VAT registration for online service providers

If a foreign company (intermediary company) provides electronic services to Russian individuals, it shall calculate and pay VAT in Russia for these electronic services.

From 01 January 2019 till 01 October 2022, in the case of providing both B2C and B2B electronic services, foreign e-service providers were obliged to be registered with the Tax authorities for VAT purposes. However, starting in October 2022, if the foreign company provides electronic services to a Russian legal entity (B2B), there is no need to be registered with the Tax authorities as a foreign e-services provider. In this case, a Russian legal entity should withhold and pay VAT instead of a foreign company as a tax agent.

The procedure is still the same for foreign providers of B2C e-services, and they need to be registered with Russian Tax authorities.

Providers of online services and intermediaries shall be registered in Russian Tax Authorities for VAT purposes, calculate, submit VAT tax return and pay VAT quarterly.

How to register as an online service provider?

There is a VAT office for e-service provides on the website of the Russian Tax Authorities, where the company can register as a provider of E-services. If you are not confident and don’t want to waste your time, you may apply to us, and we will apply for registration. As well, we can help you to understand whether your e-services are considered as online services under Russian legislation and does your company need VAT registration.

What types of online services are subject to VAT in Russia?

The full list of VATable online services is set by article 174.2 of the Tax Code of the Russian Federation.

The list includes, but not limited to, providing software, games, music, e-books, online cinema, advertisements, domain names, hosting, website, webpage support, trading platforms, search engines, social networks etc.

There are a lot of international companies that are already registered as an online service providers in Russian Tax Authorities, such as Google, Facebook, Amazon, Booking.com, and others. At the beginning of 2020, the total number of registered companies is more than 2 000. The full list of registered companies is presented on the official webpage of the Tax Authorities.

Shall the company be registered if it has a subsidiary in Russia?

No, there is no need for VAT registration, because in this case, VAT is paid by a Russian subsidiary. Only foreign companies that do not have any subsidiaries (representative office, branch) are required to be registered as a VAT taxpayer.

Outsourcing Solutions services for online service providers in Russia:

Stage

Consulting on tax legislation related to online services.

1
Stage

Registration online service provider in the Russian Tax Authorities.

2
Stage

Drafting and submitting tax returns quarterly.

3
Stage

Consulting on drafting correct wire transfer of VAT to Russian Tax Authorities.

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