How can a small business prove its right to a reduced rent rate?

Can a business pay for the lease of state real estate at a preferential rate until it is entered into the Unified Register of Small and Medium-Sized Enterprises (SME Register)? This issue will be considered by the Supreme Court of the Russian Federation (SC) using the example of a company’s dispute with the Moscow Property Department. In practice, there is no uniform approach to this issue. Lawyers consider it possible to provide a benefit to an enterprise if it proves that even before inclusion in the register it met the criteria for SMEs established by law.

The Supreme Court will consider the dispute over establishing a preferential rent rate for commercial real estate in Moscow. CJSC “Brothers Bruskov” (main activity – restaurants and food delivery services) has rented premises on Baumanskaya Street from the capital’s property department since 2004, the contract period is until July 2025. In September 2020, a new legal entity was separated from the CJSC – Bruskovy LLC, to which the rights and obligations of the tenant were transferred under the transfer deed. In April 2022, the LLC asked the department to provide it with a preferential rent rate for 2021–2022.

“Bruskovs” referred to the fact that they are a micro-enterprise, therefore they have the right to receive such a benefit in accordance with Art. 24 of the Civil Code and the resolution of the Moscow government of December 25, 2012 No. 800-PP “On measures of property support for small businesses…”. It follows from the resolution that small businesses under existing lease agreements for facilities with an area of ​​up to 300 sq. m, concluded without tendering, since 2018 the rate has been set at 4.5 thousand rubles. for 1 sq. m per year, and from 2022 – 5 thousand rubles. But the department saw no basis for the benefit, and the company challenged the refusal in court.

The arbitration courts agreed to recognize the LLC’s right to a preferential rate in 2022, and for 2021 they established a benefit of 4,750 rubles. only from March 10, since it was on this day that the company was included in the SME register. Having disagreed with the starting date of the benefit, Bruskovy LLC filed a complaint with the Supreme Court, believing that entering information into the register “is of an accounting and informational nature, and not of a legal nature.” According to the company, the available documents confirm that the LLC meets the statutory criteria for SMEs.

The Moscow Property Department told Kommersant that they saw no reason to apply a preferential rate in the period from January 1 to March 9, 2021, since the LLC was not in the SME register. In addition, the department added, since September 2015, the CJSC has been renting premises on market terms, and not on preferential terms, and under such an agreement, benefits for SMEs are possible only by decision of the interdepartmental commission, to which neither the CJSC nor the LLC applied. When asked by Kommersant why, in the absence of a decision from the commission, the department applied the benefit from March 10, 2021, they answered: “The city complied with the court decision.”

As a result, the case was transferred to the Economic Collegium of the Supreme Court, and a hearing was scheduled for November 16.

Lawyers note that there is no single approach to the issue in practice. Managing partner of Land Law Firm Denis Litvinov believes that when a tenant is reorganized, the transfer deed confirms that the new legal entity can qualify for a preferential rate. Pen & Paper partner Ekaterina Tokareva explains that the new LLC became the legal successor of the original tenant, that is, the lease agreement continued to be valid. At the same time, adds ProLegals lawyer Maxim Lukhmanov, to be eligible for the benefit, compliance with the terms of the law is required both on the part of the new legal entity (it is a small business entity) and the leased property (room area less than 300 sq. m).

The register of SMEs is maintained by the tax authority automatically based on reports for the past period provided by participants in the turnover, explains Mr. Lukhmanov, that is, “inclusion in the list is carried out after the actual appearance of signs of SMEs in a person.” The criteria for classifying a person as a small business are the average number of employees up to 100 people and annual revenue up to 800 million rubles, clarifies Artem Denisov, managing partner of the Genesis law firm.

The law “On the Development of Small and Medium-Sized Enterprises in the Russian Federation” states that information about such entities is entered into the SME register, but at the same time, the law does not link the fact that a person is included in the register with the possibility of receiving benefits, notes Denis Litvinov. Therefore, in his opinion, we can talk about the accounting and informational nature of the information in the SME register, in contrast to, for example, information in the Unified State Register of Legal Entities about the state registration of a legal entity, which is obviously of a legal nature. Entering a company into the register confirms that it has all the signs of a SME in the period preceding the update of information, which can be verified by both the lessor and the court using the documents, Mr. Lukhmanov points out. In addition, he points out, “technical errors cannot be excluded in the process of maintaining the register, which should not interfere with bona fide participants in the turnover.” Artem Denisov and Ms. Tokareva also believe that inclusion in the register is not necessary to recognize a company as an SME and receive benefits.

If the Supreme Court agrees with this, “it will make life easier for small businesses,” says Denis Litvinov. Mr. Lukhmanov does not expect abuses from business, since “the authorities have all the powers and resources to promptly verify the authenticity of the tenant’s documents and information.” But landlords will need to independently check the tenant’s compliance with the SME criteria, Ms. Tokareva notes.

In addition, Mr. Litvinov warns of risks if all authorities responsible for providing one or another benefit receive the right to determine the status of SMEs: “This will be a big field for corruption, unjustified refusals, and other possible abuses.” Therefore, in his opinion, the case considered by the Supreme Court should become “rather an exception to the rule, protecting the rights of small businesses to receive benefits in that short period when it is not yet included in the register, but all the grounds for this already exist.”

Anna Zanina