Russia Changes VAT Rules for Non-Resident Suppliers of Digital Services

From 1st January 2019, non-resident suppliers of B2B (business-to-business) electronically supplied services will need to register with the Federal Tax Service in Russia, accounting for any VAT owed.

Currently, the Russian business customer collects and remits the standard rate of VAT of 18% to the tax authorities through the reverse charge mechanism. This will now be removed.

Since 2017, foreign providers of electronically supplied services to private individuals in Russia (B2C), must register for tax in Russia and charge VAT at the standard 15.25% rate. Federal Law No. 335-FZ of 27th November 2017, expands the scope of these VAT rules, including B2B supplies.  The registration requirement is triggered once the sales of digital services to the value of RUB 1 is made.

The impacted services include, amongst others, the provision of databases, web-hosting services, search engines, access to social networks, streaming of music and film, and gaming.

Foreign businesses are required to register by 15th February 2019, via the Federal Tax Service’s portal for online service providers. VAT returns and payments will now be due on a quarterly basis by the 25th day of the month following the reporting period. Russian businesses and private entrepreneurs will be able to reclaim their input VAT.  Registration is still mandatory for foreign providers of VAT exempt supplies such as software licences.


If you have any queries or you are worried that your business is not prepared for Russian VAT Change, please contact our team of VAT Specialists.

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