Russian VAT

[Nickcharles]

Hi,

We are an english company, who have been commissioned to make online video for another english company. Both of us are vat registered in the UK. We have to get 50% of this online video made in Russia by a Russian company who are similar to us. They are quoting us with 18% vat, but of course we need to either not pay this or somehow claim it back. Can anyone help shed some light on this, my accountant doesn't have any idea.

Thanks so much for any help.

[jpcentral]

I don't think you are going to find many experts on Russian VAT around. However, I've had a quick look.

Russia are not in the EU so there is no arrangement to charge zero VAT.

You cannot reclaim Russian VAT on a UK VAT Return.

The question is therefore whether they need to charge you VAT.

Export of goods is zero rated in Russia so, if your Russian company can be convinced that their supply to you is an export of goods they could probably charge you no VAT. Reading the summary, I think they would have to supply you with a physical product in order to qualify which doesn't sound as if that is likely to be the case.

There also seems to be a requirement to jump through a few hoops to justify a 0% VAT rate - "The application of a 0% VAT rate and recovery of the respective input tax should be confirmed by submitting a number of documents to the tax authorities within certain time limits." That certainly sounds as if justifying a 0% rate might be quite difficult.

I think you probably have to assume that the Russian company is more familiar with the workings of Russian VAT than us. It is probably worth asking them if the work they are doing can be classified as an export. If not, you will have to treat the VAT paid as a cost.