The Supreme Court clarifies the conditions under which a recycling fee may be refunded if a vehicle is exported from Russia to other EAEU countries

3 August 2023
Tax Messenger
The law[1] establishes that, if a vehicle previously imported to Russia is exported to other countries of Eurasian Economic Union (hereinafter, "EAEU"), the recycling fee paid on it may be refunded if the following conditions are met:

  • The vehicle was released in Russia under the customs procedure of release for domestic consumption
  • A vehicle passport (hereinafter, "VP") was not issued for the vehicle
  • The exportation of the vehicle is documentally confirmed
  • The payment of a recycling fee in another EAEU member country is documentally confirmed

The courts have stated on numerous occasions that the recycling fee paid for a vehicle exported from Russia to another EAEU member country may be refunded, if the territory where the vehicle is used changes.

A change in the territory where a vehicle is used is established not de facto (by the importation of a vehicle to another EAEU member country) but de jure (by the receipt/cancelation of a document verifying the vehicle’s release into circulation in the given territory).

E.g., in Russia, a vehicle’s release into circulation is verified by a VP.

The Supreme Court once again upheld this approach in July 2023 in Case No. А40−190 025/2021.

The facts of the case are as follows: An importer brought vehicles to the Russian Federation and paid the recycling fee. VPs were obtained for only some of the vehicles. All the vehicles were designated for subsequent sale and use in the Republic of Belarus.
After the vehicles had been imported to Belarus, the importer applied to the customs authority for a refund of the recycling fee paid in Russia.

The customs authority refunded the recycling fee paid for vehicles for which VPs had not been issued and declined to refund the recycling fee paid for the rest of the vehicles.

The courts of three instances and the Supreme Court supported the customs authority’s decision on the following grounds:

  • A vehicle for which a VP has been issued is released for consumption in Russia, and the recycling fee for such vehicles cannot be refunded
  • The issuance of a VP indicates that the vehicle is designated for use in Russia, which entails risks of environmental impact
  • The subsequent sale and importation of the vehicles to the Republic of Belarus did not involve cancelation of the previously issued VP. The maintenance of the VP’s validity cannot exclude the further usage in territory of Russia

The Supreme Court also took the position that the importer could have claimed a refund of the recycling fee on an exported vehicle with a VP if it had taken action to cancel the VP.

In support of its position, the Supreme Court referred to Case No. А56−15 978/2016 (requesting that the tax authority’s refusal to refund a recycling fee be annulled), where the appellate and cassation courts concluded that the cancelation of a VP constituted grounds for refunding a recycling fee.

At the same time, there is no history of similar conclusions or decisions in disputes with the customs authorities. Furthermore, based on the facts of the similar Case А51−18 478/2020, a customs authority may consistently refuse to cancel the VP of a vehicle exported from Russia and to refund the recycling fee.

In the current geopolitical situation, there is an increasing need to establish supply chains involving several countries, in particular for vehicles, and the specifics involved in paying and claiming refunds of recycling fees have become more important than ever before.

Foreign trade participants should be aware of the legal requirements for payments and refunds of recycling fees as well as take into account evolving law enforcement and judicial practice.

How can we help?

Our B1 team of customs professionals has unique experience in assisting companies with these types of supplies as well as issues involved in the payment of recycling fees:

  • Assistance in obtaining a refund of overpaid recycling fees
  • Structuring of supplies in trade with EAEU countries when goods are imported from a third country
  • Representation of client interests when customs authorities' decisions are appealed in court

  • Wilhelmina Shavshina
    Global trade and Customs
  • Vladislava Gritskova
    Assistant Manager
    Global trade and Customs
  • Ekaterina Mazurova
    Global trade and Customs
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