VAT Registration in Russia - 2023 Procedure
VAT Registration in Russia
Updated on Tuesday 21st March 2023 Rate this article
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The VAT registration in Russia is required for both local and foreign companies. Our law firm in Russia can help foreign investors in setting up a business in this country with the VAT registration in Russia as part of the company incorporation procedure. Plus, if interested in immigration to Russia, you can benefit from information and support.
Russian VAT registration for foreign companies
There is an obligation for foreign companies operating in Russia to register for VAT, especially after the first 30 days of activity on the market. The Russian VAT is obtained after a series of formalities and local filing rules if the products are imported into Russia and/or distributed on the territory of the country. Also, the Russian VAT for foreign companies is also necessary for the supply of services, if Russia is the place of supply. We remind you of some rules for VAT registration in Russia as a foreign company:
- When it comes to foreign companies operating in Russia, these are required to register for VAT before they start making deliveries, importing, or exporting goods and services in/from Russia.
- If you establish a company in Russia, the registration for the payment of taxes also involves the one for VAT. The authorities will issue a tax number for the company.
- There is no sales registration threshold for VAT in Russia.
On the other hand, it is allowed to register for Russian VAT without establishing a local company. In this case, the registration can be done in your own name, without needing a tax representative.
It is important to understand the legislation referring to taxation in Russia, a matter where our local advisors can provide legal advice. Get in touch with us for further details.
| Quick Facts | |
|---|---|
| We offer VAT registration services | Yes |
| Standard rate | 20% |
| Lower rates | 16.67% for foodstuff, certain children’s supplies, medicine, water |
| Who needs VAT registration | Companies with taxable supplies in Russia |
| Time frame for registration | Around 30 days |
| VAT for real estate transactions | 18% |
| Exemptions available | For: - IT and digital sectors, - individual entrepreneurs with turnover less than RUB 2 million in 3 years |
| Period for filing | Quarterly |
| VAT returns support | Yes |
| VAT refund | For non-resident companies registered in Russia |
| Local tax agent required | Not mandatory, but recommended |
| Who collects the VAT | - retailers, - manufacturers, - wholesalers |
| Documents for VAT registration | - certificate of incorporation, - standard forms |
| VAT number format | INN (ИНН) followed by 10 digits |
| VAT de-registration situations | When companies close their operations |
VAT registration in Russia for a local company
The procedure of obtaining a VAT number in 2023 can be completed upon the registration of a business or after reaching the above-mentioned threshold in the case of Russian companies. E-service providers are also required to register for VAT in Russia before starting any operation here.
In terms of documents, these must provide information about their registration details (Certificate of Incorporation), proof of reaching the mandatory registration threshold in the case of local companies or an estimate of the turnover when voluntary registration is sought. Foreign companies are required to provide similar documents issued by the authorities in their home countries. It is important to note that foreign businesses can appoint a local representative for tax and VAT registration, however, there is no obligation in this sense. The documents must be filed with the Federal Tax Office in Russia and the VAT numbers are issued within a matter of days.
Our law firm in Russia can guide local and foreign business owners in registering for VAT. An advantage of obtaining a VAT number in Russia is the possibility of easing the procedure of obtaining EORI numbers and trading with companies in the European Union.
VAT legislation in Russia
The value added tax is one of the largest contributors to the Russian economy, as the local market is one of the largest in the world. The VAT is regulated by the Russian Tax Code. Under the law, VAT registration is not a mandatory requirement for companies in Russia. Obtaining a VAT number is different for local and foreign companies operating in Russia. Even if there no minimum turnover that imposes VAT registration in Russia, the following activities can determine such a procedure. These activities refer to:
- the supply of goods and services worth more than 2 million RUB requires VAT registration for local companies;
- foreign companies must register for VAT if they deliver goods or supply services in Russia;
- import and export of goods also requires obtaining a VAT number in Russia for both local and foreign companies;
- e-service providers are also subject to VAT registration requirements in Russia.
Foreign investors who want to open companies in 2023 in Russia can obtain more information on the VAT registration requirements from our Russian lawyers. In terms of relocation to Russia, you may address your questions to our immigration lawyers in Russia.
In Russia, there is a possibility to request VAT exemption if the turnover of a registered company is below RUB 2 million in the proceeding 3 years. On the other hand, the registration procedure normally takes around 5 days, but there are situations in which the period might extend to 30 days.
We invite you to read about VAT registration in Russia in the scheme below:
The 0% VAT applies to suburban rail passenger transport and varied exports until 2029. This was a law modification that was recently added for economic operators in Russia.
New VAT registration rules for e-service providers in Russia
As mentioned above, e-service providers must comply with new regulations when supplying goods and services in Russia. Under these new rules, non-resident companies selling goods and services to companies in Russia must register for VAT here. This new regulation appeared after 2017 when it became mandatory for foreign e-commerce companies selling goods to private consumers in Russia to register for VAT.
Foreign investors providing e-services in Russia must pay attention to the new VAT rates. Our lawyers in Russia can offer assistance to foreign companies’ representatives who want to register for VAT in this country. We can also explain the requirements for immigration to Russia.
The Russian Federal Tax Services is in charge of issuing the VAT code for companies with activities in this country. This institution is controlled by the Ministry of Finance in Russia. You can conduct your business in Russia right after the VAT code is issued.
VAT rates in Russia
According to the Russian Federal Tax Office, some VAT rates have been changed. At the level of 2023, the following rates are available:
- the new standard rate which is set at 20%;
- the reduced 10% rate is for various foodstuff, medical and pharmaceutical products;
- a 0% rate is also in place for certain goods and services sold in Russia;
- a new 16.67% rate for foreign e-service providers was introduced in 2019.
Is a tax representative required in Russia?
Although considering that the legislation may seem quite complex regarding the taxation system, especially for foreign entrepreneurs, the authorities do not impose the obligation to have a tax representative for Russian VAT registration.
However, the recommendation is that foreign entrepreneurs in Russia hire the services of a local agent to help them with the registration formalities for the payment of taxes, including VAT. Even if you do not need to open a company in order to register for VAT, you must consider specialist help.
Content of VAT invoices in Russia
Invoices to clients in Russia must include Russian VAT number, business name and address, invoice date and sequencing number, VAT rate, type of products, and total amount with VAT. There are dedicated programs and software that can be used in companies that offer for sale goods and services subject to VAT registration in Russia. It is important to align yourself with the tax regulations regarding the payment of related taxes, so do not hesitate to talk to one of our Russian attorneys.
When is VAT not applied in Russia?
There are also exceptions to VAT payment in Russia, as follows:
- The transfer of fixed assets, intangible assets, and (or) other assets to non-commercial organizations to be used in carrying out their main statutory activities without direct involvement with various business activities.
- Carrying out operations associated with the circulation of Russian or foreign currency, except for numismatic purposes.
- The transfer of assets involving investments made by companies and partnerships, contributions of shares to mutual funds of cooperatives, or contributions made under a simple partnership contract in Russia.
Making investments in Russia
There are multiple investment options in Russia, and among them, the energy, natural resources, and manufacturing sectors are the most sought after and valued. As the authorities continue to implement support and incentives to attract foreigners in making investments, Russia remains among the favorite countries for business development. We also mention some statistical data:
- FDI stocks total around 24.2% of Russia's total GDP, according to data for 2021.
- Around USD 24,938 per capita represents the net national income in Russia.
For updates related to the VAT laws and registration requirements, please contact our Russian law firm. Also, you can talk to our immigration lawyers in Russia if you want to move to this country.
