February 7, 2019

Electronic Services obligated to charge Russian VAT 2019 and standard Russian VAT increased from 18% to 20% (effective 1/1/19)

Foreign entities providing specific electronic services to Russian service recipients (B2C and B2B) will be obligated to register for VAT in Russia and generally charge 20% Russian VAT to the customes. The previous VAT system where Russian service recipients serve as VAT tax agents for the foreign supplier is no longer applicable.

Please note, the standard rate of Russian VAT increased from 18 % to 20% (effective January 1, 2019).

Invoices for such services provided after December 31st 2018 (regardless of the payment date) need to be grossed up (including VAT). The foreign legal entity then forwards the Russian VAT to Russian authorities based on its own Russian VAT registration.

To find out what this means for your North American company doing business with Russia, please contact our VAT experts for information and assistance.

The following services are affected by the change in the Russian VAT law:

  • provision of the right to use software and databases
  • data storage and processing services where the person providing data has access to the data through the internet
  • online provision of computing capacity
  • provision of domain names and hosting services
  • services for placing offers for the sale/purchase of goods, work, services and property rights, the provision of advertising space on the internet and services for establishing contacts; concluding contracts between buyers and sellers
  • administration and support of information systems and websites
  • provision of web based statistic services, the provision of access to internet search engines the provision of web based translation services, etc.

Euro VAT Refund, Inc. is happy to answer your questions and provide tailored recommendations. Contact our VAT experts today for more details.


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