08.06.10

In cases  where a foreign company licenses its trademarks to a Russian organization, Russia is considered the location where these services took place for calculating taxes on this. If the Russian organization pays a vendor that later on will be added to its account for payment for services under the contract, then the Ministry of Finance considers this a preliminary payment of services. Therefore, a non-resident must pay VAT on these prepayments.

This VAT is deductable on the basis of invoices after the services provided for by the licensing contract are performed, but only those services that are part of transactions subject to VAT. If the foreign organization gives a refund due to a refusal to conclude a license contract, the VAT that has already been paid is also deductable (Ministry of Finance Letter #03-07-08/238 dated November 20, 2009).

Translated by Alinga Consulting Group.

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Source: Российский налоговый портал