Electronically supplied services are defined as services performed over an IT network (e.g.internet), automated with the use of IT such as rights to use programs (software), including computer games, databases via the internet, streaming music, films, domain names, hosting, website and webpage support etc.
Foreign suppliers of electronically supplied services to local legal entities and individuals shall apply for registration with the Russian Federal Tax Service and be responsible for paying the respective VAT.
VAT rate in Russia amounts to 20%. The effective VAT rate for foreign companies is 16.67% (20/120%) as this rate shall be applied to a tax base including VAT.
Incompliance with these rules, non-registration and non-submission of VAT returns may be penalized by 10% of the revenue received during the specified period of e-services provision, but not less than RUB 40 thousand (ca. SEK 4.5 thousand).
The full registration and reporting procedure could be done online which makes the process much easier for foreign companies. However, the constantly changing Russian legislation may make its interpretation, registration process and filing tricky and complicated.
Our report on electronically supplied services and VAT associated with it provides detailed information about current legislation, full list of e-services and VAT registration procedure.