MOSCOW, February 4 - RAPSI. The Supreme Commercial Court will consider the Federal Tax Service's claim that Citibank's premium clients must pay taxes on the services that they received for free from the bank's partners, the court spokesperson told RAPSI on Monday.
The dispute centers on the bank's loyalty and rewards program that allows CitiGold and Ultima cardholders to use the business lounges at the Pulkovo Airport free of charge. The fee is later paid by the bank.
The tax watchdog views the arrangement as in-kind income. Thus, the bank, acting as a tax agent, was required to notify the tax authorities. Its failure to do so calls for a 17,800-ruble fine.
An appeals court overruled the lower court verdicts and upheld the claim. Citibank then appealed the ruling with a commercial court, which ruled in the bank's favor. According to the court, the bank's clients did not actually receive the service free of charge, and thus it should not be viewed as in-kind income subject to taxation.
The court held that while the program allowed clients to receive the VIP service, it also enabled the bank to attract additional funds. To receive a premium card, a Citibank client has to have an average monthly account balance of at least 1.3 million rubles. Thus, the bank did not have to notify the tax authorities.