RS Q & A VAT on the services provided by a foreign company

VAT on the services provided by a foreign company

A foreign company renders information services to a Russian organisation. The Russian organisation is a VAT tax agent.
Is the Russian organisation obligated to retain and pay VAT on the amount paid for the services of the foreign company, and at what point is the VAT paid?

In the event that the services provided by the foreign company, which is not registered with the tax authorities as a taxpayer, are carried out on the territory of the Russian Federation, then the Russian organisation is obligated to calculate VAT, withhold this sum from the foreign company and pay it to the Russian budget. Payment of VAT by the tax agent must be made simultaneously with the transfer of funds to the foreign company.

The tax base for calculating VAT is determined by the tax agent as the sum of income from the sale of services including tax. Thus, the amount transferred to the foreign contractor must make up the difference between the sum specified in the contract and the amount of VAT calculated and paid to the Russian budget.

Prepared by experts of the GARANT Legal Consulting Service
For detailed explanations of the reply, please, contact the authors