The transfer of exclusive rights to use computer appliances, databanks, rights of use thereof on the ground for a license agreement, discoveries, useful models, know-how etc. are still exempted from the VAT (Tax Code of Russia, Art. 149.2.26). The above exemption extends also to the foreign entities which have to get registered in accordance with Art. 83.4.6 of Tax Code of Russia.
In case a foreign entity provides the electronic services and, to this end, uses an intermediary or a chain of intermediaries (settlements chain), then the obligations of tax calculation and payment lies upon the intermediaries which are deemed tax agents by the tax legislation.
In the event that there are more than one intermediary, then the obligation of tax calculation and payment lies only upon the intermediary who settles immediately with the end-customer.
In summary, a foreign entity providing the electronic services both directly and indirectly (through an intermediary) fulfills the VAT obligations only in part of the services directly provided to customers. As for the services provided through an intermediary, the entity upon which the VAT obligation lies is the intermediary itself.
- Discharge of VAT payment obligation
To pay the tax it is not necessary for the foreign company to set up a bank account in a Russian bank. A bank account outside Russia would suit for this purpose.
As relative to the repay (set-off) of the excessively paid tax the taxpayer would resort to the provisions of Tax Code of Russia, Art. 78, but with a reservation that the refund can be made to the bank account with a Russian bank, not a foreign bank.
VAT tax period is a quarter.
Payment has to be made no later than on the 25th of the month following the tax period.
VAT-invoices, input and output VAT registries, journal of received and rendered VAT-invoices as relative to electronic services provided by foreign entities are not necessary (Tax Code of Russia, Art. 169.3.2.2.)
After registration with the tax authority is in place a foreign entity has to include in the relevant documents the obligatory details about the taxpayer: taxpayer identification number, reason for registration code and a correct name of the company. Absent the required details on the document, the Russian customers will have problems applying VAT deductions, with an increase in self-costs of services as a negative result.
The VAT rate for the provision of electronic services is 15,25% of the tax base (for the year 2019).
