The engagement by Russian companies of foreign entities providing freight forwarding services has recently been associated with a high risk of additional tax assessments on the income of such foreign entities.
This negative practice is largely driven by explanations issued by supervisory authorities since 2023, requiring the allocation of a portion of payments made to foreign forwarders that relates to the cost of international transportation. Where such allocation is not made, tax authorities assume that the entire remuneration paid to the foreign forwarder constitutes income from international transportation and is therefore subject to taxation.
In practice, two approaches are currently observed:
Court practice is not yet widespread. However, the new approach adopted by tax authorities is increasingly gaining judicial support, as evidenced by emerging arbitration practice.
Examples of unfavorable court decisions include:
Transitional provisions
Transitional provisions should also be taken into account, allowing income of foreign companies from international transportation (and, accordingly, income from freight forwarding services equated to such transportation) to remain untaxed until 31 December 2025 pursuant to Subparagraph 11, Paragraph 2, Article 310 of the Tax Code of the Russian Federation.
To apply these provisions, all of the following conditions must be met simultaneously:
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