Starting 01.01.2021, the provision regarding VAT exemptions in relation to operations for the sale of software or rights to it has undergone significant changes. In accordance with the latest edition of sub. 26 p. 1 of Art. 149 of the Tax Code of the Russian Federation, it is possible to apply the VAT exemption only if the software is included in the unified register of Russian software (it is posted on the website https://reestr.minsvyaz.ru/reestr/) and if the subject of the transaction is the transfer of the exclusive rights to the software (earlier, the transfer of rights to use the software, i.e. transfer of non-exclusive rights, also fell under the benefit).
Accordingly, when it comes to the transfer of non-exclusive rights to software, as well as to the transfer of exclusive rights to software that is not in the above register, then since 01.01.2021 such a transaction should be subject to VAT.
We would like to note that this special register contains only software created by Russian organizations and resident organizations of the EEU, which are commercial organizations without predominantly foreign participation. That is, software created by foreign companies does not appear in this register. Therefore, the VAT exemption does not apply to such software, which means that the value of the transaction from this year should be formed taking the tax into account.
At the same time, a Russian buyer should not act as a tax agent for VAT when purchasing a software from a foreigner. This is due to the fact that according to Art. 174.2 of the Tax Code of the Russian Federation when purchasing “electronic services” from a foreign organization (which also includes the granting of rights to use computer software via the Internet, including by providing remote access to them), the obligation to pay VAT falls exclusively on the foreign person. In this regard, the foreign company must be registered with the “Russian” tax authority, taking into account clause 4.6 of Art. 83 of the Tax Code of the Russian Federation. This conclusion is also confirmed in the Letter of the Ministry of Finance of the Russian Federation dated 03/04/2021 No. 03-07-13 / 1/15393.
If the foreign entity has not fulfilled this obligation, then the Russian organization should not become a tax agent for VAT and pay this tax for it, as stated in the Letter of the Ministry of Finance of the Russian Federation dated 14.12.2020 No. 03-07-08 / 109049.
Thus, if a Russian organization acquires a software from a foreign organization after 01.01.2021, then the cost of such software must include the amount of VAT, which it does not need to withhold as a tax agent. A foreign company must pay this VAT on its own, having previously registered with the Russian tax authority. The Russian buyer on the basis of clause 2.1 of Art. 171 of the Tax Code of the Russian Federation can deduct the amount of VAT accounted for in the cost of software by a Russian organization. But for this, the relevant documents must be available (an agreement and (or) a settlement document with the allocation of the tax amount and an indication of the taxpayer identification number and the code of the reason for registering a foreign organization, as well as documents for transferring payment, including the amount of tax, of a foreign organization).
If you have similar questions, the specialists of our company are ready to analyze them in each individual case, just write to us at info@sterngoff.com.
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