Russia VAT Guide 2026 — NDS (22%/10%) Explained

What is NDS?

NDS (НДС — налог на добавленную стоимость) is the Russian value-added tax, administered by the Federal Tax Service (FNS / ФНС). It is an indirect tax levied on the sale of goods, works, and services in Russia, as well as on imports into Russia. NDS is charged at each stage of the production and distribution chain, with businesses entitled to deduct input VAT (входной НДС) paid on their purchases. The end consumer ultimately bears the tax.

Standard Rate — 22%: Effective from 1 January 2026, the standard NDS rate increased from 20% to 22%. This applies to the majority of goods, works, and services not specifically exempt or subject to a reduced rate. The rate increase was enacted to fund increased social spending and infrastructure investment. All VAT-registered businesses must charge 22% on their taxable supplies unless a reduced rate applies.

Reduced Rate — 10%: A reduced rate of 10% applies to certain socially significant goods, including: (a) most food products (except luxury food items and alcohol), (b) children's goods (clothing, footwear, nappies, school supplies, and children's furniture), (c) medicines and medical devices (included in the approved list by the Russian government), (d) periodical printed publications and books (excluding advertising and erotica), and (e) domestic passenger air and rail transport. The exact list of goods qualifying for 10% is defined by the Russian government and updated periodically. Taxpayers using the 10% rate must maintain separate accounting for supplies at different rates.

Zero Rate — 0%: A 0% rate applies primarily to exports of goods (subject to customs export procedures), international transportation services, works and services directly related to exports, services provided under international treaties, and certain goods and services related to space activities. The 0% rate is not an exemption — exporters must still file VAT returns and document their entitlement to the 0% rate with supporting customs and shipping documents. Failure to provide the required documentation within 180 days converts the 0% rate to the standard 22% rate, with penalties and interest.

VAT Registration

VAT registration in Russia is mandatory for entities whose revenue exceeds certain thresholds. The registration is with the FNS at the taxpayer's place of registration (legal address for companies, place of residence for individual entrepreneurs).

Mandatory Registration Threshold: A legal entity or individual entrepreneur (IP) must register for VAT if its revenue from the sale of goods, works, or services exceeds 2 million RUB per quarter (for three consecutive months, not cumulatively). Once the threshold is exceeded, registration must be completed and VAT must be charged from the first day of the month following the month in which the threshold was exceeded. There is no annual registration threshold — the test is applied quarterly. Entities below the threshold may still voluntarily register for VAT. Voluntary registration is common for businesses that: (a) want to recover input VAT on their purchases, (b) deal primarily with VAT-registered customers who need input VAT deduction, or (c) import goods into Russia (import VAT is payable regardless of registration status).

Registration Process: The VAT registration application is submitted through the nalog.ru portal (личный кабинет юридического лица or личный кабинет ИП). The standard processing time is 5 business days. Upon registration, the taxpayer receives a VAT registration certificate and is added to the unified state register of taxpayers. Once registered, the taxpayer must issue VAT invoices (счета-фактуры) for all taxable supplies, maintain purchase and sales ledgers (книга покупок и книга продаж), and file quarterly VAT returns. Deregistration is possible if the taxpayer's revenue falls below the threshold for a sustained period or if the business is liquidated.

VAT Agents (налоговые агенты): In certain cases, the buyer must act as a VAT agent and withhold and remit VAT on behalf of the seller. This applies to: (a) purchases of goods, works, or services from foreign entities not registered for VAT in Russia, (b) lease of state or municipal property, (c) sale of confiscated or ownerless property, and (d) purchase of raw animal hides, scrap metal, and certain other specified goods. VAT agents must issue VAT invoices on behalf of the seller, file VAT returns reporting the withheld VAT, and remit the VAT to the budget. The VAT agent may generally deduct the withheld VAT as input VAT (creating a neutral economic effect).

VAT Returns

The Russian VAT return (налоговая декларация по НДС) is filed quarterly. The filing and payment deadline is the 25th day of the month following the end of the quarter. For example, the Q1 2026 VAT return is due by 25 April 2026.

VAT Return Form: The VAT return is filed electronically in a format approved by the FNS. It includes: (a) the total amount of VAT calculated on sales at each applicable rate (22%, 10%, 0%), (b) the amount of input VAT claimed for deduction, (c) the net VAT payable or refundable, and (d) detailed information from the purchase ledger (книга покупок) and sales ledger (книга продаж), which are submitted as appendices. The return also includes information from the VAT invoice register (журнал учёта счетов-фактур) for intermediary activities.

Electronic Filing: Electronic filing is mandatory for all VAT-registered taxpayers. Paper filing is only permitted for VAT agents that are not VAT-registered and in certain limited circumstances. The return is submitted through the taxpayer's personal account on nalog.ru or via a certified electronic document management (EDM / ЭДО) provider. The FNS applies strict format validation rules — returns that fail validation are rejected and deemed not filed. Taxpayers who exceed the filing deadline face penalties as described in the FAQs below.

VAT Refund Process: If input VAT exceeds output VAT in a given quarter (a VAT refund position), the taxpayer may apply for a refund (возмещение НДС). The refund process involves a cabinet (desk) audit (камеральная проверка) by the FNS, which lasts up to 2 months (extendable to 3 months in complex cases). The FNS examines the VAT return, the purchase and sales ledgers, VAT invoices, and may request additional documents. If the audit is passed, the refund is transferred to the taxpayer's bank account. If the FNS identifies issues, it may issue a decision refusing the refund, which can be appealed. An accelerated refund procedure (заявительный порядок) is available for taxpayers who meet certain criteria (low-risk profile, bank guarantee, or tax deposit), allowing the refund to be issued before the cabinet audit is completed.

Desk Audits (камеральная проверка): The FNS routinely conducts desk audits of VAT returns. The audit is automated to a large extent — the FNS's AIS-NDS system cross-checks every VAT invoice against the counterparty's return. Discrepancies (e.g., a seller reporting an invoice but the buyer not claiming the corresponding deduction, or vice versa) trigger automated queries and may lead to a request for documents or a field audit. The taxpayer must respond to the FNS's queries within 5 business days. Failure to respond can result in penalties. The AIS-NDS system is a powerful compliance tool — it has significantly reduced VAT fraud (especially "missing trader" fraud) and increased audit coverage. Taxpayers should ensure their VAT invoices are accurately recorded and match their counterparties' filings.

Exemptions and Special Regimes

Russia provides a number of exemptions from NDS and alternative tax regimes that may reduce or eliminate VAT obligations for qualifying businesses.

Exempt Operations (ст. 149 НК РФ): Certain types of transactions are exempt from NDS, meaning no VAT is charged and no input VAT can be recovered (the exemption is not a 0% rate — it is an exemption without the right to deduct). Exempt transactions include: (a) healthcare and medical services provided by licensed medical institutions (including private clinics), (b) education services provided by licensed educational institutions, (c) financial services — including lending, deposit-taking, insurance, and securities transactions (excluding intermediary and consulting services), (d) insurance and reinsurance services, (e) sale of certain medical goods included in the approved list, (f) sale of shares in Russian companies and investment units, (g) services provided by religious organisations, (h) research and development work funded from the state budget, and (i) transport of passengers by public transport (excluding taxis). Businesses that conduct both taxable and exempt transactions must maintain separate accounting (раздельный учёт) to determine the proportion of input VAT that is deductible.

USN (Simplified Tax System — УСН): The USN (упрощённая система налогообложения) is a simplified tax regime available to small businesses and individual entrepreneurs with revenue under approximately 250M RUB per year and fewer than 130 employees. USN taxpayers are exempt from NDS (except for import VAT and certain other specified obligations) and pay a single tax on either: (a) 6% of revenue (USN доходы), or (b) 15% of revenue minus expenses (USN доходы минус расходы). However, USN taxpayers do not issue VAT invoices and their customers cannot claim input VAT on purchases from USN suppliers. Starting in 2025 (and continuing in 2026), USN taxpayers with revenue exceeding 60M RUB are required to charge and remit VAT at reduced rates (5% or 7% depending on revenue level) unless they apply for an exemption. This is a significant change — previously, USN taxpayers were fully exempt from VAT regardless of revenue. USN taxpayers may voluntarily register for VAT under the general system if it is commercially beneficial (e.g., if their customers are VAT payers who need input VAT).

ESKhN (Agricultural Tax — ЕСХН): Agricultural producers can opt for the ESKhN regime, which imposes a flat 6% tax on revenue minus expenses and exempts the taxpayer from NDS (except import VAT). The ESKhN is available to agricultural producers and fisheries, provided that agricultural income accounts for at least 70% of total revenue. Like USN taxpayers, ESKhN taxpayers with high revenue may be required to charge NDS at reduced rates. Agricultural producers may also voluntarily register for VAT under the general system.

Input VAT Recovery Rules: VAT-registered taxpayers can deduct input VAT (входной НДС) on purchases of goods, works, and services that are used for taxable transactions. Input VAT on purchases used exclusively for exempt transactions is not deductible and is included in the cost of the goods/services. Input VAT on purchases used for both taxable and exempt transactions is apportioned based on the ratio of taxable to total revenue (the "pro rata" rule). Input VAT is recovered through the purchase ledger (книга покупок) and is claimed on the quarterly VAT return. To claim input VAT, the taxpayer must have a properly executed VAT invoice (счёт-фактура) from the supplier. Input VAT on imports is recoverable provided the import VAT was paid at customs and properly documented.

Import and Export VAT

Import VAT: When goods are imported into Russia, VAT is payable at the customs border as part of the customs clearance process. The VAT rate depends on the type of goods — generally 22% or 10% for eligible goods. Import VAT is calculated on the customs value of the goods plus customs duty and excise tax (if applicable). The importer pays the VAT to the customs authority (FCS — Федеральная таможенная служба) at the time of customs clearance, before the goods are released. For VAT-registered importers, the import VAT paid is generally recoverable as input VAT, provided the importer has the customs declaration (ГТД) and the customs receipt. For USN and other non-VAT-registered entities, import VAT is a non-recoverable cost. Import of certain goods may be exempt from VAT (e.g., humanitarian aid, certain medical equipment). Goods imported from EAEU member states (Belarus, Kazakhstan, Armenia, Kyrgyzstan) are subject to a simplified VAT collection procedure — VAT is paid through the tax authority rather than customs, and the rate is determined by the country of import.

Export — 0% Rate: Export of goods from Russia is subject to NDS at 0%. To apply the 0% rate, the exporter must submit a complete package of supporting documents to the FNS within 180 calendar days from the date the goods are placed under the customs export procedure. The required documents include: (a) the customs declaration (ГТД) with a customs stamp confirming export, (b) contracts with foreign buyers, (c) transport, shipping, and/or forwarding documents confirming the goods have left Russia, and (d) payment documents from the foreign buyer. If the documents are not submitted within 180 days, the export is reclassified as a domestic sale at the standard 22% rate, and the exporter must pay the additional VAT plus penalties and interest. However, if the documents are submitted late but before the FNS issues a tax assessment, the 0% rate may still be applied. Services related to exports (such as international transport, loading, and warehousing) may also qualify for the 0% rate. Exporters of services must maintain the same documentation standards as goods exporters.

Cross-Border Services — Reverse Charge: When a foreign entity provides services electronically or remotely to a Russian customer (B2B), the Russian customer is generally required to act as a VAT agent and apply the reverse charge mechanism. The Russian customer calculates NDS at the applicable rate on the service value, issues a VAT invoice in their own name, and claims the corresponding input VAT deduction (if they are VAT-registered). This applies to services such as software, IT services, consulting, marketing, advertising, and legal services provided by foreign entities. The place of supply for such services is deemed to be Russia if the customer is located in Russia. For B2C supplies of electronic services by foreign providers, the foreign provider must register with the FNS (or use an intermediary) and charge NDS at the applicable rate. Since 2025, foreign providers of electronic services have faced enhanced registration and reporting obligations, including the requirement to issue electronic VAT invoices in the Russian format.

FAQs

Do I need to charge VAT if I use USN?

Under the standard USN regime, taxpayers are exempt from NDS except for import VAT and VAT as a tax agent. However, from 2025, USN taxpayers with revenue exceeding 60M RUB per year must charge NDS at 5% (if revenue is 60-250M RUB under USN доходы) or 7% (under USN доходы минус расходы) unless they apply for an exemption. USN taxpayers with revenue below 60M RUB remain fully exempt from NDS and do not issue VAT invoices. If your customers are VAT payers who need input VAT, you may voluntarily register for VAT under the general system (22%) to make your supplies more attractive. Changing between regimes has specific transition rules — consult a tax advisor before switching.

What is входной НДС (input VAT)?

Входной НДС (input VAT) is the VAT paid by a taxpayer on purchases of goods, works, or services used in their business. If you are a VAT-registered taxpayer and the purchase is used for taxable transactions, you can deduct the input VAT from your output VAT (VAT charged to customers). The net result is that you remit only the difference to the budget. To claim input VAT, you must have a valid счёт-фактура (VAT invoice) from your supplier that matches the FNS's AIS-NDS records. Input VAT on purchases used for exempt transactions is not deductible and is included in the cost of the purchase. For mixed-use purchases, input VAT must be apportioned.

How do I get a VAT refund?

If your input VAT exceeds your output VAT in a given quarter, you are in a VAT refund position. To obtain a refund, file your quarterly VAT return showing the excess and submit an application for refund (заявление о возмещении). The FNS will conduct a cabinet audit (камеральная проверка) of your return, typically lasting 2-3 months. If the audit confirms the refund, the amount is transferred to your bank account. If the FNS identifies discrepancies, it may issue a decision partially or fully denying the refund. You can appeal an unfavourable decision within 1 month. For accelerated refunds, taxpayers with a low-risk profile can apply for refund before the audit is complete by providing a bank guarantee or a tax deposit. The accelerated procedure generally takes 2-3 weeks. VAT refunds most commonly arise from exporters (0% rated exports with substantial input VAT on domestic purchases) and businesses with significant capital investments (machinery, equipment, construction).

What are the penalties for late filing?

Late filing of a VAT return carries a penalty of 5% of the VAT payable under the return for each month (or partial month) of delay, up to a maximum of 30% of the amount due. The minimum penalty is 1,000 RUB. If the return shows a zero or refund amount, the minimum penalty still applies (1,000 RUB) for failure to file on time. Late payment of VAT accrues interest (пеня) at 1/300 of the Central Bank key rate per day of delay for the first 30 days, and 1/150 from day 31 onwards. Additionally, the FNS may block the taxpayer's bank account (приостановление операций по счетам) if the VAT return is not filed within 20 days of the deadline. The account blockage prevents all outgoing transactions and is one of the most powerful enforcement tools available to the FNS. Criminal liability may arise for large-scale VAT evasion (unpaid VAT exceeding approximately 15M RUB over a 3-year period), with penalties including fines of up to 500,000 RUB or imprisonment of up to 6 years.