Month: February 2019

As per February 15 the term during which foreign organizations providing E-services must file an application on tax registration will expire.

Since January 1, 2019 all foreign organizations, that sell electronic services and content to organizations, personal entrepreneurs and individuals, are obliged to pay Russian VAT to the budget of the RF regardless of whether they have a permanent representative office. All foreign suppliers must be registered in the tax office not later than 15.02.2019 via the online service “VAT-office of the IT-company”.

After the company has been registered with the tax office it will receive an INN and KPP for entering into an other service – “Personal account of a foreign company”. Through the personal account one can file tax declarations, pay tax,  communicate with and send documents.If the foreign company would not get registered with the Russian tax office and would not pay VAT, it could face severe fines up to 10 per cent of its revenues. In addition, VAT, a penalty and fine in the amount of 20-40 per cent of the unpaid tax sum will also be due by the foreign company.

Are you sure that your company does not provide e-services as listed by RF legislation?

From January 1, 2019 an exemption from personal income tax regarding the sale of property has become effective in the Russian Federation. Property comprises both immovable and other property except proprietary rights.

When gaining profit from the sale of property, both non-residents and residents of the RF can now be exempted from personal income tax. For this exemption to apply they must have the property freehold in their possession for a certain term. Based on the type of property and the circumstances of its acceptance, there are minimal terms for possession of property, after which no personal income tax would not be due on the sale.

The minimal ownership term stipulated for immovable property
is 3 years received:

• by means of inheritance or based on a documented gift from a family member or close relative;

• as a result of privatization;

• according to an annuity agreement with permanent alimony.

In other cases, the minimal ownership term for immovable property is five years.

Moreover, the 3-year ownership term is also applicable to property other than immovable property (except for proprietary rights).

If the non-resident would fail to achieve the minimal ownership term, the personal income tax would be due at a rate of 30 per cent of the total sum of the sales profit.

In case a non-resident uses property for entrepreneurial activity, the exemption of personal income tax can be applicable only to profit from the sale of vehicles, houses, apartments, rooms, dachas, garden houses or a any share/participation in them taking into account the abovementioned requirements.

These amendments follow from the Federal Law dated 27.11.2018 No. 424-FZ. If you have any questions, please contact Juralink by telephone or email. Our specialists will be pleased to support you on this issue.