The Supreme Court allowed changing the price of a transaction if tax legislation changed during its execution

The Supreme Court (SC) decided that the value of a transaction may change if changes are made to the legislation during its execution. The Supreme Court decided to recover 148.4 million rubles from VTB in favor of Sitronics IT. for the use of Microsoft software. At the time of signing the contract, these services were not subject to VAT, but during its validity the benefit was canceled, which raised the question of who exactly should pay the tax. Lawyers say that previously the practice in such disputes was contradictory. According to their assessment, the Supreme Court’s decision may affect all players who have entered into long-term contracts for foreign software until 2021.

The Supreme Court on March 27 determined that the price of a transaction could be revised if tax legislation changed during its execution. The Supreme Court upheld the decision of the Ninth Arbitration Court of Appeal on the need to collect a debt in the amount of 141.4 million rubles from VTB Bank. and a penalty of 7 million rubles. for the use of Microsoft software in favor of Sitronics IT. VTB and Sitronics declined to comment.

In December 2019, NVision Group JSC (from November 2023 – Sitronics IT) entered into a sublicensing agreement with VTB. According to it, the bank received the right to use the software for 2020–2022 for 706.77 million rubles. in year. According to the terms of the agreement and the norms of the Tax Code (TC) in force at that time, these services were not subject to VAT. It was separately stipulated that “the price of the contract is fixed and cannot be changed.”

Amendments to the Tax Code, adopted in July 2020, abolished the VAT benefit for the sale of rights to software and databases not included in the unified register of Russian programs from 2021. NVision demanded to pay an additional 20% VAT on the price for 2021, VTB refused, and the dispute went to court. The Moscow Arbitration Court rejected the claim, but the appellate court recovered 141 million rubles from the bank. tax and another 7 million rubles. percent, the court for intellectual rights, which considered the case as a cassation, again exempted the bank from VAT (see “Kommersant” on February 8).

As a result, the Supreme Court of the Russian Federation sided with Sitronics IT and upheld the decision of the appeal court. “In fact, the Supreme Court explained that although, under the terms of the agreement, the plaintiff undertook not to make claims to the bank for additional payments, this could not change the bank’s obligation to pay VAT on the sale of rights to software and databases,” clarifies Andrey Toryannikov, a partner at the law firm atLegal.

The Supreme Court in its ruling raised the question of whether the law that amends the procedure for paying VAT provides for transitional provisions, adds Nikita Zharov, head of tax practice at Tax Compliance. According to him, there were no such provisions in the law, that is, “the corresponding legislative changes should not lead to the payment of VAT by the seller at his own expense without shifting the tax to the other party to the contract.”

The dispute in question, clarifies the managing partner of AB KIAP Andrey Korelsky, is relevant for all market players who have entered into long-term contracts until 2021 regarding the transfer of rights to the results of intellectual activity in terms of foreign software, as well as in terms of software that, due to prescribed procedures, is not immediately entered the domestic register.

Until now, practice, as well as the positions of lawyers regarding the additional assessment of VAT, “have been very contradictory,” Mr. Toryannikov emphasizes, “the decision of the Supreme Court puts an end to legal disputes on the issue of the legality of additional VAT assessment in similar situations.”

Alexey Zhabin, Yan Nazarenko