From 1st January 2019, foreign suppliers of business-to-business (B2B) electronically supplied services are required to register with the Federal Tax Service in Russia.The method applied in 2018 whereby the Russian business customer collects and remits the VAT at the standard 18% rate to the tax authorities through the reverse charge mechanism is not applicable anymore.
The registration requirement is triggered once the sales of digital services to the value of RUB 1 is made.
The impacted services are listed in Article 174.2 of the Russian Tax Code. Please see below in detail
For the purposes of this chapter, the provision of services in electronic form is recognized as the provision of services through the information and telecommunications network, including through the information and telecommunications network “Internet” (hereinafter referred to as the “Internet” network), automated using information technologies. These services include:
- granting rights to use software for electronic computers (including computer games), databases via the Internet, including by providing remote access to them, including updates to them and additional functionality;
- the provision of advertising services on the Internet, including using programs for computers and databases operating on the Internet, as well as the provision of advertising space on the Internet;
- provision of services for the placement of proposals for the acquisition (sale) of goods (works, services), property rights in the Internet;
- rendering through the Internet the services of providing technical, organizational, informational and other opportunities carried out using information technologies and systems for establishing contacts and concluding transactions between sellers and buyers (including the provision of a trading platform operating on the Internet in real time at which potential buyers offer their price through an automated procedure and the parties are notified of the sale by sending automatically message being created);
- providing and (or) maintaining a commercial or personal presence on the Internet, supporting electronic resources of users (websites and (or) pages of websites on the Internet), providing access to them by other network users, enabling users to modify them;
- storage and processing of information, provided that the person who submitted this information has access to it through the Internet;
- providing real-time computing power for placing information in the information system;
- the provision of domain names, the provision of hosting services;
- the provision of services for the administration of information systems and sites on the Internet;
- the provision of services carried out automatically via the Internet when data is entered by the purchaser of the service, automated services for data retrieval, their selection and sorting by request, providing the specified data to users via information and telecommunication networks (in particular, stock exchange reports in real time , real-time automated translation);
- granting rights to use electronic books (publications) and other electronic publications, informational, educational materials, graphic images, musical works with or without text, audiovisual works via the Internet, including by providing remote access to them for viewing or listening through the Internet;
- provision of services for searching and (or) providing information about potential customers to the customer;
- providing access to search engines on the Internet;
- statistics on sites on the Internet.
For the purposes of this chapter, the services in electronic form specified in the first paragraph of this clause do not include, in particular, the following operations:
- the sale of goods (works, services), if, when ordered through the Internet, goods are delivered (works, services) without using the Internet;
- implementation (transfer of rights to use) of programs for electronic computers (including computer games), databases on tangible media;
- e-mail consulting services;
- the provision of services to provide access to the Internet.
Registration and Returns
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 be due on a quarterly basis by the 25th day of the month following the reporting period.
Should you have any additional questions, please contact:
Office: +7(495) 967 6236
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