Despite an aggressive trend by customs authorities to include dividends (in full or in part) in the customs value of imported goods, including raw materials and components for manufacturing finished products in Russia, the Arbitrazh Court of the Tula Region sided with the declarant and refused to recognise a connection between such payments and the specific goods.
Background
Case No. A68-6121/2024 was considered by the court of first instance upon the statement of claim of Olbios LLC (“Declarant”) against the Tula and Samara customs authorities, seeking to have decisions on the adjustment of customs value recognised as illegal.In 2021, the Declarant imported various parts of vehicle seat frames, seat components, materials for their production, as well as equipment and spare parts for manufacturing finished products. All shipments were declared using the first method — the transaction value method.
In February 2022, by a decision of its sole participant, the Declarant distributed retained earnings from previous years to its sole participant (“Founder”).
During a desk audit, the customs authority included dividends paid to the Founder in the customs value of the listed goods, resulting in additional customs duty assessments.
The customs authority assumed that the dividend payment reflected part of the participant’s income derived from the sale of finished products manufactured using the imported goods and therefore should be considered an element of the transaction price under sub-clause 3 of clause 1 of article 40 of the EAEU Customs Code.
Court position
The Arbitrazh Court of the Tula Region granted the Declarant’s application and recognised the customs authority’s decisions on additional assessments as illegal.The court noted that it followed from the Declarant’s financial statements that a net profit was earned in the period of 2019–2020, whereas dividends were actually paid for the first time only in 2022.
The court emphasised that:
- according to the Declarant’s financial statements, net profit was earned in the period of 2019–2020, but dividends were actually paid for the first time only in 2022;
- dividends, by their economic nature, represent the income of founders from the investments they made;
- the customs authority failed to prove that the disputed payment was specifically connected with the goods imported and sold in 2021;
- the dividend payment for 2020 cannot be considered part of the income from the sale of goods imported and sold in subsequent periods.
The court separately emphasised that determining the customs value cannot be based on an arbitrary value, while the customs authority did not provide evidence that the paid dividends were connected with specific imported goods.
Significance of the case
The case under consideration demonstrates a more balanced judicial approach to the issue of including dividends in the customs value. The court did not limit itself to a formal analysis: it thoroughly examined the documentation submitted by the Declarant and independently requested documents from the bank through which the dividend transfer was made.The court confirmed that classifying intra-group payments as an element of the transaction price requires a convincing evidentiary basis, not a presumption.
This precedent shows that not all courts agree with attempts by customs authorities to groundlessly (and without evidence) reclassify any payments to a foreign participant as part of the income due to a foreign seller, subject to inclusion in the customs value of goods. The court pointed out that the customs authority must prove the grounds for such reclassification, not merely assert them. If this practice gains further traction, the customs logic of “dividends = hidden resale income → include the full amount” will no longer hold up in court.
It is important to note that the case has so far been considered only by the court of first instance and may be revised by the appellate and cassation courts. Nevertheless, we hope that in any further proceedings, courts will maintain the same careful approach to the factual circumstances of the case, and the standard of assessment established in it will serve as a guide for future disputes regarding the inclusion of dividends in the customs value of imported goods.
