Russian tax authorities recommend withholding VAT on B2B e-services in light of sanctions

In short

Russian B2B buyers must self-assess and pay VAT to the Russian budget on Electronically Supplied Services (ESS) purchased from foreign suppliers. This is an official recommendation of the Federal Tax Service of Russia (FTS).1

In detail

Under the current Russian ESS B2B VAT regime, foreign ESS suppliers must collect and pay VAT directly to the Russian budget. The recommendations of the FTS seem to help facilitate the payment of VAT in cases where making a payment from a foreign bank account to the Russian Treasury becomes difficult or impossible, in particular because of the applicable sanctions.

If the Russian buyer self-assesses and pays VAT, the Russian tax authorities should not require the foreign seller to pay this tax and should not dispute the buyer’s VAT recovery.


Earlier in 2019, the FTS already qualified this mechanism as acceptable2 (see our Legal Alert of April 26, 2019). It has also been tested in practice. In light of the latest FTS recommendation, foreign ESS suppliers can now consider multiple VAT payment options to comply with Russian tax law.

We will be happy to assist you in selecting the most appropriate VAT payment route, subject to your facts and applicable penalties.

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