IT companies in Russia in 2023

An IT company in Russia can be a legal entity of any form of ownership and any ownership structure.

According to Russian law, IT companies deal with information technology. In particular, they develop and sell software and databases. Also, they provide services and perform work on developing, adapting, modifying software and databases or installing, testing, and maintaining these same software and databases.

You do not need a special license to operate as an IT company in Russia. However, if an IT company applies for benefits and preferences, then, first of all, it must be accredited as an IT company. In addition to the possibility of using tax incentives, State accreditation allows IT companies to apply for government support measures, including those provided for by the Decree of the President of Russia of March 2, 2022, No. 83

The Russian Ministry of Digital Development carries out state accreditation of IT companies.
The detailed procedure for state accreditation of IT companies was approved by the Government of the Russian Federation by Resolution No. 1729 of September 30, 2022, and by Decree of the Government of Russia of February 22, 2023, No. 296 changes were made to this procedure for state accreditation of IT companies.

What does IT company accreditation provide?

1. The reduced insurance contributions on employees' salaries.
According to the Tax Code, clause 2.2 of Article 427, IT companies can pay insurance contributions using reduced rates of 7.6% of insurance contributions calculated from employee salaries under the limit base (limit value is 1 917 000 rubles in 2023). To compare, the standard rate of insurance contributions in Russia is 30%. Once an employee’s income achieves 1 917 000 rubles, the rate of the insurance contributions is 0%.
To apply the benefit, the IT company must comply with the condition on the share of income from IT activities. The percentage of IT activities in the company’s total revenue must be more than 70%

2. The reduced corporate income tax.
The corporate income tax rate is 0% in 2022−2024. IT company must comply with the condition that the share of income from IT activities is more than 70% (clause 1.15 of Article 284 of the Tax Code of Russia);

3. Reduced tax rates when using a simplified taxation system.
For IT companies using a simplified taxation system, regions of Russia can set lower tax rates. For example, in the Moscow region, for the simplified tax system "Income," the rate is 1% (against the standard rate of 6%), and for the simplified tax system "Income minus expenses" - 5% (against the standard rate of 15%). This tax incentive is set in Article 2.4 of the Law of the Moscow Region dated February 12, 2009, No. 9/2009-OZ).

4. Provision of preferential mortgages for employees of an IT company at a rate of up to 5% per annum.
The specified support measure is available to employees of accredited IT organizations under the age of 50 (inclusive) with an average salary of 3 months before deduction of personal income tax:

from 150, 000 rubles — for employees of companies whose place of work is located in Moscow;
from 120, 000 rubles — for employees of companies whose place of work is located in cities with a population of over a million (except Moscow);
from 70, 000 rubles — for employees of companies whose place of work is located in cities and other municipalities that are not million-plus;

5. Exemption from inspections by state and municipal control bodies, as well as on-site tax audits in 2022 — 2024;

6. Concessional lending.
Providing loans to organizations at a preferential rate of 1 to 5% per annum and for accredited IT companies at a preferential rate of up to 3% per annum for the implementation of projects for the development and (or) implementation of digital technologies based on Russian solutions;

7. Providing a deferment from conscription for military service to citizens working in accredited IT companies;

8. Simplified employment for foreign employees and obtaining a residence permit for foreign citizens recruited to work in accredited IT companies.
A foreign citizen working in an accredited IT company can get a termless residence permit without obtaining a temporary residence permit, and family members can also receive a residence permit under the same scheme.

Also, foreign IT specialists can conclude an employment contract or a civil contract for the provision of services with Russian IT companies without obtaining a work permit or patent.

Previously, to obtain a residence permit, a foreign IT specialist was required to live for at least one year under a temporary residence permit, which was issued within the quota annually approved by the Cabinet of Ministers.

9. Accelerated depreciation of fixed assets and intangible assets.
IT companies can take advantage of accelerated depreciation by applying an increasing ratio of no more than 3 to the basic depreciation rate for certain types of property and intangible assets.

Who can receive state accreditation?

As a general rule, IT companies have the right to receive state accreditation if:

The main type of economic activity is one of the types contained in the list of types of economic activity or included in the subclass/class/group/subgroup of types provided for in Appendix No. 1 to the Regulations on State Accreditation, such types of activities include computer software development, consulting services in this area and other related services and other types;
The average salary of employees is not less than the average for the country or region of Russia where the company is registered. The number of employees does not matter;
Income from IT activities more than 30%;
The company’s official website contains information about ongoing IT activities in Russian language.

A company can undergo a simplified state accreditation procedure if it meets the following criteria (in addition to those listed above):

The company’s total income is more than 1 million rubles;
The company is the copyright holder of the software. This software should be included in the register of Russian software;
The company has income from selling rights to software included in the register of Russian software.

Organizations created less than three years before applying for accreditation (startups) can receive state accreditation without confirming that 30% of the organization’s income is derived from IT activities if:

The company’s income since its creation is less than 1 million rubles;
The company is registered in the regional register of startups (subject to its availability in the constituent region of the Russian Federation where the organization is registered).

Before applying for state accreditation, a company must submit consent to disclosing information constituting a tax secret to the Federal Tax Service of Russia.

The application and documents for accreditation are submitted electronically via the "Unified Portal of State and Municipal Services."
Confirmation that an IT company has state accreditation is an entry in the register of accredited IT companies (with the status "Valid"). The register of accredited IT companies is available on the official website of the Ministry of Digital Development (access may not be reachable in some countries)
In addition to accreditation, on the Unified Portal, a company can go through a planned procedure for confirming the status of an IT company, obtain an extract from the register of accredited IT companies, cancel an IT company accreditation record, and use a salary matching calculator.

The Ministry of Digital Development makes decisions on granting state accreditation to an organization or on revoking state accreditation within 15 working days;
You can also receive an extract from the register of accredited companies within one business day.

Several companies that cannot be accredited

Accreditation will be denied in the following cases:

Case
A company does not meet the criteria for IT companies
1
Case
A company with direct or indirect government participation of at least 50%
2
Case
A company is a government body, state unitary enterprise, state company, state corporation, public law company, state or municipal institution
3
Case
A company is a credit, non-credit organization, insurance organization, telecom operator, credit history bureau, dependent company of the bank, performing the functions of a financial agent
4
Case
A company is included in the list which is approved by order of the Government of the Russian Federation of January 23, 2003, No. 91-r
5
Case
A company has a tax debt of more than 3,000 rubles
6
Case
The head of the organization has an unexpunged or outstanding criminal record

7
Case
A company did not provide consent to disclose tax secrets
8

Validation and verification procedures for IT companies

The regulation stipulates that accredited IT companies shall carry out the procedure to confirm compliance with the requirements for accredited IT companies organizations. The procedure should be made annually until July 1 (starting from 2023). Organizations will need to provide information about the website, and income (expenses) from activities in information technology. The Russian Ministry of Digital Development may also conduct an unscheduled audit.

If the organization is the copyright holder of a program for electronic computers and databases included in the Unified Register of Russian software and databases and has income from the sale of rights to such a program during the current and (or) previous year, an extraordinary inspection and the annual confirmation procedure for compliance with the average monthly salary and another remuneration is not carried out about such an organization.

IT companies and VAT

According to sub-item 26 clause 2 article 149 of the Tax Code of the RF, the sale and transfer of rights to software from the Russian software register and their support — updating and expanding functionality — are exempted from VAT.

However, for software to be included in the registry, the following conditions must be met:

A company should have exclusive rights to the software.
The software must work and be sold throughout Russia.
Russian citizens or firms must own an IT company. Only a Russian company can update and manage software from the registry, as well as provide warranty service, technical support, and modernization.
An IT company’s revenue from foreigners or Russian companies controlled by them over the last year should be no more than 30%. Revenue for all transactions with software is taken into account: use, development, modification.
The software interface is implemented in Russian. The software’s source text and object code are stored in the territory of Russia.

Outsourcing Solutions will gladly help register IT companies in Russia and provide consulting support, tax advice, and further accounting services. We can also determine if you have to register a company in Russia or if your company needs to be registered for VAT purposes only in Russia as an online services provider.

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