New VAT Rules in Russia

A new draft law that amends the Russian VAT taxation regime was adopted at the end of February. The new changes will mainly target the manner in which the value added tax applies to the internet and digital services. The new VAT law is important for foreign investors in Russia and our team of lawyers can help you understand how this will affect your digital business in the country.

VAT payable at the buyer's location

The new VAT rules bring important changes for the internet or digital services providers in Russia. Before this law was amended there was no Russian VAT on most of these types of services provided by foreign companies operating in the country. Now, digital services will be considered to be supplied at the buyer’s location. This is relevant for foreign digital services providers because the taxation method depends on the residency status of the buyer.
If digital services are delivered to a Russian company or via a Russia sale agent, VAT is payable by the Russian buyer or selling agent. If the services are delivered by foreign providers directly to a Russian individual or via a foreign sales agent, VAT is payable by the foreign company or sales agent. If the last case if applicable, the foreign legal entity will have to register for VAT purposes in Russia.
If you own a company that provides digital services, our lawyers in Russia can help you register with the relevant tax authorities. Other relevant VAT changes in Russia
Foreign companies that register for VAT purposes in order to provide digital services to their clients will not be able to input VAT recovery. Another important amendment to the current law is that the VAT exemption for the licensing of databases and software rights has been abolished.
Examples of companies affected by this VAT law change include those that provide software, web hosting services, those that sell electronic content or those in the broadcasting, radio, TV or telecommunications sector.

You can contact our patent office in Russia for more information about doing business in Russia

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