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Anti-crisis directory of the owner and tenant of real estate

Attorney's advice to entrepreneurs on high alert: rent, force majeure, restrictive measures

#March-July 2020

Prepared on the basis of legal acts as of 07/16/20

From March to July 2020, lawyers and advocates of the Yurproekt Bar Association regularly analyzed the ongoing changes: bans, restrictions and requirements for doing business in the conditions caused by the COVID-19 coronavirus pandemic, support measures.

We have prepared and made freely available useful materials for business owners and tenants of real estate. Available for viewing and downloading:

  1. Anti-crisis_handbook — updated as new regulations and clarifications of the Supreme Court are published
  2. Sample documents for tenants
  3. Restrictions and bans for business and citizens in Kuzbass 16.07.2020< li> pdf , in Kuzbass

We hope that our advice will help you better understand how to act in the current situation.

Anti-crisis guide navigator:

1. "Force majeure": what gives and how to use it correctly?

1.1. What is "force majeure"?

1.2. Is the coronavirus pandemic a force majeure or not?

1.3. How to prove "force majeure"?

1.4. If you prove "force majeure", what does it give, what are the consequences?

1.5. If the business is banned or there is no way to pay creditors due to a decline in buyers - is this a "force majeure" and you can not pay?

2. Rent for real estate: how to get rid of it, reduce it, get a deferment?

2.1. Is it possible not to pay or reduce the rent in the context of Covid-19 and the introduction of restrictive measures?

2.1.1. Exemption from rent due to the inability to use the rental object.

2.1.2. Reduced rent due to restrictions on the use of the rental object.

Bonus 1. Working schemes to reach agreements between the tenant and the landlord to reduce the rent.

Bonus 2. The algorithm of actions of the tenant to get a rent reduction.

2.1.3. Release from rent as a result of termination of the contract.

2.1.4. Exemption from rent as a measure of state support.

2.2. Who can get a rent deferment and how?

Bonus 3. Tenant's steps to change the lease agreement.

Bonus 4. Table - tenant rights and support measures in the context of Covid-19 in Kuzbass.

* Who is at risk of losing regional support measures?

3. Tax reduction as a measure to support landlords in the Kemerovo region.

* Who can be deprived of the right to reduce corporate property tax?

4. Final recommendations for tenants and landlords.

1. "Force majeure": what gives and how to use it correctly?

1.1. What is "force majeure"?

Force majeure circumstances (force majeure) are extraordinary and unavoidable circumstances that arose during the validity of the contract (Article 401 of the Civil Code of the Russian Federation, paragraph 8 Resolution of the Plenum of the Supreme Court of the Russian Federation dated March 24, 2016 N 7). That is, these are circumstances that could not reasonably be expected at the conclusion of the contract, or avoided or overcome, which are beyond the control of the parties to such an agreement.

In particular, such circumstances may include: natural disasters, mass diseases (epidemics), transportation restrictions, prohibitive measures of states, prohibition of trade operations, including with individual countries, due to the adoption of international sanctions, and others not circumstances depending on the will of the parties to the agreement (contract) (from="_blank">Regulations on the procedure for witnessing force majeure circumstances by the Chamber of Commerce and Industry of the Russian Federation).

1.2. Is the coronavirus pandemic a force majeure or not?

The COVID-19 pandemic itself is not among the situations covered by the concept of “force majeure circumstances” (force majeure). However, force majeure should include its consequences - the introduction of restrictive measures by the authorities: bans on shops, the introduction of quarantine (a ban on citizens leaving their homes), etc.

Force majeure circumstances are considered exclusively on an individual basis and do not apply to all contractual relationships. If this is Italian business clothing, which is sewn from fabrics made only in Italy and nowhere in the world you can buy and deliver such fabrics, then due to the closure of the customs borders of the Russian Federation with Italy, this will become a force majeure in relations with the clothing customer for such an atelier - obviously, clothes made of Belarusian fabrics will not suit him.

1.3. How to prove force majeure?

The procedure for testifying to force majeure circumstances (force majeure) falls within the competence of the chambers of commerce and industry. In the Kemerovo region, the Kuzbass Chamber of Commerce and Industry issues such conclusions on force majeure circumstances under agreements concluded between Russian legal entities (individual entrepreneurs). You can read about the procedure for obtaining it on the KuzCCI website. Now the conclusions are issued free of charge.

But the conclusion of the chambers is not a panacea (does not provide 100% protection in the event of a litigation) and is not the only possible proof of force majeure. That is, your counterparty may not accept the opinion (certificate) of the Chamber of Commerce and Industry. And then you will have to prove in court that this particular circumstance (for example, a ban on catering organizations) is extraordinary for you and unavoidable for your company to fulfill the contract (for example, hold a wedding or a banquet). The court must determine on a case-by-case basis whether this circumstance constitutes force majeure and evaluate its impact on the ability of a party to fulfill its obligation under the contract.

1.4. If you prove force majeure, what does it give, what are the consequences?

The occurrence of a force majeure event in itself does not terminate the obligations of the parties under the contract forever and does not entail the termination of the contract itself, if its execution becomes possible after they terminate. That is, if you cannot perform repair and construction work in April 2020 due to the impossibility of delivering material from abroad, then if such an opportunity presents itself in May 2020, you will be obliged to perform the work if the contract does not expire and the customer will not refuse him.

The legal consequence of force majeure is temporary delay in the performance of an obligation and release from liability for its non-performance or delay in performance. That is, for this period it will be necessary to pay later, but there are no grounds to charge penalties, penalties, or recover losses for late payment.

1.5. If a business is banned or there is no way to pay creditors due to a decline in buyers, is this force majeure and you can not pay?

If there are no force majeure conditions in the lease agreement and any other (it is not defined in any way what applies to it and what does not), the court will determine in each specific case whether this or that event is a majeure circumstance.

According to the current legislation, everything that is covered by the concept of “business risks” cannot be attributed to force majeure (force majeure), including: violation of obligations by the debtor’s counterparties, lack of goods on the market necessary for execution, lack of the necessary funds (clause 3, article 401 of the Civil Code of the Russian Federation).

The Supreme Court in 2016 explained that cannot be considered insurmountable the force of circumstances, the occurrence of which depended on the will or actions of the party to the obligation, for example, the debtor's lack of the necessary funds, etc.

And on April 21, 2020, in connection with the spread of COVID-19 and ongoing changes in legislation, the Supreme Court approved review of practice and acknowledged that force majeure may be the inability to pay if you cannot pay due to the imposition of restrictive measures.

The most important thing from the explanation of the Supreme Court of the Russian Federation about force majeure:

“At the same time, it should be borne in mind that the debtor’s lack of the necessary funds, as a general rule, is not a basis for exemption from liability for failure to fulfillment of obligations. However, if the lack of necessary funds is caused by the established restrictive measures, in particular, the ban on certain activities, the establishment of a self-isolation regime, etc., then it can be recognized as a basis for exemption from liability for non-fulfillment or improper fulfillment of obligations on the basis of Article 401 of the Civil Code RF. Exemption from liability is permissible if a reasonable and prudent participant in civil transactions, carrying out activities similar to the debtor, could not avoid adverse financial consequences caused by restrictive measures (for example, in the event of a significant decrease in the amount of profit due to forced closure of a public catering establishment for open visits).

To whom this is relevant:

  • tenants who have closed due to the introduction of bans from the authorities under the "High Readiness" regime, cannot use their business facility and earn money, or the landlord (owner of the shopping center) has restricted their access in pursuance of the bans imposed by the authorities;
  • Entrepreneurs running businesses that have fallen under the ban on their premises;
  • to everyone who has lost the opportunity to earn a profit due to the bans imposed on citizens to visit crowded places.

What are the consequences:

  • this will not make it possible not to pay at all to those who owe,
  • this will make it possible to receive a deferred payment without sanctions (fines, penalties, damages)!

Don't forget to contact a lawyer for:

  • preparation of force majeure notices,
  • negotiating with a creditor (landlord, etc.) in order to find a balance of interests,
  • achievement and legal consolidation of optimal agreements that exclude litigation

2. Real estate rent: how to get rid of it, reduce it, get a deferment?

Since March 2020, many owners have closed their buildings in pursuance of acts of the authorities on the introduction of restrictions for various types of “contact” businesses. Now some are resuming work, including because the bans on their business have been lifted (for example, hairdressing and / or manicure and pedicure services, multifunctional centers and law firms Order of the Government of the Kemerovo Region dated April 8, 2020 No. 184-r ).

Let's analyze the following questions:

  • If the owner closed the building on the basis of an order from the authorities, is it possible for the tenant not to pay rent to the owner of the shopping center?
  • And if you haven’t closed it, but you can’t use it under the threat of a fine, what can you do?
  • And if there was no ban, but the flow of visitors / buyers decreased, is it possible to reduce / delay the rent?

2.1. Is it possible not to pay or reduce the rent in the context of Covid-19 and the introduction of restrictive measures?

The solution to this problem may be different depending on the situation. Below we have considered 4 situations and points of view.

2.1.1. Exemption from rent due to inability to use the rental object.

The first position of the Russian courts, which can be found in the past, is “You can’t use the rented object at all - you can not pay the rent.”

This position is defended by clarification of the Supreme Court of the Russian Federation of 2015: the tenant does not is obliged to pay rent for the period in which he is deprived of the opportunity to use the leased object due to circumstances beyond his control.

The courts refer to paragraph 2 of Article 328 of the Civil Code of the Russian Federation. It is about the fact that if you are supposed to be provided with something under the contract, and you also have to do something for it (for example, pay for what you received), then if you were not provided with this something, then you should not with your parties to fulfill their obligations (pay).

The judges of the Supreme Court logically justified the right of the tenant not to pay as follows:

“The lease agreement is mutual. Since the lessor at the time of the impossibility of using the leased property due to circumstances beyond the control of the lessee does not provide any provision, accordingly, he loses the right to receive rent.

2.1.2. Reduced rent due to restrictions on the use of the rental object.

The second point of view, which can be deduced from the analysis of the current legislation, is “Used the rented objects at least somehow - pay”.

The current legislation (Art. 614 of the Civil Code of the Russian Federation, Art. 19 of the Federal Law No. 98) speaks unambiguously only about reducing the rent in a situation where it was impossible to use the leased object in full due to restrictions from the authorities, and the rules of law, which seem to make it possible not to pay rent at all (Article 328 of the Civil Code of the Russian Federation), are general and there are no guarantees that they will be applied by the courts in the current situation.

Legal grounds for rent reduction:

  • Clause 4 of Article 614 of the Civil Code of the Russian Federation provides for the right of the tenant to demand a corresponding reduction in the rent if, due to circumstances for which he is not responsible, the conditions of use stipulated by the lease agreement have deteriorated significantly. This article is not only about the physical, but also the legal conditions of use.
  • Article 19 of Federal Law No. amendments to certain legislative acts of the Russian Federation on the prevention and elimination of emergency situations" gives the Tenant the right to demand a reduction in rent for the period of 2020 due to the impossibility of using the property associated with the adoption by the state authority of the subject of the Russian Federation of a decision to introduce a high alert regime or an emergency on the territory of the subject.

Court practice:

  • In general, the courts have not yet had to resolve disputes between tenants and landlords due to such disasters on a federal scale, when similar restrictions on business have been introduced in all regions of the country.
  • The same 2015 Supreme Court position can be interpreted as follows: the Supreme Court clarified that no rent is due if the landlord does not provide any. And if the landlords can prove that the “provision” was, for example: the tenant’s property was stored there or he could use it for another purpose, then these cases will give the landlords reasonable arguments against the tenants’ demands to “zero out” the rent.
  • In a fresh review of practice No. 2 dated 04/30/2020, the Supreme Court clarified (point 5):

    “... the rent is subject to reduction from the moment when the indicated impossibility of using the property for the originally agreed purpose occurred, regardless of the date of conclusion of an additional agreement to reduce the amount of rent or the date the court decision on compelling the lessor to change the lease agreement in part rent reduction.

    In addition, the tenant has the right, as an objection to the claim for the recovery of rent, to indicate that the landlord unreasonably evaded concluding an additional agreement to reduce the rent. In this case, the rent is subject to collection in the amount determined taking into account the requirements of Part 3 of Article 19 of Law N 98-FZ, for example, the amount of the reduced rent may be determined taking into account the amount by which the rent is usually reduced in the current situation".

That is, the Supreme Court is talking about a certain “established” approach in a certain territory to reduce rents in connection with the introduction of a “high alert” regime and restrictive measures. Somewhere it will be 30-70%, and somewhere it will be reduced to prices for renting warehouse space, etc.

Thus, the landlord has an obligation to reduce the rent if his tenant cannot fully (according to the terms of the contract and appointment) use the leased object, but the amount of this reduction is not normatively determined, and the Supreme Court has established only approximate guidelines. Based on these benchmarks, below we predict the possible logic of Russian courts making decisions to reduce rent during a pandemic for various situations, and, as an option, for negotiations between the parties to a lease agreement.

Bonus 1. Workflows to reach agreements between tenant and landlord to reduce rent

No. How the rental object was used How much to reduce rent
one The commercial premises were used by the tenant during the period of the prohibition of retail trade to store the property of the tenant Variable costs are reimbursed (consumed energy resources, security, cleaning, management, etc.) + rent as for renting a warehouse
2 The retail space was used by the tenant during the period of the prohibition of retail trade as an office / point of issue of goods Variable costs are reimbursed (consumed energy resources, security, cleaning, management, etc.) + rent as for office real estate
3 The catering facility was used during the ban not to receive visitors, but to prepare takeaway dishes Variable costs are reimbursed (consumed energy resources, security, cleaning, management, etc.) + rent as for the rent of industrial premises
4 The activity in the rental object was banned and the object was not used (the tenant released it), but the contract was not terminated, which means the tenant could use the premises Variable costs are reimbursed (consumed energy resources, security, cleaning, management, etc.) + rent as for renting objects with the same purpose for which the tenant could use it, carrying out activities in the same area, taking into account restrictions (production, point of issue , office, warehouse, etc.)
five The activity in the rental object was not banned and the object was used, but the income from its use decreased due to the restrictive measures introduced and other consequences of the “coronavirus” (the flow of customers decreased, the income of the population decreased, etc.) There is no obligation to reduce the rent, the reduction is possible only by agreement of the parties.
6 Activities in the rental facility were not banned, but the landlord restricted the tenant's access to the facility and the facility was not used by the tenant There are no grounds for paying rent - you can demand a full exemption from paying it

Bonus 2. The algorithm of actions of the tenant to get a rent reduction

  1. Prepare a demand for a reduction in rent from the date of impossibility to fully use the leased property with references to Art. 614 of the Civil Code of the Russian Federation and Art. 19 of federal law No. 98-FZ and amendments to the contract.
  2. The request to reduce the rent and change the contract must be sent to the landlord in writing (be sure to get confirmation of the direction and receipt - get a receipt from the Russian Post and track the receipt by the landlord on the site).
  3. If possible, hold negotiations on which to determine the conditions for changing the contract that suit both parties.
  4. Upon reaching agreements, sign an additional agreement that will reflect the amended terms of the agreement (rent is reduced, an interest-free or percentage deferral for its payment is provided, etc.) - in the same form as the agreement itself (clause 1 of article 452 Civil Code of the Russian Federation): i.e. if the contract was certified by a notary, then the additional agreement to it must also be certified by a notary (any).
  5. If the landlord does not agree to concessions, demands the payment of penalties, or does not respond at all to the demand for a reduction in rent and amendment of the contract within 30 days, then you can: (a) apply to the court to change the terms of the contract (rent reduction) (Clause 2, Article 452 of the Civil Code of the Russian Federation) or (b) wait for a claim from the landlord and object to this claim, referring to the existence of grounds for the tenant to reduce the rent for the period of restrictions and prohibitions.

2.1.3. Exemption from rent as a result of termination of the contract.

The third point of view is “If you want not to pay rent at all, terminate the contract and vacate the object.”

Reliable legal grounds for complete exemption from rent will be given to those tenants who manage to terminate the contract and release the property - from the moment of termination and release of the leased object.

Other cases will not allow you not to pay:

  1. terminate and not release = continue to actually use and, therefore, remain due to pay;
  2. release and not terminate = retain the right to return to the premises, and you have to pay for this.

How can I terminate the lease:

  • by agreement of the parties
  • as a result of cancellation of the contract, if the contract provides for the right to unilateral cancellation (in this case, restrictions are often set - a fee for cancellation, compensation for losses, etc.).
  • by court order - in the section on deferment, the procedure that applies to termination is discussed in more detail.

2.1.4. Rent exemption as a measure of state support

Tenants of state and municipal property during the coronavirus pandemic were in a slightly better position than everyone else - for them, the state has established support measures that give a guaranteed right to exemption from rent.

At the federal level:

Exemption from rent for tenants of federal property (including land plots):

  1. Whom it concerns (a set of conditions) - (a) the implementation of activities in the sectors of the economy most affected by the deteriorating situation as a result of the spread of a new coronavirus infection, (b) the availability of documents confirming the use ie the relevant property for the implementation of the specified type of activity.
  2. What gives - exemption from payment of rental payments;
  3. Valid April - June 2020
  4. How to get it - write an application to the Federal Property Management Agency (territorial department), get a draft supplementary agreement to the lease agreement and sign it.

At the regional level in Kuzbass:

Suspension of fulfillment of obligations under lease agreements for state (municipal) property and agreements for the placement of non-stationary trade facilities (NTO):

  1. Whom it concerns (a set of conditions) - (a) tenants of buildings and premises that are in state and municipal ownership, and persons using state / municipal land plots / lands to accommodate NTOs, (b) they must be included in the unified register of small and medium business; (c) contracts must be concluded BEFORE the introduction of the “High Alert” regime.
  2. What gives - exemption from rent and fees for permits for the placement of NTOs during the period of restrictive measures without paying penalties.
  3. Validity period - by agreement of the parties until the end of the restrictive measures.
  4. How to get it - write an application to the KUGI of the Kemerovo region / KUMI of your municipality and send it by mail, including e-mail, receive a draft supplementary agreement to the lease agreement and sign it.

At the municipal level in Kuzbass:

  1. RF Government Decree No. 670-r recommended that local governments be guided by the provisions on support measures taken in relation to tenants of federal property.
  2. Governor's Order No. 33-rg orders local governments to take the same support measures as in relation to state (regional and non-delimited) real estate and land plots: deferment and exemption from paying rent.
  3. Until the adoption of legal acts at the municipal level, only one support measure has been provided to tenants of municipal real estate - deferral of payment of rent (provided that they conduct activities that relate to the most affected sectors of the economy).

Regulatory framework on measures to support tenants, relevant for Kuzbass:

2.2. Who can get a deferral of rent and how?

As we found out earlier, the courts are unlikely to support tenants in their desire not to pay rent at all and will consider options for reducing due to the inability to use the property and other negative consequences from restrictions imposed in the country and region. However, in some cases, the tenant has the opportunity to receive a deferral of rent payment.

Deferral of payment of rent is granted:

1. State-guaranteed deferment for the “most affected” tenants of any real estate objects (except for residential premises), including land plots - state, municipal, private:

  • Available to whom (a set of conditions): (1) lease agreements were concluded before a decision was made in 2020 to introduce one of the regimes; (2) operate in industries of the economy most affected by the deteriorating situation in the result of the spread of the new corona viral infection (air transportation, culture, leisure and entertainment, physical education and sports, tourism, hotels, catering, additional and non-state education, organization of events, repairs, laundry, dry cleaning, hairdressers and beauty salons)
  • What it gives: suspension of lease payments from the date of introduction of the “High alert” or “Emergency situation” mode in the territory of the subject of the Russian Federation and until October 1, 2020: (1) for the period from the date of introduction of one of the specified regimes in the territory of the subject of the Russian Federation and until the cancellations - 100% deferral (i.e. the debt will accumulate for the entire period), (2) from the date of cancellation until 10/1/2020 - 50% deferment.
  • How to pay off the debt formed during the grace period: from 01/01/2021 to 01/01/2023 in equal installments once a month at 50% or less of the monthly payment in accordance with the current terms of the contract.
  • Additional pluses: (1) sanctions in connection with the violation of the obligation to pay under the contract are not applied, (2) the establishment of additional payments for the delay by the lessor is not allowed.
  • Restrictions: If the rent includes utility bills and property maintenance costs, they are not covered by installments, unless the landlord has been exempted from these costs.
  • How to get it: the landlord, within 30 days from the date of the tenant's request, is obliged to conclude an additional agreement on the deferral of payment of the rent provided for in 2020.

2. Other tenants:

  • Relevant to: (1) if the landlord does not agree to a rent reduction and (2) there are no reliable legal grounds to seek a reduction or exemption from it through the courts (for example, if the tenant's activity was not prohibited, but the conditions of rent and / or business have deteriorated due to bans on the import of goods, recommendations for self-isolation for citizens and a general economic downturn of the situation).
  • How to get: see instructions below

Bonus 3. Tenant's workflow to change the lease agreement

  1. Prepare immediately a proposal to amend the terms of the contract at least for the period of restrictive measures of the authorities with a proposal not to apply penalties: Article 451 of the Civil Code of the Russian Federation allows the party to the contract to initiate its change due to "materially changed circumstances" - when the parties at the conclusion the treaties could not foresee that the authorities would impose prohibitions and restrictions on doing business. To demand changes is to offer to reduce the amount of rent, change the payment term, including receiving a deferral of payment.
  2. A proposal to change the terms of the contract must be sent to the lessor in writing (you must get confirmation of the direction and receipt - get a receipt from the Russian Post and track the receipt by the lessor on the site).
  3. If possible, hold negotiations on which to determine the conditions for changing the contract that suit both parties.
  4. Upon reaching agreements, sign an additional agreement that will reflect the amended terms of the agreement (reduced rent, provides for an interest-free or percentage deferral for its payment, etc.) - in the same form as the agreement itself (clause 1 article 452 of the Civil Code of the Russian Federation): i.e. if the contract was certified by a notary, then the additional agreement to it must also be certified by a notary (any).
  5. If the landlord does not agree to concessions, demands the payment of penalties, or does not respond at all to the proposal to change the contract within 30 days, then you can go to court to change the terms of the contract or to terminate it and oblige the landlord to take back the property (Clause 2, Article 452 of the Civil Code of the Russian Federation).

Pay attention:

  • There is very little positive judicial practice on amending and terminating a contract by a court due to a significant change in circumstances - the court can amend a contract due to a significant change in circumstances only in exceptional cases. Although, of course, the current situation is unlike any other in modern history (bird flu and others), and can be considered exceptional.
  • The disadvantage of this method of protecting rights is that, as a general rule, when the contract is changed or terminated in court, obligations are considered changed or terminated from the moment the court decision to change or terminate the contract enters into force. That is, in court, the tenant will need to justify the need to change the contract not from the date the decision enters into force, but from the date of the onset of negative consequences.

The following procedure for the tenant to change the contract will apply:

  • when he does not have the right to demand a reduction in rent (for example, due to the impossibility of using the property) or there is no right to exemption from it (for example, in relation to state property);
  • when he does not have the right to withdraw or unilaterally change the contract;
  • applies to cases of termination of the contract (it also works in the opposite direction - the landlord can initiate), as well as for other types of contracts (not only for rent).

Bonus 4. Table - tenant rights and support measures in the context of Covid-19 in Kuzbass

We systematized all the types of rights of tenants in relation to rent provided for by the current legislation, depending on the category of the tenant, the type of his business and the object of the lease.

Some rights can be exercised out of court (release, deferral of state property) - apply to government agencies and obtain an additional agreement to the lease agreement.

Other rights (reduction, deferment of rent in relation to property that is privately owned) will have to be sought during negotiations with the landlord or defended in court.

Real Estate Tenants2.png

Who is at risk of losing regional support measures?

Support measures may be deprived of those tenants who were brought to administrative responsibility after 03/31/2020:

3. Tax reduction as a measure to support landlords in the Kemerovo region

For property owners in accordance with the regional law "On the tax on property of organizations" a>) provides for the possibility of reducing the tax on property of organizations:

1. Reducing the property tax on the cadastral value from 2 to 1%

Prior to the adoption of the law, the tax rate for 2020 for corporate property tax in the Kemerovo region and most regions of Russia was 2% of the cadastral value of the property.

Who pays tax at this rate?

Taxpayers are legal entities that own real estate objects that meet simultaneously two conditions:

  1. The objects belong to the category: (a) administrative and business centers, shopping centers (complexes) with a total area of ​​over 1000 sq. meters and rooms in them; (b) non-residential premises with a total area of ​​over 250 sq. m., the purpose, permitted use or name of which is offices, retail facilities, public catering and consumer services, or which are actually used to accommodate such facilities;
  2. These objects must be included in The list approved by the executive authority of the constituent entity of the Russian Federation for 2020 (order Administration of the Kemerovo region dated December 3, 2019 No. 6-ra).

Who will get the property tax cut in 2020?

This measure applies only to those legal entities whose main OKVED in the Unified State Register of Legal Entities as of March 1, 2020 is included in the list in accordance with the annex to this regional law new coronavirus infection, approved by Decree of the Government of the Russian Federation of April 3, 2020 No. 434) .

! Please note that this support measure does not apply to personal property tax. That is, if a shopping center or premises in it are owned by a private person who pays a tax on the property of an individual in the amount of 2% of the cadastral value, then the adopted regional law will not help reduce this tax. The issue of reducing the tax on the property of individuals is within the competence of municipal authorities.

2. Reduction of property tax from the average annual value from 2.2% to 1.1%

Prior to the adoption of the law, the tax rate for 2020 for corporate property tax was in the Kemerovo region and most regions of Russia 2.2% of the average annual value of the property.

Who pays tax at this rate?

Taxpayers are legal entities that own real estate objects and simultaneously meet two conditions:

  1. They do not apply the simplified taxation system, which allows not to pay tax on the property of organizations (clause 2 of article 346.11 of the Tax Code of the Russian Federation);
  2. They are not required by law to pay property tax on the cadastral value (paragraph 2 of article 375, article 378.2 of the Tax Code of the Russian Federation).

Who will get the property tax cut in 2020?

The same criteria as for the property tax of organizations from the cadastral value (see earlier).

3. Reduction of up to 50% property tax in the amount of rent reduction to the tenant

They are provided with a reduction in property tax by the amount by which they reduce the rent to their tenant, but the tax can be reduced by no more than 50%.

A reduced property tax rate will be received by property owners who have entered into an additional agreement with their tenants to reduce the rent, subject to the following conditions:

  1. the lease entered into prior to March 1, 2020, and was duly registered (although we understand that the requirement to register a lease is only for leases of 1 year or more; in general, unregistered short-term leases may have problems obtaining this support measure).
  2. an additional agreement to the lease agreement was concluded after March 1, 2020 (an additional agreement on rent reduction is assumed);
  3. in relation to these buildings and premises, state registration of property rights was carried out (there are earlier property rights to real estate that may not be registered in the USRN)
  4. the main type of economic activity of the tenant in accordance with the information of the Unified State Register of Legal Entities / EGRIP as of March 1, 2020 is one of the following types: in accordance with the annex to this regional law (as we found out earlier, it copies the list of the most affected sectors of the Russian economy, approved by Decree of the Government of the Russian Federation of April 3, 2020 No. 434) or refers to section G "Wholesale and retail trade; repair of motor vehicles and motorcycles” OKVED OK 029-201.

Who can be deprived of the right to reduce corporate property tax?

The effect of the regional law No. 44 does not apply to taxpayers brought to administrative responsibility in the period from March 16, 2020 to December 31, 2020 under the following articles:

  • article 6.3 (violation of sanitary rules and hygienic standards, failure to comply with sanitary and hygienic and anti-epidemic measures during the state of emergency or in the event of a threat of spread a disease that poses a danger to others, or during the implementation of restrictive measures (quarantine) in the relevant territory, or failure to comply with the issued legal order or the requirement of the state sanitary doctor to carry out sanitary and anti-epidemic measures in time );
  • part 1 of article 19.4 (disobedience to a lawful order or requirement of the state sanitary doctor);
  • article 20.6.1 (failure to comply with the rules of conduct when a high alert regime is introduced in a territory where there is a threat of an emergency, or in an emergency zone).

In addition to the fact that fines for violations under Articles 6.3 and 20.6.1 of the Code of Administrative Offenses are set at a fairly high amount (up to 1 million rubles), the right to a reduced property tax rate can also be lost.

4. Final recommendations for tenants and landlords

In any scenario, we recommend:

  1. Tenants - to make every effort to reach an agreement with the landlord without a trial, legally correctly record these attempts and consolidate the agreements reached as completely and in detail as possible. Even if subsequent jurisprudence changes the general rule, the parties will be able to insist on the implementation of the terms of the agreement reached. In extreme cases, it will be possible to use legal remedies against an unscrupulous party that initially signed the document on the same terms, and then tries to “replay” the situation in court (this is the “estoppel” principle, it is provided for in a number of articles of the Civil Code of the Russian Federation: paragraph 4, paragraph 2 article 166, paragraph 5 article 166, paragraph 3 article 432, paragraph 5 article 450.1)
  2. Landlords - take into account the possibilities for negotiations with tenants. Supreme Court in paragraph 4 review of practice No. 2 dated 04/30/2020 provided such leverage to landlords - if it is proved that the tenant was not actually injured and obviously will not be harmed, and his requirements are a manifestation of bad faith (for example, in the case of using the object of the lease despite the established restrictive measures), the court may refuse the tenant's demands for a delay and satisfy the landlord's claims for full payment of the rent in 2020, and not in 2021-2023.


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Author
Dmitriy Alexandrovich Malinin
Chairman of the Bar Association "Jurproekt"

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