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Customs - Russia - dutiability of royalty/license fee

08/03/21

The Russian customs authorities have recently started challenging royalty/license fee agreements of companies in the retail sector. 

According to the media and official comments of the Federal Customs Service of Russia (FCS), the customs authorities have charged significant amounts of additional customs duties and initiated a criminal case against a large retailer in Russia for not including certain royalties in the customs value of goods. 

Recently, the FCS announced that about 40 companies are on their 'target list', although information about this list is unavailable.

What does it mean for your company?

This current practice is giving rise to a number of concerns amongst the business community, and suggests that the customs authorities will likely initiate customs audits towards companies having royalty/license fee agreements, to check the dutiability of such agreements. 

Bearing in mind that under the law, the underpayment of customs duty and VAT for 25k euros and more may lead to criminal investigations, proper preparation for such audits and careful management are highly recommendable.

It is therefore the right time to revisit royalty/license fee agreements and elaborate defending arguments to sustain the non-inclusion of certain royalties or license fees in the customs value of imported goods.

How can we help?

We will be happy to discuss with businesses the current approach of the Russian customs authorities and help them review their royalty/license fee agreements in place, assist during an audit or address the customs queries received in relation to this topic.

Contact us

Simeon L. Probst

Simeon L. Probst

Partner Customs & International Trade, PwC Switzerland

Tel: +41 58 792 53 51

Claudia Buysing Damsté

Claudia Buysing Damsté

Partner, PwC Netherlands

Tel: +31 (0)65 103 04 63

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