Development of Judicial Practice on VAT Deductions for Duty-Free Imported Goods in Russia

• Development of judicial practice on VAT deductions for goods imported on a gratuitous basis
• On August 21, 2025, the Supreme Court of the Russian Federation issued a ruling on the Murashinsky Plywood Plant case
• The case involved the legitimacy of VAT deductions for goods imported without a reciprocal obligation to pay the supplier
• Murashinsky Plywood Plant acquired equipment from foreign suppliers in 2019 and used it in VAT-taxable activities
• Defects in the equipment required replacement parts, which were provided under warranty in 2022 without payment
• Additional agreements allowed for free supply of spare parts, with the company covering customs duties
• VAT paid as part of customs duties was claimed for deduction
• Tax authorities denied VAT deductions for the imported parts
• Lower courts supported the tax authority’s position, citing non-fulfillment of conditions for VAT deductions
• The Supreme Court disagreed with lower courts and ruled in favor of the company
• The ruling emphasized that VAT paid during import can be deducted if goods are used in VAT-taxable operations and proper documentation is provided

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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