The Supreme Arbitration Court of the Russian Federation (the "Court") has declared that the tax authorities are not responsible for reimbursing companies for their expenses for legal counsel during the pre-trial appeals process.
The Court has supported its decision by stating that the hiring of legal counsel by companies in order to assess the justification of the tax authorities' demands is a typical aspect of business activity. Therefore, these expenses are not eligible for reimbursement.
Consequently, expenses for legal counsel are only reimbursable when counsel has defended the interests of a company in court.
[Decree No. 13923/10 of the Presidium of the Supreme Arbitration Court of the Russian Federation, dated 29 March 2011]