Russia’s Ministry of Finance issued several letters dedicated to the question of determining the place of realization of certain services provided by foreign companies.
In Letter #03-07-РЗ/31594 from July 1, 2014, the financial authority stated that Russia is not considered the place of realization of services for online server access provided by a foreign organization, and this service is not subject to VAT in Russia.
Letter #03-07-РЗ/32215 from July 3, 2014, explains that in situation when Russian organization purchases design documentation services provided by a foreign company, in this case place of realization of services is Russia, the Russian organization acts as a tax agent and is obligated to calculate and pay appropriate taxes in the budget.
In Letter #03-07-08/35368 from July 18, 2014, the Ministry explains procedures for determining the place of realization of services of a foreign company prospecting clients for a Russian organization. If the Russian organization signs contracts with the clients, Russia will be recognized as place of realization of services only if the activity of the company offering the services is conducted in Russia. Thus, if the services are offered by a foreign company without a permanent representation in Russia, the services are not subject to VAT.
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