Tax Support of Foreign Companies Providing E-Services

From January 01, 2019 foreign companies providing e-services, the place of supply of which is the territory of the Russian Federation, shall independently pay VAT from such services provided in Russia, irrespectively of whether the buyer of the services is a Russian organization, an individual entrepreneur or an individual. Buyers of such services are not regarded as tax agents any more.

Foreign companies providing electronic services shall:

  • register with a Russian tax authority (irrespectively of whether the e-services are subject to VAT or not),
  • prepare and submit the VAT returns,
  • pay the tax to the budget of the Russian Federation.

Providing of electronic services shall be recognized as services rendering through the information and telecommunication networks, including the Internet, in the automated way, using the information technologies.

The list of the electronic services is exhaustive and established in clause 1 of article 174.2 of the Tax Code of the Russian Federation. But description of such services in the tax legislation is general in nature and does not regard to the terminological and functional variety of the services offered in the IT market.

In their turn, the supervisory authorities represented by the Ministry of Finance of the Russian Federation distanced themselves from the matters of qualification of the services as electronic ones (Letter of the Russian Ministry of Finance No. 03-07-08/21817 dated April 12, 2017), and the legal precedents on this matter have not taken place yet.   Therefore, the matters of qualification and referring of particular types of services to the services listed in article 174.2 of the Tax Code of the Russian Federation are still the most complicated and unsettled.

 

ICLC undertakes to provide:

  • registration of a foreign company providing e-services to the Russian consumers with tax authorities of the Russian Federation;
  • interaction with tax authorities on behalf of the foreign companies (submission of the requested documents, preparation of responses to the requests of the tax authorities, obtaining of necessary clarifications);
  • calculation of VAT due and payable by the foreign company to the Russian budget;
  • preparation of VAT declarations and forwarding them to the tax authorities.

Also, we are ready to analyze the contracts concluded between the Russian buyers and foreign companies, in order to qualify the services rendered as the electronic services in accordance with the provisions of the Tax Code of the Russian Federation.