New practice of customs authorities – request for details of registered license agreements to representative

Recently, Gorodissky & Partners has been receiving requests from the Russian customs authorities to provide information on license agreements for trademarks, the transfer of rights to which we have registered for our clients. The requests typically include requirements for the full text of agreements and/or disclosure of the terms of such agreements regarding the royalty payment, as well as the trademarks to which the license fees relate.

In our experience, such requests are related to the procedure for adjusting the customs value of imported goods, which has already been initiated or is expected to be conducted by the customs authority, for royalties paid under license agreements for the right to use trademarks with which imported goods are marked. The declarant is obliged to include such payments in the customs value of imported goods, determined by the transaction value method, under certain conditions, which follows from sub.7 par.1 of Art.40 of the Customs Code of the EAEU.

In recent months, such requests to the Russian trademark licensees who import foreign goods marked with corresponding trademarks have become more frequent. Business publications have also posted information about large claims of the customs authorities against a number of the Russian divisions of international companies for additional customs payments and VAT paid when importing goods into the Russian Federation related to the non-inclusion of royalties in the customs value. The largest claim, as mentioned in the media in February of this year, was filed against H&M for more than 3 billion rubles.

Please note that, unfortunately, we cannot ignore such requests, since in this regard our law firm belongs to the “other persons” mentioned in Art. 340 of the Customs Code of the EAEU who are obliged to provide information at the request of the customs authority. Accordingly, upon receipt of such a request, we are obliged to comply with the request of the state authority to provide it with the information at our disposal.

If this question is not applicable to your company, and you regularly include royalties in the customs value of imported goods like some of our other clients, please inform us. Then, if we receive a request regarding your company, we will provide the customs authorities with all the information of interest, which is not potentially risky for you in this case.

If this question is applicable to your company (in case royalties have not actually included in the customs value), we recommend that you take a number of preventive steps that may help to reduce the risk of additional customs payments for royalties paid, at least, in the future. If necessary, we can discuss your situation in advance, for example, during a video conference, which will be attended by the experts from our company competent in this issue.

We will be pleased to provide a detailed advice on the issues raised and other necessary assistance. In case of any questions please contact the Head of Legal Department, Partner Sergey Medvedev (MedvedevS@gorodissky.ru, +7-495-937-61-16), Counsel Valery Narezhniy (NarezhniyV@Gorodissky.ru, +7-495-937-61-16).