The Federal Commercial Court of the Moscow Circuit (the "Court") has once again ruled in favour of a company in respect of payment of bonuses for attainment of specific sales volumes. As a rule, these bonuses are paid to suppliers in accordance with dealer agreements or supply agreements.

In reviewing the case, the Court has indicated that VAT is not applicable on bonuses because (i) bonuses do not factor in the amount paid for goods, thereby they do not change the payment amount; and (ii) there is no agency relationship between a supplier and a company.

[Decree No. КА-А40/7094-11 of the Federal Arbitration Court of the Moscow Circuit, dated 12 July 2011, to matter No. А40-84852/10-112-433]