Foreign Company Outsourcing Staff To Russian Organization Must Pay VAT

The Ministry of Finance has issued an official letter explaining, if personnel are outsourced from a foreign company to a Russian organization for work in the Russian Federation, then the Russian Federation is considered to be the place the service is rendered. Therefore, the VAT is applicable to the cost of the services. The Russian organization purchasing these services from a foreign company acts as a tax agent obligated to calculate and pay VAT accordingly.

This is according to Letter of the Ministry of Finance # 03-07-08/304 from November 2, 2010.