Russian companies – tax agents of VAT from electronic services

Russian companies – tax agents of VAT from electronic services

LEGAL DIGEST, NEWS \ 12.04.2022

Russian companies that purchase services in electronic form from foreign organizations are recommended to independently calculate, withhold and pay VAT on the amount of such services.

The Federal Tax Service of the Russian Federation (FTS) in its explanation No. SD-4-3/3807 dated March 30, 2022 notes that if, when a foreign organization provides services in electronic form, the buyer independently calculated, paid VAT to the budget (that is, took on the role of a tax agent) and accepted the tax amount paid for deduction, then for these transactions, the tax authorities have no grounds to demand repeated payment of tax from foreign firms and its reflection of such transactions in the tax declaration.

At the same time, Russian organizations are recommended to inform foreign suppliers about the performance of this role and the payment of VAT to the budget of Russia.

Please be reminded that starting from 2019, Russian companies have been released from the duties of tax agents when purchasing services in electronic form. From this period, foreign companies have to independently calculate and pay VAT on the sale of electronic services. To do this, they needed:

  • to register with the Federal Tax Service through the online service “VAT office of Internet companies”;
  • to obtain a taxpayer ID number;
  • to pay VAT quarterly and submit reporting.

However, owing to the current difficulties in transferring funds from foreign bank accounts to Federal Treasury accounts in order to pay VAT, Russian companies are recommended to make these payments independently. Please note that the services in electronic form include:

  • granting rights to use programs (online / via remote access);
  • online advertising;
  • services of technical, organizational, informational or commercial platforms;
  • information systems administration and websites’ support services;
  • storing and processing information online;
  • provision of computation powers for information placement;
  • providing domain names, provision of hosting services;
  • provision of automated services for data searching, their selection and sorting on requests;
  • granting rights to use electronic books, graphic pictures, and musical compositions;
  • services for searching for or providing the customer with information about potential buyers;
  • providing access to search systems;
  • maintaining statistics on websites.

In the matters of the application of tax legislation, in particular, the payment of VAT from electronic services, please contact Acsour specialists.