On 1 September 2026, the Federal Tax Service released an official interpretation of Article 274.1 of the Tax Code concerning the determination of financial results under equity construction agreements (dolevoye stroitelstvo). The clarification addresses the timing of revenue recognition, allowable deductions for construction costs, and the treatment of advance payments from participants (dolshchiki) for profit tax purposes.
Key Takeaways
- Revenue Recognition at Transfer: Income from equity construction contracts is recognized for tax purposes only upon transfer of the property to the participant (signing of acceptance act), not upon receipt of advance payments.
- Cost Deduction Matching: Direct construction costs (materials, labor, subcontractors) are deductible in the same tax period as the corresponding revenue recognition, ensuring matching principle compliance.
- Advance Payment Treatment: Funds received from participants are recorded as liabilities (account 76.02) and excluded from taxable income until the property transfer date, with VAT obligations arising separately upon each payment.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement