Specialists of the Law Firm "YUST" successfully represented the interests of Porsche Russland in a dispute with a tax authority

Porsche Russland LLC requested the Court of Arbitration of the city of Moscow to rule invalid the decision to refuse to bring to liability for a tax offence, claiming that said non-normative act of the tax authority was against the norms of the Tax Code of Russia and infringed the Company’s rights.

The decision says the following. The tax authority imposed an additional tax on the following basis: a part of the compensation payments made by the Company to official dealers for the spare parts used in guarantee repairs, in the form of the sums equivalent to the VAT on the margin for said spare parts, cannot allegedly be qualified as extra-sale expenses pursuant to Articles 170 and 270 of the TCRF.

The Court of Arbitration of the City of Moscow by its Ruling dated 26.06.2014, left unchanged by the instances of appeal and of cassation, fully upheld the Company’s claim.

When the courts upheld the Company’s claims, they pointed out the following. The Company correctly took into account the complete amount of compensation payments for the spare parts used in guarantee repairs by the official dealers as non-sale expenses. The courts reasoned that the Company’s expenses in the form of the margin on the spare parts and the respective part of the VAT are subject to tax accounting according to the procedure similar to the one for compensation payments, that is – by classifying them as non-sale expenses.

The courts also ruled the following concerning the tax authority. The latter did not approve the procedure of the accountability, applied by the Company, of the amounts equivalent to the VAT on the margin. In breach of Article 89 of the TCRF, it did not indicate the legal provisions, which regulate the tax accountability of such amounts. And the tax authority failed to declare that the Company had paid VAT in excess, for the amount of the VAT excluded from the non-sale expenses, and also did not correct the tax liability of the Company due to said excess payment.