Nikita Deynega helped Pravo.ru to make a list of the Supreme Court’s major economic decisions for 2021

The Pravo.ru portal has prepared a publication in which lawyers talked about what they consider to be the most important economic decisions of the Supreme Court of the Russian Federation in 2021.

One of them was the ruling in case No. A76-8895/2019. In this process, the actions of a lender who had made repairs to the premises they were renting were assessed. After the company moved out, the improvements were accounted for as depreciable property and the balance of the cost was added to non-operating expenses. The tax authorities disagreed with this qualification, assessing the repairs as a gift to the landlord and imposing additional taxes. The Supreme Court confirmed the impossibility of a one-time write-off of the residual value of inseparable improvements at the time of VAT refund, and also determined the need to restore the VAT previously deducted by the lessee. It is worth noting that the Economic Court of Appeal relaxed the tax authority’s approach and allowed to include the repair costs as expenses if they meet a number of criteria.

According to Nikita Deynega, Head of Tax and Administrative Law practice at Maxima Legal, “the Supreme Court in this case took a rather conservative and tough position based on the presumption of bad faith of taxpayers”. The expert noted that “although the Economic Chamber gives a fairly clear algorithm for disproving bad faith, it still does not fully solve the problem, because the criteria which the Supreme Court proposes to assess are largely subjective”.

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