Court Ruling on 0% VAT for Freight Forwarding Services in International Cargo Transport

• Development of judicial practice regarding the application of 0% VAT rate to freight forwarding services in international cargo transportation
• On July 25, 2025, the Arbitration Court of the Kamchatka Territory issued a decision in the case of Magadantralflot
• The case involved the applicable VAT rate on services for the documentation of goods for export
• Magadantralflot engaged a forwarder for the transit of fish products for export
• The forwarder charged 20% VAT due to lack of documents confirming the 0% rate applicability
• The tax authority denied the deduction of 20% VAT charged by the forwarder
• The court supported the tax authority’s position
• Transit documentation services are considered freight forwarding services
• Freight forwarding services in international transportation are subject to 0% VAT
• The court ruled that the deduction of VAT by the company was incorrect
• Suppliers risk additional VAT charges if documentation is insufficient
• Some suppliers charge 20% VAT preemptively to avoid future payments
• Previously, courts often sided with taxpayers on VAT deductions
• In this case, the court sided with the tax authorities
• The court’s logic was that the neutral budget effect is conditional
• Tax and customs specialists at Nextons have significant consulting experience

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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