Regardless of where you’re based, you have to deal with Russian VAT rules if you have clients in Russia. VAT, or Value Added Tax, is a consumption tax levied on almost all goods and services. While you might already know that, you might be unaware of the specific rules surrounding your product, which you should follow if you want to stay tax compliant.
The standard VAT rate in Russia is 20%, with reduced rates of 16.67% and 0% applied based on the products you sell. This guide includes everything you, as a freelancer, need to know about VAT (or НДС in Russian) in a nutshell. Let's get started!
What are the different VAT rates in Russia?
There are three different VAT rates in Russia, and freelancers must charge the amount that applies to their products and services:
VAT comprises the largest source of federal revenue for Russia. There is no sales registration threshold, which means that even if you make just a single sale in the country, you must register for Russian VAT regardless of your yearly sales revenue or the service you provide.
Expatriates working in Russia are subject to comprehensive rules and, in most cases, employment visa/work permit requirements. A work permit, however, usually only allows you to work for the business that acquired it for you. Freelancing, hence, is largely illegal for foreigners in Russia.
Xolo can help you register for taxes as a freelancer in Russia and handle all the necessary paperwork on your behalf. With Xolo Go, you can use a slice of our company as a legal framework to invoice your clients anywhere in Russia and beyond.
Applications for VAT registration can be submitted online; the taxation period being from 1st January to 31st December. You need to report VAT to the Federal Tax Service of Russia every quarter.
VAT returns must be filed and taxes must be paid no later than 25th of the month following the end of a reporting quarter.
In Russia, tax is managed by the country’s tax authority, the Federal Tax Service of Russia, governed by the Ministry of Finance. You can register for VAT online, by following these instructions from the tax authorities and submitting an application for the same.
Once registered, you will receive a VAT registration number which links you in the Russia tax system as a legal business and tracks taxes you pay, the tax credits you receive, the tax you charge from customers, etc.
Alternatively, you can also register with the help of an agent. You can hire an accountant (or agency) to handle your VAT returns and dealings with the tax office. Xolo provides services like Xolo Go and Xolo Leap, which help with precisely this and any other VAT concerns you may have.
Registering for VAT is only the first step. From the day of your registration's effective date, you must:
VAT invoices are basically tax receipts, an official record of how much tax you charged and collected, and hence official proof of how much tax you owe the government. Russian invoices must include the following information:
If this sounds overwhelming, Xolo can help! We automatically generate, send, and store all your invoices digitally, so you won’t have to worry about misplacing them over the next decade.
Tax registration process can be tricky at times, but we hope this guide has helped clear your doubts! If you’re still confused about the different schemes and numbers and paperwork, Xolo offers a range of solutions that handles all the hassle while you focus on your core competencies.
With Xolo Go, you can easily freelance and invoice your clients, even without a registered company or LLC.
Xolo Leap is the easiest and most effective way to create your own company through Estonian e-Residency! Reduce time spent on mundane business administration and focus on what you do best!
Simply put, we do the hefty work for you so that you can enjoy the freedom of freelancing. So connect with us immediately, and we’ll help you get your one-person business up and running in Russia in no time!