Development of Judicial Practice on ESCHN Payers’ Expense Accounting and VAT Deductions in Russia

• The case involves the accounting of expenses and VAT deductions by taxpayers under the Unified Agricultural Tax (ESKHN) related to services for participation in commercial organizations.
• On June 26, 2025, the Arbitration Court of the Murmansk Region ruled on the case of Karat-1 regarding the legality of including third-party service expenses in the tax base and applying VAT deductions.
• The Federal Tax Service conducted an audit of Karat-1 for all taxes for 2022, focusing on an agency agreement with UK NOREBO for services related to shareholder rights in a subsidiary.
• The Tax Service denied Karat-1 the reduction of the ESKHN base and VAT deductions, arguing the services were not related to VAT-taxable operations and not included in the closed list of ESKHN expenses.
• The court supported the Tax Service’s position, stating that dividends from shares do not result in VAT consequences and the services do not meet the requirements for VAT deductions.

Source: russiantaxandcustoms.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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