Notification of a CFC: deadlines, form, penalties

• Organizations submitted their CFC notifications for 2025 by March 20, 2026, and individuals by April 30, 2026. Next cycle: for 2026, organizations must submit their notifications by March 22, 2027, taking into account the transfer from Saturday, and individuals must submit their notifications by April 30, 2027.
• Form KND 1120416, approved by Order No. ED-7-13/671@ of the Federal Tax Service of Russia dated July 19, 2021, as amended by Order No. ED-7-13/721@ dated October 9, 2023, is in effect. It applies to tax periods beginning in 2023; the Federal Tax Service has not approved a new form for 2025.
• The fine under paragraph 1 of Article 129.6 of the Russian Tax Code is 500,000 rubles for each company. There is also a separate fine of 500,000 rubles under paragraph 1.1 of Article 126 of the Russian Tax Code for failure to submit financial statements, and 1,000,000 rubles under paragraph 1.1-1 of Article 126 of the Russian Tax Code for failure to comply with the inspectorate's request.
• CFC financial statements are submitted regardless of whether profits exceed the 10,000,000 ruble threshold. Only those paying personal income tax on fixed profits are exempt.
• An amended notification submitted before the inspectorate itself discovers the inaccuracy completely waives liability under Article 129.6 of the Russian Tax Code. This is the only legal way to correct the error without a fine.
• For tax periods beginning in 2026, the exemption on profits of active foreign holding and subholding companies applies only if the profit tax rate in the country of their location is at least 15 percent.

In short: every Russian tax resident who controls a foreign company or structure must file a CFC notification—organizations no later than March 20, and individuals no later than April 30 of the year following the tax period in which profits are recognized. There's only one form: KND 1120416, as per Order No. ED-7-13/671@ of the Federal Tax Service of Russia dated July 19, 2021. The price of silence is 500,000 rubles for each company under Article 129.6 of the Tax Code of the Russian Federation, and this amount doesn't depend on the amount of profit or whether the company was in business at all.
Next, there are the details that usually create problems: shifting the reporting year back two steps, a set of supporting documents, handling a missed deadline, and the arithmetic of fixed profit, which, starting in 2025, is no longer the same for everyone.

Who is subject to this obligation and why it's often overlooked

This obligation arises from two simultaneous factors: you are a Russian tax resident for the calendar year, and you control a foreign legal entity or a foreign structure without legal entity status. There is no declaration procedure—controlling person status arises automatically, based on factual circumstances.
This is why people learn about their obligation after the fact, most often from a tax inspectorate request. A foreign company could have been registered in 2019 for a project that didn't take off, an account never opened, and no activity—the obligation to submit a notification existed all along.

Participation Thresholds and Actual Control

A controlling person is defined as a resident with a stake of more than 25 percent. The threshold drops to 10 percent if the combined stake of all Russian residents in the company exceeds 50 percent. For an individual, the share is calculated together with the spouse and minor children, which is often overlooked in cases of family ownership through several relatives. The criterion of actual control under paragraph 6 of Article 25.13 of the Russian Tax Code operates separately. Here, the share is completely irrelevant: if you determine profit distribution decisions, sign key documents, give instructions to the director, or beneficially manage assets for your own or your family's benefit, you are the controlling party. A nominal structure with a zero shareholder does not eliminate this; it merely complicates the tax authorities' case, but does not negate the fact itself.

Loss, Downtime, and Dormant Company

Financial results do not affect the obligation. If the company incurred a loss, a notification is filed. If it did not open an account and had no turnover, a notification is filed. If it is not obligated to prepare financial statements under personal law, a notification is filed, and the profit amount is confirmed by other documents.
The only scenario in which a notification for a specific year is not required is if you were not a Russian tax resident at the end of that calendar year. If you spent 183 days or more abroad, you are not subject to the obligation for this period. However, it will return in the year in which residency is restored, at which point a special rule applies: notification of participation must be submitted no later than March 1 of the following year.

Ownership through a Trust or Foundation

A foreign structure without a legal entity—a trust, a private foundation, or a partnership—is subject to the same rules. The founder is recognized as the controlling person by default. It is possible to vacate this status, but the conditions are strict: the founder may not receive the structure's profits, dispose of them, or seize or retain control over the property. All four conditions must be met simultaneously, and they must be supported by the structure's constituent documents.
In practice, classic discretionary trusts rarely meet this requirement, and irrevocable structures require separate document analysis. If you are considering such a structure when registering a company abroad, it is better to calculate the tax consequences for the Russian beneficiary before signing the agreement rather than after.

Deadlines: The main confusion lies in which year you're reporting for

The deadline itself is simple. For organizations, it's March 20th, and for individuals, it's April 30th of the year following the tax period in which income in the form of a CFC's profit was recognized or its loss was determined. The basis is paragraph 2 of Article 25.14 of the Russian Tax Code.
The difficulty lies elsewhere. There are two steps between the foreign company's financial year and the notification filing date, and even experienced accountants make mistakes here.

How is the reporting period calculated?

CFC profit for the financial year ending in 2024 is recognized as the controlling person's income in the 2025 tax period. The notification for 2025 was filed in the spring of 2026. In other words, in April 2026, the notification was accompanied by the foreign company's financial statements for the 2024 financial year, not for 2025.
Accordingly, the notification for 2026 is submitted in the spring of 2027 and is accompanied by the financial statements for the financial year ending in 2025. For organizations, the deadline in 2027 is extended: March 20 falls on a Saturday, meaning the deadline is Monday, March 22, 2027. For individuals, April 30, 2027, is a Friday; the extension does not apply.

What to do if the deadline has already passed

This situation is normal and solvable, but action must be taken before the demand arrives. The law does not provide for an automatic exemption from the penalty for voluntary late filing, but the outcome is fundamentally different.
The inspectorate receives automatic exchange data according to the CRS standard for the previous year closer to the fall of the current year and then compares it with the submitted notifications. Between the receipt of the data and the demand, a typical period of time is six to 18 months. During this time, the window for voluntary disclosure remains open, and good faith prior to the audit is a valid mitigating circumstance under Article 112 of the Russian Tax Code.
It's especially important to remember Clause 11 of Article 25.14 of the Russian Tax Code. If you are recognized as a controlling person on a "ten percent" basis and were unaware that the total resident shareholding exceeded 50 percent, filing a notification within the deadline specified in the inspectorate's request completely exempts you from liability under Articles 129.5 and 129.6 of the Russian Tax Code.

The Notification of Participation Follows Its Own Calendar

This is a second, independent document, and is often confused with the notification of a CFC. It is submitted once—within three months from the date of the participation, change in shareholding, or establishment of the structure. The fine for this is smaller—50,000 rubles under paragraph 2 of Article 129.6 of the Russian Tax Code—but it's also more common.
Changes in shareholding are calculated to two decimal places using mathematical rounding rules. Whether you sold a portion of your stake, received a share in an additional share issue, or withdrew from participation, the clock resets within three months. If you terminate your participation, you must also notify the inspectorate within three months, indicating the withdrawal date.

Form and supporting documents

The form has not changed since 2023: KND 1120416, Order of the Federal Tax Service of Russia dated July 19, 2021 No. ED-7-13/671@, as amended by Order dated October 9, 2023 No. ED-7-13/721@. Organizations submit only electronically via telecommunications channels. Individuals have the right to choose: personal taxpayer account, paper in person, or by mail.
Submission location: the tax office at the location of the organization or the individual's place of residence. Large taxpayers report at their registered address. For owners registered in Moscow, this means the territorial tax office at their registered address, not their actual residence or office address.

What is filled out and where are the most common mistakes?

The notification consists of a title page, a page with taxpayer information, and a set of pages for each foreign company and structure. For each, the name, registration number, tax code, address, financial year-end date, reporting and auditor's report date, stake, and basis for recognition as a controlling person are disclosed.
A weak point is the disclosure of indirect participation. If ownership is chained, each link must be disclosed: name, number, and stake in each subsequent organization. An incomplete chain constitutes false information, and the penalty for this is the same as for failure to file: 500,000 rubles.
A second weak point is the profit exemption code. It is entered "from memory," without verification against the actual reporting figures for the required financial year. Meanwhile, it is this code that triggers a compliance check by the inspectorate, and the discrepancy is discovered at the first request under Article 25.14-1 of the Tax Code.

Financial Reporting and Audit

There is a common misconception here that should be dispelled. Clause 5 of Article 25.15 of the Tax Code clearly states: supporting documents must be submitted regardless of whether a CFC's profits are required to be included in the tax base. The threshold of 10,000,000 rubles exempts the profit from inclusion in the base and from being reflected in Form 3-NDFL, but not from submitting the report along with the notification.
The required documentation is as follows: financial statements for the fiscal year in accordance with the company's personal law, or other documents confirming profit or loss if no reports are prepared. Plus an auditor's report if an audit is required by the personal law or charter, or if it is conducted voluntarily. Everything is translated into Russian.
A useful rule from paragraph 6 of Article 25.15 of the Tax Code: if the auditor's report isn't ready by the deadline, it can be submitted later—within one month from the date you indicated in the notification as the report preparation date. Organizations submit documents along with their income tax return, while individuals submit them along with the notification.

Accurate Notification as a Way to Correct an Error

Paragraph 7 of Article 25.14 of the Tax Code provides a direct tool. If you discover an incompleteness, inaccuracy, or error, you submit an amended notification. If this is done before you learn of the inspectorate's determination of inaccuracy, liability under Article 129.6 of the Tax Code does not apply at all.
The wording is important: the exemption applies until the tax authority has recorded the inaccuracy and you become aware of it. Not until the act or the decision, but until this point. Therefore, self-checking submitted notifications for past periods is a procedure with a direct monetary return.

IT-OFFSHORE Expert Opinion

"We regularly see the same scenario. A client has been paying annual fees for a company in Belize or Seychelles for years, believing it to be "dormant," only to receive a demand for three or four periods at once. The math is brutal: 500,000 rubles for each year for each company, plus 500,000 for reporting, plus a million if the demand remains unanswered.
Moreover, it was almost always possible to submit notifications voluntarily and walk away with a significantly smaller amount. There's a second conclusion we reach with the client at the outset: the obligation to report does not depend on jurisdiction, but the tax burden does. A company in Armenia or Kazakhstan is exempt from CFC profit tax upon registration in the Eurasian Economic Union (EAEU) and without submitting supporting documents. A trading structure in Hong Kong with a passive income share of no more than 20 percent is exempt as an active company, but the documents will still need to be collected. These are different service modes, and we discuss them before registration, not after two years".

Fines: What makes up the amount and what reduces it

Penalties for CFCs are structured in layers, and this is a key feature. A fine is imposed for each unfulfilled obligation, not just once for the same violation.

Full list of penalties

Failure to file a CFC notification or providing false information therein — 500,000 rubles for each company, paragraph 1 of Article 129.6 of the Russian Tax Code. Failure to file a participation notification — 50,000 rubles for each organization, paragraph 2 of the same article. Failure to submit financial statements or other supporting documents — 500,000 rubles, paragraph 1.1 of Article 126 of the Russian Tax Code. Ignoring an inspection request under Article 25.14-1 of the Russian Tax Code — 1,000,000 rubles, paragraph 1.1-1 of Article 126 of the Russian Tax Code. Failure to include CFC profits in the tax base amounts to 20 percent of the unpaid tax, but not less than 100,000 rubles, as per Article 129.5 of the Russian Tax Code.
This is followed by the tax itself, penalties, and, if the arrears reach a large amount, the risks under Articles 198 and 199 of the Russian Criminal Code. Both articles allow for exemption from liability for the first offense and full payment of the arrears, penalties, and fines.

When Documented Fines Do Not Apply

Clause 4 and 5 of Article 126 of the Russian Tax Code contain a direct exception that is rarely mentioned. Fines for failure to submit supporting documents are absolutely not applicable for the financial years ending in 2020 and 2021. For the 2022–2024 financial years, the exemption applies under two conditions: the controlling person was subject to foreign restrictive measures that prevented them from obtaining reports, and the CFC itself was a resident of an unfriendly jurisdiction. This provision is valid and applicable to periods for which reports were filed in 2026, but these circumstances must be documented rather than declared.

Mitigating Circumstances and Actual Amounts

Article 112 of the Tax Code of the Russian Federation allows for a fine reduction of at least half, while practice allows for a reduction of fourfold or more. Published decisions include cases where 500,000 rubles were reduced to 31,250 rubles—that is, a 16-fold reduction with only minor delays and a combination of mitigating factors. The following criteria are in place: the violation was committed for the first time, there was no intent, no budget damage despite the company's zero profit, the violation was independently remedied, and the penalty was disproportionate. The petition is filed between the act and the decision—this is a narrow window, and once the decision is made, it's almost impossible to reduce the fine.

Profit Exemption and Fixed Income Regime

Notification is always submitted, but tax is not always. It's important to distinguish between these two from the outset: profit exemption from taxation does not exempt you from reporting.

Grounds for Exemption and New Rate Requirements

Article 25.13-1 of the Russian Tax Code provides a list of grounds. Three are most common for businesses: registration in an EAEU country, status as an active foreign company with a passive income share of no more than 20 percent, and an effective tax rate of no less than 75 percent of the average Russian tax rate.
Registration in the EAEU is the only ground for which supporting documents are not required. For other documents, documents are submitted within the same deadline as the notification, with a Russian translation of the relevant parts.
The tightened requirements set out in Federal Law No. 425-FZ of November 28, 2025, will apply for tax periods beginning in 2026. The exemption for active foreign holding and subholding companies now applies under two conditions: their country of residence is not on the Ministry of Finance's offshore list, and their corporate income tax rate is at least 15 percent. For holdings in jurisdictions with a nominal rate, this means restructuring their structure—and this must be done now, before the 2026 period ends.

Fixed Profit Arithmetic

The regime under Article 227.2 of the Tax Code of the Russian Federation is only available to individuals and, as of 2025, will no longer be flat. The fixed profit amount depends on the number of companies: 27,990,000 rubles for one CFC, 52,718,000 rubles for two, then 22,727,300 rubles for each additional company up to four, and 120,899,900 rubles for five or more. In monetary terms, after the progressive personal income tax scale, it looks like this: 5,000,000 rubles in tax for one company, 10,000,000 for two, 5,000,000 rubles for each additional company up to four, and 25,000,000 rubles for five or more. The savings compared to the old regime, from 34,000,000 rubles, only apply to owners of one company; for others, the burden has increased.
Notification of the transition must be submitted by December 31 of the year in which the regime applies. The minimum period of application is five tax periods. In this case, CFC reporting is not required, and penalties under Article 126 of the Russian Tax Code are not imposed. However, the CFC notification must still be submitted, and the right to any exemptions under Article 25.13-1 of the Russian Tax Code is completely lost.

Who is not eligible for this regime?

Calculations must be based on actual profit. If your companies' total profits are consistently below 27,990,000 rubles, the fixed payment becomes a voluntary overpayment. If the profits are primarily generated in an EAEU country or in an active trading structure, the regime removes the exemption, which was already free.
This exemption is relevant in two situations: large retained earnings that cannot be supported by financial statements due to restrictions in the company's jurisdiction, and a complex structure consisting of one or two profitable companies, where the cost of auditing and translations is comparable to the savings. A separate advantage is predictability: the amount is known in advance and is not affected by exchange rate fluctuations.

How to organize a process so you don't have to revisit the topic every spring

CFC reporting is broken down not by the complexity of the regulations, but by the organization. The information resides in three different places: with the registered agent in the country of incorporation, with the local accountant, and with the Russian tax consultant. There is no automatic connection between them.
The workflow is simple. The calendar is built two years in advance, starting from the end of each company's financial year, not from Russian deadlines. Reports and auditor's reports are requested from the agent in December—this way, you have a complete, translated set by March, rather than having to rewrite the last week of April.

What to request from the agent in advance

The minimum set for Russian reporting: financial statements for the required financial year, an auditor's report for a mandatory or voluntary audit, a current extract from the register confirming the ownership structure, and a certificate of the company's tax residency if the effective tax exemption is planned. If the company has changed directors, shareholders, or address, corporate documents for these changes are separately requested—they will also be needed for the participation notification if the stake has changed.

Checking Past Periods

Before preparing the next notification, it makes sense to review previously submitted documents and verify them with the actual documents. Experience shows that most owners of structures older than three years find discrepancies—most often in the indirect participation chain and in the code for the exemption grounds.
Until the inspectorate has identified an inaccuracy, the matter is resolved with an amended notification without penalties. Afterward, only a petition for a reduction is required. The difference between the two scenarios amounts to hundreds of thousands of rubles per company, and is determined solely by who submitted the notification first.
Our team supports the registration of structures in over 30 jurisdictions, as well as subsequent support and reporting preparation. If you need a detailed analysis of a specific situation—including ownership structure, jurisdictions, and notification history—please contact us or see how we work. Other materials on international structuring are available in the articles section.