25 October 2019 is a deadline for the submission of VAT returns for Q3 2019 which is the first VAT period when input VAT related to services (work) deemed supplied outside Russia may be recovered.
Starting 1 July 2019 the new rules allow Russian companies to recover in most cases input VAT related to services charged to foreign customers without VAT (such as marketing, advertising, consulting, legal and some other services). Before 1 July 2019 this VAT was not recoverable and was an extra cost. This cost usually has been included into the service fee charged to the foreign company.
Case 1 – A Russian subsidiary renders marketing, consulting or other services to a foreign group company. This is often relevant to software, technology, industrial products, FMCG, financial companies.
Case 2 – A Russian company renders consulting, advertising, engineering, construction (outside Russia), software development, electronic or some other services to foreign third party customers as a main business. This is usually relevant to infrastructure (construction, engineering), professional services and IT companies.
Read an April 2019 report [PDF 306 KB] prepared by the KPMG member firm in Russia
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