to the terms of the agreement, in 2017 Metkombank paid interest to the WINTERLUX (hereinafter – Company)

On January 30, 2017, a Company provides the bank with a letter containing representations in which it confirms that it has the actual right to receive income (interest); the right to dispose of them and that the company does not have any obligations to transfer them to third parties. The Company also assured that it claims to apply a preferential rate under the Agreement on the avoidance of double taxation between the Russian Federation and the Republic of Cyprus, and undertakes to provide the bank with information if the circumstances in which another person will receive the right to receive income appears.

With this in mind, the Bank did not withhold tax on interest paid according to the contract.

Following a desk audit in 2018, the tax authorities determined that WINTERLUX LIMITED had characteristics of a conduit company.

It is confirmed by the following:

• The Company is part of an international group whose beneficiary is a Russian citizen;

• The Company was used as a pipeline for income transmitted to affiliates, including an indirect shareholder registered in the Bahamas, towards repayment of outstanding loans;

• An analysis of the Company’s account statements showed that some transactions were carried out on behalf of related parties, which indicated that the Company was not independent in making decisions;

• The Cypriot company primarily served as a holding company and a financial organization;

• There was no employees except the director in the company.

• The company's main assets are investments in Russian banks, not Cypriot assets, while there is no direct activity in the Republic of Cyprus.

Due to this the bank independently filed an updated tax return and paid the additional tax/ late payment interest.
Noting the invalidity of previously provided representations, as well as of the non-providing new details of circumstances according to which right to receive income was got by another person, the Bank requires compensation in the amount of 16490451 rubles. 56 cop., (14727946 rubles. Of paid income tax, and 1,762,505 rubles. 56 of penalty.)

The court, noting to 431.2 of the Civil Code of the Russian Federation, emphasized liability for non-compliance with the law and satisfaction of the claim partly, due to WINTERLUX LIMITED losses in the amount of income tax.


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