Customs Value & Dividends in Russia: Legal Defense Strategies for Declarants in 2026

 

July 16, 2026

BRACE Law Firm©

Over recent years, customs authorities have actively enforced a mechanism to control and adjust the customs value of goods by incorporating dividends into the customs value of imports, posing a substantial compliance risk for numerous importers.

Dividends distributed to a participant (shareholder) of an economic entity from net profits are generally excluded from the customs value of imported goods, as they constitute investment income derived from the participant's (shareholder's) capital contribution in establishing or acquiring the enterprise and, per se, lack a direct nexus to the imported goods. However, payments designated as dividends that merely function as such in form are deemed connected to the imported goods and consequently added to their customs value if they substantively serve to remit a portion of the revenue (income) derived from the sale of those imported goods back to the seller.

Simultaneously, the prevailing judicial landscape remains fragmented, failing to offer a uniform resolution to core issues surrounding the inclusion of dividends in customs value. This article provides a strategic analysis of what constitutes customs value, the regulatory criteria and grounds for incorporating dividends, the procedural nuances of customs audits and subsequent litigation, the enforcement posture of customs and judicial authorities, and actionable defense strategies for Foreign Trade Participants.

What Do Dividends Include?

Before addressing the primary focus of this analysis, it is necessary to define what constitutes a dividend, as the statutory framework employs this term across multiple contexts.

The Federal Law No. 208-FZ dated December 26, 1995, On Joint-Stock Companies defines dividends as the portion of the company's profit remaining after taxation (the company's net profit), which shareholders (participants) are entitled to receive based on a resolution adopted at a general meeting or, in the case of a single-member economic entity, based on the sole participant's (shareholder's) resolution.

The Federal Law No. 14-FZ dated February 8, 1998, On Limited Liability Companies omits the express term dividends, operating instead with the concept of "net profit". The determination of the portion of the company's profit to be distributed among participants is adopted by the general meeting of participants.

Pursuant to Paragraph 1 of Article 43 of the Tax Code of the Russian Federation, a dividend is recognized as any income received by a shareholder (participant) from an organization upon the distribution of post-tax profit (including in the form of interest on preferred shares), allocated to the shares (participatory interests) owned by the shareholder (participant) in proportion to their respective stakes in the charter (pooled) capital of said organization.

Currently, customs legislation does not explicitly define the term dividends, nor does it codify a specific procedure for including dividends in the customs value of goods; however, an analysis of the broader regulatory framework allows us to deduce the conditions under which such inclusion occurs.

Inclusion of Dividends in Customs Value: Regulatory Framework

During customs declaration, the declarant must disclose the value of the moved goods as substantiated by commercial and other relevant documentation. The magnitude of customs duties assessed is directly contingent upon this declared customs value.

The customs value stated in the customs declaration for imported goods serves as the foundational element for calculating customs duties and taxes, while also acting as an instrument for regulating trade and economic relations.

According to Article 39 of the Customs Code of the Eurasian Economic Union (the "EAEU Customs Code"), the primary basis for the customs value of imported goods is the transaction value (Method 1), meaning the price actually paid or payable for these goods when sold for export to the customs territory of the Eurasian Economic Union, augmented by specific additional charges. These statutory additions include packaging costs (covering materials and labor), raw materials, supplies, parts, semi-finished products, and other components incorporated into the imported goods, as well as carriage (transportation) expenses incurred to deliver the goods to the place of arrival within the EAEU customs territory, along with other costs mandated by Article 40 of the EAEU Customs Code.

The price actually paid or payable for imported goods strictly applies to the merchandise crossing the EAEU customs border; consequently, dividends or alternative payments remitted by the buyer to the seller – provided they lack a nexus to the imported goods – are not included in the customs value (Paragraph 9 of Article 39 of the EAEU Customs Code).

Article 40 of the EAEU Customs Code sets forth the following mandatory additions to the customs value of imported goods:

• Costs incurred or to be incurred by the buyer (e.g., brokerage fees, agency remuneration, container costs, and packaging expenses);
• The appropriately apportioned value of goods and services (including raw materials, parts, tools, dies, molds, engineering, development, design work, artwork, and sketches) provided directly or indirectly by the buyer free of charge or at a reduced rate for use in producing and selling the imported goods;
• A portion of the income (revenue) realized from the subsequent sale, disposal, or use of the imported goods that directly or indirectly accrues to the seller;
• Transportation charges for delivering the imported goods to their point of arrival within the EAEU customs territory;
• Handling fees for loading, unloading, or reloading the goods, alongside other logistical operations tied to their transport to the EAEU arrival point;
• Insurance premiums;
• License and similar fees for the use of intellectual property rights (including royalties, patents, trademarks, and copyrights) relating to the imported goods, which the buyer must directly or indirectly pay as a condition of the sale for export to the EAEU.

It is critical to highlight that the statutory framework does not elucidate the legal and economic nature of "other payments". Nevertheless, the definitive criterion for exempting such payments from customs value is the foundational condition: if they are not related to the imported goods.

The Ministry of Finance of Russia has issued clarifications regarding the inclusion of dividends in the customs value of goods.[1] The Ministry emphasizes that across different regulatory audits (tax, customs, currency), the exact same payments may be categorized differently; therefore, authorized enforcement agencies must ascertain the true economic substance of the disputed payments and transactions. This substantive qualification is grounded in Article 54.1 of the Tax Code of the Russian Federation and the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation No. 53 dated October 12, 2006.[2]

Dividends distributed to a participant (shareholder) of an economic entity from net profits inherently represent a return on investment directed by the participant (shareholder) toward the creation or acquisition of the enterprise.

In scenarios where goods are imported pursuant to intercompany transactions within a consolidated corporate group, and the Russian buyer's revenue is predominantly generated from selling those imported goods, the declaration of dividends falls entirely within the discretionary control of the foreign supplier and/or affiliated group entities (absent statutory restrictions). This dynamic creates an inherent risk of manipulating the price components that constitute customs value. To mitigate this, customs authorities are required to scrutinize the circumstances surrounding the sale, focusing on factors such as:

• Analyzing the specific commercial terms of acquisition;
• Evaluating the exporter's pricing methodology.

The Ministry of Finance's directive requiring customs authorities to analyze the surrounding circumstances of a sale represents a constructive shift, potentially curtailing the aggressive practice of automatically capturing dividends in the customs value for all intercompany transactions.

The Ministry asserts that during this analytical review, the declarant bears the burden of proving that the price actually paid or payable was established in the ordinary course of trade. This requires demonstrating that the goods were procured under competitive market conditions, meaning identical terms would be available to any independent third-party buyer lacking a shareholder affiliation with the importer.

Conversely, if the customs authority's analysis reveals that payments designated as "dividends" are superficial in form and substantively operate to guarantee the seller (including affiliates within the same corporate group) a portion of the revenue from the sale of the imported goods – functioning as such within the bilateral commercial relationship – these payments will be incorporated into the customs value under Subparagraph 3 of Paragraph 1 of Article 40 of the EAEU Customs Code.

Furthermore, dividends are subject to inclusion in the customs value if the declarant fails to produce evidence detailing the exporter's pricing methodology or lacks proof of an arm's-length price, particularly in markets with a restricted pool of buyers.

Ultimately, the Ministry of Finance shifts the evidentiary burden onto the declarant to establish that the goods were priced under competitive market conditions.

Declarants face significant evidentiary hurdles in this regard due to the following factors:

• When acting as an exclusive authorized distributor, there may be no comparable import transactions by independent third parties;
• Where third-party transactions exist, their purchase prices might exceed those offered to the subsidiary distributor;
• Sellers typically refuse to disclose proprietary pricing methodologies.[3]

The Ministry notes that if, at the time of declaration, it is known that the goods cannot be procured without supplementary payments which – based on their true economic substance – are not bona fide dividends, yet the exact quantum of these payments remains unascertainable until after the goods are released, the declarant may utilize the postponed determination of customs value under Paragraph 16 of Article 38 of the EAEU Customs Code. Under this mechanism, the initial declaration relies on currently available documentation, with duties and taxes provisionally assessed against the declared estimated value.[4]

However, at the moment a customs declaration is filed, corporate resolutions declaring dividends generally do not yet exist, rendering both their occurrence and quantum unknown. This reality severely undermines the practical utility of the postponed determination mechanism. The Ministry itself, in Letter No. 27-01-21/11349 dated February 10, 2025, restricts the use of this deferral solely to instances where the payment is demonstrably not a dividend in its true substance.

International Legal Framework Governing the Inclusion of Dividends in Customs Value

To understand the international regulatory context, we must refer to the World Customs Organization (the "WCO").

The WCO drafts, implements, and updates international conventions and legal instruments governing customs administration. The WCO currently serves as the depository for 17 international conventions. Within its framework, it develops technical methodologies for customs valuation and rules of origin. A critical WCO body is the Technical Committee on Customs Valuation, which ensures uniform technical interpretation and application of valuation principles.

Under Article 1 of the WTO Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (the "GATT"), the customs value of imported goods is the transaction value – the price actually paid or payable for goods sold for export to the importing country, adjusted in accordance with Article 8. Article 8.1(d) mandates that the transaction value must be increased by the value of any part of the proceeds of any subsequent resale, disposal, or use of the imported goods that accrues directly or indirectly to the seller.

Critically, Note 4 to Article 1 clarifies that the price actually paid or payable strictly refers to the price of the imported goods. Consequently, remittances of dividends or other payments from the buyer to the seller that lack a nexus to the imported goods do not form part of the customs value. This fundamental principle is codified domestically in Paragraph 9 of Article 39 of the EAEU Customs Code.

Article VII of the GATT establishes the core tenet of customs valuation: assessments must be grounded in the actual value of the imported merchandise, strictly prohibiting arbitrary or fictitious valuations.

In 1983, the WCO Technical Committee on Customs Valuation issued guidance clarifying that proceeds from the subsequent resale, disposal, or use of imported goods must not be conflated with dividends. The Technical Committee illustrated this with a case involving an importer trading in wholesale apparel. The importer sourced men's clothing from an affiliated manufacturer, alongside women's and children's apparel from unrelated third-country and domestic producers. At the fiscal year's close, the importer distributed 75% of its annual net profit as dividends to its founder – who concurrently served as the parent company and the foreign supplier of the men's clothing. While a fraction of this profit undoubtedly stemmed from the resale of the affiliated men's apparel, the Technical Committee concluded that this attenuated nexus was insufficient to warrant inclusion in the customs value. The Committee did not mandate apportioning the dividend fraction attributable to the men's clothing; rather, it decisively ruled that such a payment falls entirely outside the scope of customs value.

Advisory opinions from the Technical Committee hold persuasive weight in Russian customs litigation. When domestic customs regulations lack granularity, specificity, or certainty regarding valuation issues, Russian courts are permitted to consider the advisory opinions, information, and recommendations of the WCO issued pursuant to Paragraph 2 of Article 18 of the Agreement on Implementation of Article VII of the GATT 1994.[5]

The Nexus Between Dividends and Imported Goods as a Criterion for Inclusion

Establishing a nexus between dividends and imported goods requires definitive criteria, which remain absent from the EAEU Customs Code. This regulatory vacuum generates substantial ambiguity regarding when dividends are legally attributable to imports.

Paid dividends may be subject to inclusion in the customs value if two primary conditions are satisfied:

• The distributed dividends maintain a direct nexus with the imported goods;
• The importer's revenue (income) is generated predominantly through the sale of the imported goods.

Consequently, the dispositive inquiry is whether the dividend payment constitutes the seller's revenue from the sale of specific imported goods, rather than a standard distribution of investment returns.

Dividends are deemed directly linked if they function as a condition precedent to the supply of specific goods – meaning the commercial contract or collateral documentation explicitly stipulates that the unit price incorporates dividends or that delivery is contingent upon their payment.

This nexus is traditionally proven through a textual analysis of the foreign trade contract, addenda, specifications, and commercial invoices. If documentation expressly states, "the price of the goods is X, plus the buyer pays dividends of Y per shipment", or "the supply of goods is conditional upon the payment of dividends", direct evidentiary proof is established. Customs authorities also scrutinize corporate correspondence, meeting minutes, and internal memos to uncover whether dividend distributions operate as a mandatory transactional element.

In practice, defense counsel frequently deploy the following counterarguments:

• Highlighting the complete absence of any contractual language linking dividends to pricing mechanisms or delivery conditions;
• Providing documentary evidence that dividend declarations are governed exclusively by the general meeting of participants operating under standard corporate governance protocols, entirely independent of specific import transactions.

However, the direct contractual linkage criterion is rarely dispositive in court, as customs authorities seldom find such blatant contractual stipulations; instead, they pivot to the second criterion discussed below.

Corporate Affiliation as a Factor in Adjusting Customs Value

As defined in Article 37 of the EAEU Customs Code, related parties are entities that satisfy at least one of the following conditions:

• They are officers or directors of one another's businesses;
• They are legally recognized business partners (i.e., bound by contractual relations to generate profit while sharing associated expenses and liabilities);
• They hold an employer-employee relationship;
• A third party directly or indirectly owns, controls, or holds 5% or more of the outstanding voting stock or shares of both of them;
• One of them directly or indirectly controls the other;
• Both are directly or indirectly controlled by a third person;
• Together they directly or indirectly control a third person;
• They are members of the same family or relatives.

We examine these criteria through the lens of recent judicial precedent.

In Case No. A14-17886/2023, the Voronezh Customs Authority concluded, following a documentary audit, that an affiliation existed between the entities. Consequently, the authority argued that the portion of net profit for 2020 (post-tax) distributed as dividends to participants – one of whom served as the seller of the declared goods – must be included in the customs value. The authority posited that the dividend payout was directly linked to the value of the imported goods, necessitating its addition to the Price Actually Paid as a segment of revenue indirectly accruing to the seller. For a subset of the goods, an additional markup was applied to capture the revenue derived from subsequent sales that indirectly benefited the seller.

The appellate and cassation courts sustained the customs authority's position, holding that insofar as the generated income (revenue) indirectly accrues to the seller company – because such income is generated exclusively from the imported goods and is paid to a controlled entity – the appellate panel rightfully overturned the trial court's decision, affirming the Voronezh Customs Authority's adjustments to the customs declarations regarding the inclusion of paid dividends in the customs value.[6]

Under Article 39 of the EAEU Customs Code, declarants possess two primary methods to rebut the presumption that corporate affiliation influenced intercompany pricing:

• Conducting a factual analysis of the circumstances surrounding the sale to demonstrate that the affiliated buyer and seller transacted at arm's-length conditions, including comparable pricing metrics, as if they were unrelated entities;
• Submitting documentary evidence confirming that the transaction value closely aligns with a legally recognized test value.

Leveraging Transfer Pricing Documentation

Transfer Pricing (TP) Documentation serves as a vital evidentiary tool for executing both statutory defense methods.

The first method requires proving that the affiliated buyer and seller operated as independent market actors. TP regulations are anchored in the "arm's-length" principle: related parties must transact on terms comparable to those of independent entities in similar circumstances. Customs authorities evaluate all transactional circumstances, encompassing commercial structuring and pricing mechanisms. Accordingly, robust TP documentation must comprehensively detail these elements to irrefutably evidence that affiliation did not distort the commercial terms.

The WCO's stance (Commentary 23.1 and Case Study 14.1 of the Technical Committee) and OECD guidelines robustly support the admissibility of TP documentation: relevant TP files can be utilized to examine the circumstances surrounding the sale, validate the arm's-length nature of the price, and thereby confirm the bona fide nature of the dividends.

The second method involves benchmarking the transaction value against a statutory test value, which may include:

• The transaction value of identical or similar goods sold to unrelated buyers;
• The customs value of identical or similar goods calculated via the deductive value method;
• The customs value calculated via the computed value method.

To successfully preclude the inclusion of dividends in the customs value, TP documentation must provide an exhaustive analysis of the economic conditions of the parties, their factual contractual obligations, functional analyses (assets and risks), justification for the selected TP method, benchmarking of the arm's-length price range (or profitability markup), and a reasoned conclusion affirming that the intercompany prices align with market benchmarks.

However, the mere existence of TP documentation does not guarantee a successful defense. In Case No. A40-204215/2022 (initiated by Moët Hennessy Rus LLC), the courts held that where the customs authority possesses information indicating that the affiliation between the seller and buyer likely influenced the transaction price, the declarant failed to dispel these doubts with the provided documentation. The divergence of the declared customs value from the customs authority's price intelligence, coupled with the lower pricing of the declared goods relative to similar goods under comparable import conditions, and the established affiliation of the parties, substantiate the customs authority's assertion that the relationship distorted the transaction value. Furthermore, the courts ruled that the submitted TP documentation cannot be construed as evidence confirming that the transfer prices generated sufficient profit commensurate with the companies' functions and risks, while simultaneously covering the manufacturer's costs for local market realization, marketing, overhead, and R&D investments.[7]

Similarly, in Case No. A09-10661/2024, the courts found that the net profit realized by the company from EAEU sales of goods imported from its sole participant in 2021 constituted profit distributed as dividends. The court ruled that "Given the affiliation, the presence of transfer pricing indicators, and the fact that these payments (dividends) essentially secure the seller a portion of the revenue from the sale of imported goods – functioning as such within the bilateral commercial relationship – and considering the company's failure to provide complete and reliable evidence of market-based pricing," the dividends paid to the founder must be added to the Price Actually Paid and incorporated into the customs value. [8]

Strategic Defense Arguments Deployed by Declarants

In current enforcement practice, defense counsel deploys the following arguments to challenge the inclusion of dividends in customs value:

• The goods were procured under strict market conditions;
• Independent third parties could purchase the goods on identical terms as the dividend-paying importer, absent any shareholder relationship;
• Pricing structures remain accessible and identical for independent buyers;
• Submission of comprehensive Transfer Pricing (TP) documentation proving compliance with the arm's-length principle;
• Transparent disclosure of the exporter's pricing methodology;
• The imported goods were sold in a disparate fiscal period, the entire imported batch was not realized within the fiscal year, or inventory remained unsold in the warehouse;
• The distributed dividends originated from the retained earnings of prior fiscal years;
• The dividend beneficiary is legally distinct from the foreign seller;
• The customs authority improperly conflated the legal concepts of gross "revenue" and "net profit";
• The customs authority's methodology violated the principle of equality by subjecting the importer to a disparate valuation framework compared to independent importers;
• At the time of dividend distribution, the imported goods had not yet been sold (retained as inventory) or were consumed internally for production purposes rather than resale.

It is critical to emphasize the necessity of meticulously assembling this evidentiary baseline – often requiring manual, multi-stage data aggregation and bespoke financial modeling – supported by granular explanatory memoranda and primary source documents. This rigorous approach compels the customs authority to quantitatively isolate the specific dividend tranche subject to inclusion, or conversely, justifies total exclusion. Failing to furnish customized financial modeling exponentially increases the risk that the customs authority will attribute the entirety of the dividend payout to the customs value.

Customs Audits Involving Dividends: Procedural Nuances

Audits are executed via desk customs audits (Article 332 of the EAEU Customs Code), field customs audits (Article 333), or post-clearance audits (Article 326). Customs authorities heavily favor post-clearance audits, reviewing declarations across a three-year retrospective period. Similar to desk audits, the authority typically grants the declarant a highly compressed window of 5–7 calendar days to produce documentation and responses. Crucially, unlike desk audits, post-clearance audits do not mandate a formal notification of commencement, strip the declarant of the right to file objections against the audit report, and deny the audited entity access to the audit file.

Currently, there are no published regulations, guidelines, or official regulatory positions establishing a standardized methodology for apportioning dividends within customs valuation. Consequently, audit practices diverge wildly – even between distinct departments within the same customs authority.[9]

For example, structural discrepancies exist regarding dividend accounting: certain units strictly assess actually disbursed funds, whereas others assess declared dividends, irrespective of whether the actual cash transfer was executed.

Further ambiguity plagues scenarios where goods are supplied by affiliates of the importer rather than the direct founders: some customs authorities factor this into their analysis, while others completely disregard it.

In Case No. A09-6953/2025, the courts ruled that if a corporate group member pays dividends to a founder within the same group, yet the goods are supplied by entities that are not founders but remain affiliated with both the importer and the founder, the founder's dividend income derived from the sale of those imported goods is deemed to accrue indirectly to the suppliers.[10]

Moreover, authorities frequently fail to account for the temporal disconnect between the period of dividend declaration and the actual realization of the imported goods (across the audited declarations). This lag inherently means the revenue and profit materialize in a subsequent reporting cycle.

During these audits, authorities demand financial data capable of isolating the specific tranche of net profit generated directly from the sale of the imported goods, or from the sale of domestic products manufactured using the raw materials listed in the audited declarations. This granular data is requested to bridge the evidentiary gap between the dividend payout and the profits generated directly from the founder's or affiliate's imported goods.[11]

Judicial Landscape: Evolving Court Approaches

Jurisprudence concerning the inclusion of dividends in customs value began maturing around 2019–2020. Prior to this, case law was sparse, punctuated by a singular ruling where the court upheld the customs authority's position.

In Case No. A43-34050/2012 (initiated by ISTKON 3K LLC), the customs authority determined that dividends for 2010–2011, paid to the supplier acting as the sole participant, were inextricably linked to the imported goods. Under Subparagraph 4 of Paragraph 1 of Article 19.1 of the Law of the Russian Federation No. 5003-1 dated May 21, 1993, On the Customs Tariff (applicable at the time), these dividends required integration into the Price Actually Paid.

The courts concurred, holding that the dividends received by the supplier under the sole participant's resolutions for 2010 and 2011 are tied to the imported goods and must be added to the price actually paid or payable as a portion of the revenue from subsequent sales that directly or indirectly accrues to the seller.[12]

Following a wave of customs audits, 2020 marked a surge in litigation as authorities challenged importers' failure to include dividends. Until 2022, the judicial consensus – bolstered by the Supreme Court of the Russian Federation – favored declarants, routinely rejecting the inclusion of dividends.

In Case No. A56-137218/2019 (initiated by SSAB Swedish Steel CIS LLC), the customs authority argued that the declarant and supplier were affiliated under Article 37 of the EAEU Customs Code, as the supplier was the sole participant wielding authority over net profit distribution. Classifying the supplier's dividends as a portion of post-importation sales revenue accruing to the seller, the authority mandated their inclusion in the customs value.

The Supreme Court refused to transfer the cassation appeal to the Judicial Collegium for Economic Disputes, stating: "Acknowledging the legal nature of dividends, the lower courts correctly held that manipulating the customs value via dividends is permissible only if their payment constitutes a stipulated condition of the sale of the specific imported goods. The Customs Authority failed to produce evidence that the disputed dividend payout was a condition of sale, nor did it prove that the affiliation distorted the transaction price or the subsequent profit distribution. The courts rightfully concluded that the customs authority failed to prove circumstances barring the declarant's chosen valuation method."[13]

However, in late 2022, the Supreme Court drastically reversed its position, issuing a series of landmark rulings. In Case No. A09-1129/2021, Pull and Bear CIS LLC challenged the Bryansk Customs Authority's adjustments to its declarations. The authority argued the declarant unlawfully excluded dividends paid to its participant, who concurrently acted as the apparel supplier. The trial, appellate, and cassation courts ruled in favor of the declarant.

The Supreme Court overturned these lower court decisions, holding that dividends received by a participant (shareholder) resulting from net profit distribution are not included in the customs value of imported goods, as they economically represent income from investments (FDI) and lack a per se connection to the imports. However, payments designated as dividends that are such only prima facie are deemed linked to the imported goods and must be included in the customs value under Subparagraph 3 of Paragraph 1 of Article 40 of the EAEU Customs Code, if these payments substantively guarantee the seller a portion of the revenue from the imported goods, functioning as such within the bilateral commercial relationship.[14]

According to the Supreme Court, if founders authorize the distribution of net profit derived from the domestic realization of goods imported under contracts with suppliers who concurrently serve as founders of the LLC, such profit distributions must be added to the customs value.

The Supreme Court reinforced this doctrine in Case No. A09-1751/2021 (initiated by Bershka CIS LLC) and Case No. A40-20125/2021 (initiated by Chanel LLC). The Court elaborated that dividends paid to an entity acting simultaneously as the founder and the supplier must be viewed as an integral component of the customs value, functioning as an additional charge to the price of the goods.[15]

This paradigm shift was formally codified in Paragraph 24 of the Review of Judicial Practice of the Supreme Court No. 1 (2023). Reading the provisions of the EAEU Customs Code in concert, the Supreme Court mandated that in intercompany imports where the buyer's revenue relies heavily on selling the imported goods, dividends paid to a supplier/founder are subject to inclusion under Subparagraph 3 of Paragraph 1 of Article 40, provided indicators of price manipulation exist. This directive now anchors the jurisprudence of the circuit courts in such disputes.[16]

PORSCHE RUSSLAND LLC recently challenged the EEC's inaction regarding regulatory ambiguity over dividend inclusions. The EAEU Court (Decision of December 23, 2024) and the Appeals Chamber (February 12, 2025) dismissed the claims, ruling that the plaintiff failed to prove divergent enforcement of the EAEU Customs Code across member states.

Under EAEU law, dividends generally fall outside the customs value; however, revenue accruing to the seller (even if masked as a dividend) must be captured if it lacks the substantive characteristics of true "net profit". When utilizing Method 1 for affiliated transactions, parties must validate that the relationship did not distort the price and account for mandatory additions, including post-sale revenue accruing to the seller (Article 40 of the EAEU Customs Code).

The statutory provisions strictly bifurcate assets (payments) into two categories:

• Payments maintaining a nexus with the imported goods, necessitating inclusion under Paragraph 3 of Article 39;
• Payments detached from the imported goods, explicitly exempt from inclusion (e.g., true dividends).

Failure by a declarant to rigorously document and segregate the post-sale revenue accruing to the seller – improperly merging it into the general dividend distribution pool – creates an impermissible commingling of legally distinct assets. This accounting failure obstructs the application of Paragraph 9 of Article 39, which relies on the strict segregation of related versus unrelated payments.

The Appeals Chamber clarified that the EEC is only empowered to issue harmonizing acts (Article 38) when concrete evidence of non-uniform practice or profound legal ambiguity exists; absent objective proof of systemic violations, monitoring is not mandatory.[17]

Effectively, the EAEU Court endorsed the Russian Supreme Court's aggressive posture, validating it under EAEU customs law. The EAEU Court deflected the severe complexities of navigating these regulations onto the declarants, attributing the issue to inadequate documentation, while failing to provide actionable guidelines on how companies should restructure their financial accounting to prevent commingling, or how to practically segregate bona fide dividends from import-related payouts. While the Court noted that the EEC had drafted a recommendation regarding the inclusion of post-sale revenue, this guidance remains unadopted.

In the Thematic Review No. 9/2026 (issued June 17, 2026), the Supreme Court reiterated its steadfast position: dividends remitted to an affiliated foreign supplier must be captured in the customs value if they represent a conduit for repatriating import-related sales revenue (Paragraph 10).

If indicators suggest potential manipulation of pricing elements by the foreign supplier or affiliated group entities during intercompany imports, customs authorities maintain broad latitude to audit the circumstances surrounding the sale. The declarant is strictly required to prove that the transaction price was established free from the influence of the corporate affiliation, primarily through comprehensive disclosure of pricing methodologies.[18]

In Case No. A21-8520/2024, the court heavily enforced this burden of proof against the plaintiff, noting: During the proceedings, the Company failed to prove that the disputed price derived from standard pricing practices, or that HYVA-branded goods were available to independent third parties at identical prices. The Applicant failed to produce public price lists from the seller/manufacturer that functioned as a public offer to independent buyers.[19]

Current jurisprudence dictates that if an importer's net profit relies primarily on goods sourced from its founder, a presumption of price manipulation arises. Including nominal dividends in the customs value of such goods is permissible unless the declarant introduces ironclad evidence confirming the transaction value aligns with the arm's-length market price.

Customs authorities are aggressively expanding this doctrine to manufacturing entities importing raw materials via intercompany agreements for domestic production. In these manufacturing contexts, isolating the specific tranche of net profit generated from finished goods and tracing it back to specific imported raw materials is exceptionally arduous.

However, in Case No. A09-1177/2024, the courts ruled that not all glass tubing imported by the company across the 36 disputed declarations contributed to the 2020 revenue pool that was subsequently distributed as 2020 dividends via the July 5, 2021, protocol." Consequently, the court ruled the customs authority lacked grounds for full supplementary adjustments across 8 declarations, and partial adjustments across the remaining 28, because the goods entirely disconnected from the 2020 revenue distribution could not be subjected to the dividend markup.[20]

Conversely, in Case No. A50-10712/2024, the courts favored the authorities, holding that due to the applicant's failure to provide data correlating the end-product revenue (utilizing the declared goods) with the 2021–2022 dividend payouts, the customs authority properly leveraged the company's financial statements to independently apportion the dividend payout. The dividends were rightfully allocated proportionally against the customs value (cost) of the imported goods, representing a constituent part of the overall cost of sales. The company failed to object to the authority's calculation methodology and declined to submit a counter-calculation.[21]

A similar aggressive posture applies to industrial equipment imports. In Case No. A46-18610/2024 (ARIS OILFIELD TOOLS LLC) – involving oil recovery equipment – the courts upheld the inclusion of dividends paid to the supplier/participant (KATT GmbH), relying squarely on Paragraph 24 of the Supreme Court's Review No. 1(2023). However, the appellate court struck down the customs authority's calculation for adjustments exceeding 23,011,640.64 rubles and invalidated late payment penalties assessed during the bankruptcy moratorium (April 1, 2022 – September 30, 2022) enacted by Government Resolution No. 497.[22]

Procedural violations provide a critical avenue for defense. In Case No. A40-130974/2024 (KORBEV LLC), upon retrial, the court invalidated the customs authority's decisions regarding specific declarations because the audit was conducted beyond the 3-year statutory limitation period (Paragraph 7 of Article 310 of the EAEU Customs Code), and the decisions were prematurely executed before the expiration of the declarant's deadline to file formal objections, fundamentally violating due process.[23]

In Case No. A62-2350/2024, the applicant argued that the courts misapplied the EAEU Customs Code and the Russian Tax Code by improperly inflating the baseline calculation to include the withholding tax remitted to the Russian budget. The courts rejected this defense, stating: Dividends routed to an entity acting concurrently as founder, supplier, and ultimate holding company of the suppliers must be classified as an integral component of the customs value; these constitute supplementary charges not exempt from taxation. Tax amounts calculated, withheld, and remitted by the declarant acting as a tax agent do not qualify for exemption, as they are paid on behalf of the founder and are subject to deduction against the founder's own tax liabilities (Articles 24, 171 of the Tax Code). Absent statutory grounds for deducting these withheld tax amounts from the Price Actually Paid, these tax sums must be included in the customs value as supplementary charges representing sales revenue.[24]

Despite these headwinds, there is a body of precedent invalidating customs adjustments.

In Case No. A51-2069/2025 (A&D RUS LLC vs. Nakhodka Customs), the courts ruled that incorporating dividends into the customs value is unlawful absent proof that the corporate affiliation influenced the transaction price or evidence of price manipulation.

The appellate court held that the dividends paid are detached from the imported goods and exempt from inclusion, as the Nakhodka Customs Authority failed to prove that the sale of the goods was contingent upon future dividend payouts. By unlawfully refusing to examine the declarant's documentation detailing the cost of goods and the apportionment of dividends across the disputed declarations, the authority imposed an economically groundless burden on the applicant and unlawfully inflated the customs value with tax liabilities (dividend withholding tax) that, while mandatory, maintain zero nexus with the supplier payout.[25]

Throughout 2025–2026, circuit courts have repeatedly struck down customs decisions involving dividend inclusions. In Case No. A40-16564/2024, the Arbitration Court of the Moscow District favored the declarant, emphasizing that the foreign trade contract (with J.H. Toennjes E.A.S.T. GmbH & Co. KG, Germany) lacked provisions redirecting payments as dividends; the authority failed to prove affiliation influenced pricing or demonstrate undervaluation. The court admonished the authority for unlawfully conflating aggregate corporate revenue (Line 2110 of the financial statements) exclusively with revenue derived from the imported goods.[26] In Case No. A51-11076/2024 (Nordic Titan LLC), the courts barred the inclusion of dividends because the revenue from the imported goods constituted a negligible fraction of the company's total profits, and selling such goods was not its core business. Crucially, the courts reaffirmed that the burden of proving undervaluation rests squarely on the customs authority. The Supreme Court (Ruling No. 303-ES26-1681 dated March 4, 2026) refused to hear the customs authority's cassation appeal.[27]

Case No. A56-108954/2024 (PRIVOD EXPERT LLC) is equally indicative: following the cassation court's reversal of pro-declarant rulings, the trial court, upon retrial, once again sided with the declarant, compelling the customs authority to refund 1,906,096.96 rubles in overpaid duties.[28]

In Case No. A06-3555/2023 (Maschio-Gaspardo Russia LLC), the courts shielded the applicant concerning specific declarations, ruling that dividends are excluded from the customs value of goods sourced from a supplier that – while part of the broader corporate group – is not the direct founder.

The customs authority's assertion that the supplier manufactured the goods and ultimately received the dividends distributed to the applicant's participant was dismissed as baseless. The courts stated that the customs authority failed to introduce any evidence confirming that the dividends paid to the founder were subsequently routed down to the supplier of the goods.[29]

This ruling is paramount as it unequivocally places the evidentiary burden on the customs authority to trace the internal corporate routing of dividends within a group structure.

This case is also notable regarding penalty assessments: the court ruled that accruing late payment penalties from the day following the filing of the declaration until the issuance of the audit decision was unlawful. At the moment of importation, the applicant could not possibly possess data regarding final financial results or net profit (which crystallizes only at fiscal year-end), rendering the retroactive application of penalties legally impermissible.

In Case No. A62-4221/2024, the courts affirmed that the bankruptcy moratorium instituted by Government Resolution No. 497 (effective April 1, 2022, through September 30, 2022) strictly barred the accrual of late payment penalties on customs arrears during that window.[30]

Criminal and Administrative Liability: Managing Legal Risks

Administrative liability in these scenarios is triggered under Part 2 of Article 16.2 of the CAO RF (Inaccurate Customs Declaration), carrying the following penalties:

• For individuals and legal entities: administrative fines ranging from 50% to 200% of the underpaid customs duties and taxes, with or without the confiscation of the goods comprising the offense;
• For corporate officers (officials): fines ranging from 10,000 to 20,000 rubles.

However, an offense under Part 2 of Article 16.2 only crystallizes if the inaccurate valuation data served – or could have served – as the basis for underpaying customs duties and taxes. In Resolution No. 9-P dated March 5, 2024, the Constitutional Court of the Russian Federation upheld the constitutionality of this provision, explicitly ruling that it does not authorize administrative liability for inaccurate statements if such statements did not and could not trigger an aggregate increase in customs payments for the consignment. Furthermore, Federal Law No. 560-FZ dated December 29, 2025 (effective January 9, 2026, regarding Article 16.2) amended the statute to trigger liability only when the underpayment exceeds the threshold defined under Paragraph 4 of Article 55 of the EAEU Customs Code. For dividend disputes, these legal parameters are critical: a mere customs value adjustment following an audit does not trigger automatic administrative liability; authorities must definitively establish the corpus delicti, including an underpayment exceeding the statutory threshold and establishing mens rea (intent or negligence), mandating an inquiry into the declarant's good faith and lack of malicious intent.

Crucially, legal practitioners are reporting an escalation in criminal proceedings regarding the failure to include dividends in customs value. Customs audits are increasingly being weaponized as precursors to pre-investigation checks and criminal prosecutions. Enforcement agencies are initiating cases under Article 194 of the Criminal Code of the Russian Federation (the "Criminal Code"): Evasion of Customs Payments, Special, Antidumping, and (or) Countervailing Duties by an Organization or Individual. Law enforcement advances the theory that companies intentionally camouflage repatriated trade revenue as "dividends" to deceive customs authorities, utilizing corporate resolutions merely as vehicles for illicit capital flight.[31]

Evasion of customs payments committed on a large scale (exceeding 3 million rubles) is punishable by fines ranging from 100,000 to 500,000 rubles (or the convict's income for 1 to 3 years), compulsory labor up to 480 hours, forced labor up to 2 years, or imprisonment for up to 2 years (Part 1 of Article 194 of the Criminal Code).

The identical offense committed on an especially large scale (exceeding 9 million rubles) triggers harsher penalties: fines from 300,000 to 500,000 rubles (or income for 2 to 3 years), forced labor up to 5 years (with potential disqualification from holding certain positions for up to 3 years), or imprisonment for up to 5 years with similar disqualifications (Part 2 of Article 194 of the Criminal Code).

Note that Note 2 to Article 194 preserves the lower thresholds (2 million / 6 million rubles) for specific government-designated commodities.

Voluntarily remitting the disputed dividends to customs does not extinguish criminal liability. Unlike Article 199 (Tax Evasion) which affords a statutory safe harbor dismissing charges for first-time offenders who fully restitute the treasury. Article 194 contains no such leniency provision.

To strategically mitigate administrative and criminal exposure, we advise the following:

• Managing audits aggressively by proactively submitting exonerating evidence: export declarations, independent supplier price lists, third-party commercial offers, and exhaustive pricing memoranda;
• Structuring a robust defense highlighting that any exclusion of dividends resulted from a good-faith interpretation of ambiguous law, negating criminal intent (mens rea). Because the evidentiary matrix proving good faith is highly bespoke, counsel must rapidly and systematically document the absence of malicious intent;
• Litigating aggressively by exhausting all pre-trial and judicial avenues to challenge any adverse adjustment decisions.

In summary, the current judicial architecture lacks a coherent, unified approach to the inclusion of dividends in customs value. Foreign Trade Participants are forced to operate in a high-risk regulatory vacuum, defending their operations through both the audit lifecycle and subsequent litigation. The viability of a corporate defense relies heavily on preemptive legal analysis and meticulous evidentiary preparation.

Foreign Trade Participants must remain on high alert for aggressive audits and massive retroactive assessments, necessitating rigorous documentation of all commercial transactions and dividend payouts, and must be prepared to litigate aggressively. Ongoing monitoring of judicial trends is essential for strategic corporate planning.

Given the severe exposure to back-taxes, ruinous penalties, and looming administrative and criminal liability for entities that have distributed dividends, we strongly recommend executing the following risk-mitigation protocols for both active supply chains and retrospective 3-year audit windows:

• Executing a preemptive legal audit to map out exposure before customs initiates a formal inquiry, and establishing the legal basis for either defending the current structure or initiating voluntary customs value adjustments;
• Drafting a bespoke legal defense matrix tailored to the company's specific operational footprint, whilst aggregating bulletproof documentation severing any presumed link between corporate affiliation and transactional pricing. Paramount focus must be dedicated to export and domestic pricing documentation, including export declarations, intra-group TP compliance reports (from both seller and importer), calculations of test values via the deductive or computed methods, and exhaustive cost-of-goods-sold (COGS) accounting ledgers.

Please note: if a declarant is unable to provide forensic accounting data definitively attributing specific tranches of net profit to specific goods imported under specific declarations, customs authorities will execute a pro-rata allocation methodology. The supplementary charge will be calculated proportionally based on the ratio of the value of each item to the aggregate value of the goods subject to the adjustment.[32] Consequently, the entire dividend distribution pool will be proportionately assessed against the imported merchandise.

The legality of this pro-rata allocation has been sanctioned by the courts. In Case No. A14-4855/2025 (Lamberti Rus LLC), the Arbitration Court of the Central District ratified the customs authority's decision to capture 12.03% of a 100,000,000 ruble dividend payout, dismissing the declarant's objections and validating the mathematical compliance of the methodology with customs regulations.[33]

In Case No. A65-20071/2024 (Andritz LLC), the courts sustained the inclusion of dividends remitted to ANDRITZ AG, citing an inherent risk of price manipulation embedded within intercompany supply chains.[34]

A detailed analytical review of current judicial practice regarding disputes on the inclusion of dividends in customs value is available in our overview [35].

____________________

References

1. Letter of the Ministry of Finance of Russia No. 27-01-21/5737 dated January 25, 2024; Letter of the Ministry of Finance of Russia No. 27-01-21/11349 dated February 10, 2025 (as amended by Letter of the Ministry of Finance of Russia No. 27-01-21/17947 dated February 25, 2025).
2. Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation No. 53 dated October 12, 2006, On the Assessment by Arbitration Courts of the Validity of the Taxpayer's Receiving a Tax Benefit.
3. Decision of the Board of the Eurasian Economic Commission No. 103 dated June 19, 2018, On Approving the Procedure for Postponed Determination of the Customs Value of Goods.
4. Resolution of the Plenum of the Supreme Court of the Russian Federation No. 49 dated November 26, 2019.
5. Resolution of the Arbitration Court of the Central District dated December 2, 2025, in case No. A14-17886/2023.
6. Resolution of the Arbitration Court of the Moscow District dated October 2, 2024, in case No. A40-204215/2022.
7. Resolution of the Arbitration Court of the Central District dated May 19, 2026, in case No. A09-10661/2024.
8. Inclusion of Dividends in the Customs Value of Imported Goods. December 6, 2023. Alta-Soft Website. URL: https://www.alta.ru/expert_opinion/106016/.
9. Resolution of the Arbitration Court of the Central District dated May 25, 2026, in case No. A09-6953/2025.
10. Inclusion of Dividends in the Customs Value of Imported Goods. December 6, 2023. Alta-Soft Website. URL: https://www.alta.ru/expert_opinion/106016/.
11. Resolution of the Federal Arbitration Court of the Volga-Vyatka District dated May 28, 2014, in case No. A43-34050/2012.
12. Ruling of the Supreme Court of the Russian Federation dated April 7, 2021, in case No. A56-137218/2019.
13. Ruling of the Supreme Court of the Russian Federation dated December 2, 2022, in case No. A09-1129/2021.
14. Rulings of the Supreme Court of the Russian Federation dated December 1, 2022, in case No. A40-20125/2021, and dated December 2, 2022, in case No. A09-1751/2021.
15. Paragraph 24 of the Review of Judicial Practice of the Supreme Court of the Russian Federation No. 1 (2023), approved by the Presidium of the Supreme Court of the Russian Federation on April 26, 2023.
16. Decision of the Board of the EAEU Court dated December 24, 2024, Decision of the Appeals Chamber of the EAEU Court dated February 12, 2025, in case No. C-10/24. EAEU Court Website. URL: https://courteurasian.org/court_cases/eaeu/C-10.24/.
17. Thematic Review of the Supreme Court of the Russian Federation No. 9/2026. On the Consideration by Courts of Disputes Related to the Application of Customs Legislation, approved by Resolution of the Presidium of the Supreme Court of the Russian Federation No. 12A/2026 dated June 17, 2026.
18. Resolution of the Thirteenth Arbitration Court of Appeal No. A21-8520/2024 dated June 5, 2025.
19. Resolution of the Arbitration Court of the Central District dated February 17, 2026, in case No. A09-1177/2024.
20. Resolution of the Arbitration Court of the Ural District dated May 29, 2025, in case No. A50-10712/2024.
21. Resolution of the Arbitration Court of the West Siberian District dated August 15, 2025, in case No. A46-18610/2024.
22. Decision of the Arbitration Court of the City of Moscow dated May 13, 2026, in case No. A40-130974/2024 (upon retrial after the case was remanded for a new trial by the Arbitration Court of the Moscow District).
23. Resolution of the Arbitration Court of the Central District dated December 19, 2025, in case No. A62-2350/2024.
24. Resolution of the Fifth Arbitration Court of Appeal dated May 6, 2026, in case No. A51-2069/2025.
25. Resolution of the Arbitration Court of the Moscow District dated January 26, 2026, in case No. A40-16564/2024.
26. Resolution of the Arbitration Court of the Far Eastern District No. F03-3891/2025 dated December 1, 2025, in case No. A51-11076/2024; Ruling of the Supreme Court of the Russian Federation No. 303-ES26-1681 dated March 4, 2026 (on the refusal to refer the cassation appeal for consideration in a court hearing of the Judicial Collegium for Economic Disputes).
27. Resolution of the Arbitration Court of the North-Western District dated October 29, 2025, in case No. A56-108954/2024; Decision of the Arbitration Court of the City of St. Petersburg and the Leningrad Region dated January 29, 2026, in case No. A56-108954/2024 (upon retrial).
28. Resolution of the Arbitration Court of the Volga District dated August 16, 2024, in case No. A06-3555/2023.
29. Resolution of the Arbitration Court of the Central District dated December 25, 2025, in case No. A62-4221/2024.
30. Criminal Liability for Dividends and Royalties in Customs Value: What You Need to Know and How to Mitigate Risks. August 20, 2025. "PRAVO.RU" Website. URL: https://pravo.ru/story/259547/.
31. Decision of the Board of the Eurasian Economic Commission No. 83 dated May 22, 2018, On Calculating Additional Charges When Determining the Customs Value of Goods.
32. Resolution of the Arbitration Court of the Central District dated December 23, 2025, in case No. A14-4855/2025.
33. Resolution of the Arbitration Court of the Volga District No. F06-4705/2025 dated July 21, 2025, in case No. A65-20071/2024.
34. See the BRACE Law Firm website: https://brace-lf.com/en/analytics/international-trade-and-customs-law/dividend-inclusions-customs-valuation-litigation-cases-analysis