 # Court Rules Inclusion of VAT in Rental Price Illegal: Precedent Analysis An organization leased non-residential premises from a Municipal Unitary Enterprise (MUP). Everything was proceeding normally until the municipal enterprise was merged into a budgetary institution. The lessor's tax status changed — it transitioned to a VAT exemption. And then the trouble began. ## The Core of the Dispute The lessor (now as an institution) decided that since it no longer pays VAT, the lessee should compensate it for this tax on top of the contractual price. Essentially, it retroactively included VAT in the payment, citing a change in its tax obligations. The court sided with the lessee. Why? ## The Court's Position 1. The contract price is fixed. If the lease agreement specifies a particular amount, the lessor cannot unilaterally shift its tax issues onto the lessee. 2. Change in status is the lessor's risk. The MUP underwent reorganization itself. The change in tax regime is its business risk, not a basis for price revision. 3. No agreement. The parties did not sign an additional agreement to change the price. The lessor acted unilaterally. ## What This Means for Businesses For lessees: - If the lessor changes its tax regime (switches to simplified taxation, VAT exemption, etc.), you are not obligated to pay more. The contract price is fixed. - A demand to pay additional VAT on top of the rent is illegal if not stipulated in the contract. For lessors: - When changing tax status, agree on a price change with the lessee in advance. Sign an additional agreement. - Do not attempt to recover "lost" VAT through court — the arbitration position is clear. Recommendation: When entering into a lease agreement with a legal entity that may change its tax status (MUP, state unitary enterprise, budgetary institutions), specify a mechanism for price revision upon changes in tax obligations. Otherwise, the risks will fall on you. This case serves as a good reminder: tax planning should be part of contractual work, not an afterthought.