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.