Starting from 1 January 2019, the rule of Law No. 244-FZ dated 3 July 2016 came into effect. Under this rule, foreign companies providing electronic services to individuals and legal entities in Russia will themselves have to calculate and pay VAT on the value of the services provided.
Previously the obligation to calculate and pay VAT in the event of a purchase of electronic services was the responsibility of Russian companies and individual entrepreneurs that were recognised as tax agents.
What should foreign companies do if they provide electronic services?
Now foreign companies providing electronic services to legal entities and individual entrepreneurs must:
- Determine whether the foreign company needs to be registered as a taxpayer in Russia;
- If the answer is yes, it should register with the Federal Tax Service as a payer of VAT and should have a Taxpayer’s Individual Number (TIN) issued;
- Subsequently, the company should submit monthly tax reports and pay the tax.
А foreign company does not need to register for tax purposes if:
- the foreign company is already registered with the Federal Tax Service on other grounds; starting from 2019, such companies only need to provide reports and pay VAT on their own;
- the foreign company makes settlements for the supplied electronic services through a branch office or a representative office in Russia;
- the foreign company provides electronic services through an agent or agents that participate in settlements.
Which electronic services entail an obligation for the supplier to register with the Federal Tax Service?
- providing rights to use software;
- providing advertising services and space;
- providing technical, organisational, and information spaces and marketplaces;
- supporting websites;
- storing and processing information;
- providing processing capacities;
- providing domain names, access to search systems, electronic books, music and images;
- gathering statistics.
You can file an application:
- by registered letter
- online through the official website of the Federal Tax Service, or
- through a third-party advisor.
Tax registration of foreign companies providing electronic services to individuals and legal entities.
- Assistance with determining whether a company is required to be registered with the Russian tax authority;
- Help with registering a foreign company with the Federal Tax Service;
- Help with calculating tax and preparing a tax return;
- Filing a VAT return with the tax authority through the taxpayer’s personal account or through the operator of an electronic document management system;
- Representing the client before the tax inspectorate, which includes preparing answers to the requests of tax authorities.
- Clarifying the effective rules of all branches of legislation with respect to foreign companies’ activities in Russia.