Changes in the practice of assessing the customs value of goods imported for sale on the territory of the Eurasian Economic Union.

Starting from the end of 2022, several decisions were made in court cases on additional tax assessment as additional payments (elements) were included in the customs value that were not initially included in the contract price of goods (Chanel LLC, Bershka CIS LLC and Pull and Bear CIS").

These decisions concerned the determination of the customs value of goods using the “first method” (based on the value of the deal for import of goods) and they indicate a common position for determining the customs value of goods when they are sold for import into the territory of the Eurasian Economic Union (EAEU).

The events followed a similar pattern: an LLC established by a foreign supplier imports the supplier's goods under a foreign economic agreement and sells it within the territory of the EAEU. The founder of the LLC, who is also the supplier, decides to distribute the net profit received from the sale of the imported goods in the customs territory of the EAEU. In another example, a supplier who is also the founder of the company is paid a royalty for the use of the trade mark, know-how, software, website, etc.

Subsequently, based on the results of a desk audit, the customs authorities decide to charge additional customs duties, arguing that the amounts of royalties and other payments paid by the said LLCs to their participants are also subject to inclusion in the customs value of the goods for the calculation of the customs duties as part of the income received as a result of the subsequent sale imported goods, which is directly or indirectly due to the seller.

Disagreeing with the decisions taken, the affected companies appealed against them in court. The first, second and third instances supported the claims of the companies to recognize the decisions of the customs authorities as unlawful, however, the Judicial Collegium for Economic Disputes of the Supreme Court of the Russian Federation sent the cases for a new trial and the decisions of the customs authorities were recognized as legal and justified, the applicant companies’ claims were denied.

Decisions on the court cases of Chanel LLC, Bershka CIS LLC and Pull & Bear CIS show that under conditions similar to those described above, the cost of a deal to import goods can be increased by other payments (elements) that are the obligation of the buyer (the use of intra-group know-how, website, commercial designation, etc.) and which create income for the seller from the customs territory in the form of dividends and other payments, and therefore are considered to form part of the price used for customs purposes, even if they were not included in the contract price of the goods. In these cases, a clear relationship between the dividends and royalties paid and the imported goods is established due to the exclusivity of their delivery.

Since the situations and foreign economic activity arrangements described above are common practice, Accetera has conducted their legal analysis and is ready to provide legal support in assessing the need for, and the risks of, intra-group license and other payments, as well as dividends, being included in the customs value of imported goods - and to provide our recommendations for minimizing the risks.