Russian customs inspections: recent trends and compliance pitfalls

Wednesday 10 January 2024

Maxim Alekseyev
Senior Partner, ALRUD, Moscow

Boris Ostroukhov
Counsel, ALRUD, Moscow

Arslan Maksutov
Associate, ALRUD, Moscow

General trends

The recent increase in the number of customs inspections in Russia in relation to so-called participants of foreign economic activity (mainly the importers (declarants) and customs brokers) shows an increasing importance of compliance with customs law rules.

It is advisable to ensure compliance with the customs law rules in light of the recent trends (described below) not only for related contracting parties such as a producer/exporter located outside Russia and its Russian subsidiary acting as a declarant and importer, but also for independent contracting parties. It is common for Russian companies to involve the customs brokers to manage the declaration process more effectively; however, involvement of a customs broker is not a guarantee of full compliance with customs law rules, and the companies should evaluate and manage the customs related risks as a part of their regular activities.

In practice, most inspections are carried out in the form of in-house inspections with the main focus on the correctness of the declarant's calculation of the customs value of the goods. The customs authorities are particularly considering the questions of whether royalties and dividends are included in the customs value of the goods.

The declarants usually determine the customs value of the goods based on the actual value of the goods (for example, based on the price agreed in the contract). However, Article 40 of the Customs Code of the EAEU indicates that when determining customs value, a number of additional charges can be added to the customs value, such as:

  • licensing and other similar payments for the use of intellectual property, if (1) they are related to the imported goods; and (2) payment thereof is directly or indirectly a condition for the sale of such goods; and
  • income resulting from the subsequent sale, disposal of, or use of, imported goods, which is directly or indirectly owed by the declarant (importer) to the seller.

In practice, most inspections end up with an adjustment of the customs value of the goods and the additional assessment of customs duties payable on these grounds.


In 2021, the Accounts Chamber of the Russian Federation, a state finance control authority, conducted a large-scale analysis of the activities of customs authorities and participants of foreign economic activities, and found that, from 2018 to 2020, signs of understatement of customs duties existed for 1,062 declarants (importers). The failure to include licence payments in the customs value of goods led to an understatement of customs duties by 98.5 billion rubles.

In this regard, the Accounts Chamber of the Russian Federation recommended evaluating each case of inclusion/non-inclusion of royalties in the customs value for compliance with the criteria established by law.

This recommendation served as an impetus for large-scale customs inspections, litigation and significant costs for participants in foreign economic activity, for whom the payment of royalties is part of the activity.

If previously the criteria of ‘relatedness’ and ‘dependence’ of royalties were analysed by the customs authorities literally, now the customs authorities’ approach to this issue is with more scrutiny, exploring the grounds for including royalties in the customs value of the goods.

For example, if the value of the licence in the contract itself between the contracting parties is defined as zero, being a part of other mutual payments by the contracting parties, the customs authority will analyse the financial flows between such parties to determine whether they ‘covered up’ the payment of royalties.

The most typical example is the contractual relationship where the parent company grants trademark rights and supplies goods to a subsidiary without the latter paying royalties, but in parallel with a contract not related to the supply of goods it provides paid consulting services (for example, consulting on promoting the brand in Russia).

In this case, in accordance with the latest Russian practice (based on the Rulings of the Supreme Court of the Russian Federation in case Nos A09-1129/2021 and A09-1751/2021), the customs authorities may include payments under the consulting contract in the customs value of the goods, since at present the standard of proof for the situations under consideration for the customs authorities has been lowered, and for declarants (especially those who are in the same group of companies with the supplier and other persons in whose favour payments are made) significantly increased.

These risks are highly dependent on how exactly the relations were structured in terms of royalty issues between the supplier and the buyer.


Inclusion of dividends to the customs value of the goods in the transactions between the related parties is a notable issue for international companies having subsidiaries in Russia. In practice, the companies should pay attention to the possible interpretation of Article 40 of the Customs Code of the EAEU, practice of courts and customs authorities.

As a general rule, dividends transferred by the buyer to the seller are not included in the customs value of the imported goods, if they are not related to the imported goods (eg, if the payment of dividends is dependent on the results of the sale of goods). This is explicitly stated at paragraph 9 of Article 39 of the Customs Code of the EAEU.

At the same time, during 2022, the Supreme Court of the Russian Federation considered three major cases[1] on the inclusion of dividends paid to the shareholders of Russian companies – declarants (importers), who were also suppliers of goods, in the customs value of the goods.

The position of the Supreme Court of the Russian Federation is that dividends transferred by the buyer to the seller shall not be included in the customs value of the imported goods as a general rule, but the payments that are ‘referred to as dividends and are such only in form (prima facie’” are recognised as related to the imported goods and are included in their customs value, if: (1) by its nature these payments ensure that the seller receives part of his due income from the sale of imported goods; and (2) they perform this function between the parties to the contract.

Ruling of the Supreme Court of the RF No 305-ES22-11464 dated 1 December 2022 in case No A40-20125/2021 provides for the following:

‘When goods are imported on the basis of transactions between the members of the same group of companies, and the income (proceeds) of the Russian buyer is formed mainly by the sale of imported goods, the decision to pay dividends is solely a matter of discretion for the foreign supplier and (or) interrelated members of the group of companies (in the absence of legislative restrictions), which creates a significant risk of manipulating the elements of the value of goods that form its customs value.’

These decisions are already being applied by the customs authorities in practice and customs inspections of deliveries of goods by related parties normally include an analysis of dividend payments.

Negative practice is forming on the expansive interpretation of Article 40 of the Customs Code of the EAEU and the misinterpretation of the economic meaning of dividends, which can significantly affect the rights of the companies involved in foreign trade.

Brief findings

Customs risks are principally manageable when the declarants (importers) are focusing on compliance issues and consider the options of mitigating these risks as a part of their day-to-day business. However, the following aspects are worth considering in light of the Russian customs law compliance issues:

  • it is advisable to engage customs brokers to facilitate the declaration process;
  • if the customs authority initiates an inspection against the declarant (importer), it is advisable to evaluate any demands made by the customs authority for lawfulness;
  • if the seller and the buyer are affiliated entities, the contracting parties should agree on the price of goods so that it would be possible to evidence that the fact of affiliation does not influence the price of the goods; and
  • it is important to formulate the position and determine the risks associated with inclusion or non-inclusion of royalties/dividends in the customs value of goods at the stage of declaring the goods in Russia. 


[1] These questions were analysed within the scope of case No A40-20125/2021, A09-1129/2021 and A09-1751/2021.