Updating the VAT return for foreign sellers of electronic goods and services

In the area of cross-border e-commerce and digital services, tax administration continues to adapt to changing economic and technological conditions. The latest step in these changes is the update of the value-added tax declaration form submitted by foreign entities selling goods and providing e-services to individuals in the Russian Federation.

The declaration amendments are aimed at bringing the reporting into line with current tax parameters and more accurately reflecting the specific activities of foreign sellers and intermediaries operating through e-commerce platforms. The updates affect both the form’s structure and the procedure for completing it, requiring additional attention from taxpayers.

The updated declaration applies to foreign entities required to register for tax purposes in connection with the sale of goods or provision of services electronically to individuals. This applies to both direct sellers and intermediaries involved in settlements or sales arrangements through electronic trading platforms.

This taxation model reflects the specific nature of the digital economy, whereby foreign companies can conduct commercial activities in the domestic market without a physical presence, yet still incur tax liabilities.

Key aspects of the changes

The declaration is submitted electronically through specialized systems no later than the 25th of the month following the reporting period. Key innovations include:

• Inclusion of the general VAT rate of 22% and the corresponding calculated rate of 18.03%, which allows to reflect the current tax liabilities.
• Introduction of a new indicator for taxpayers who combine the roles of seller of their own goods and intermediary in the sale of goods from other suppliers.

The changes will come into effect on March 29, 2026, providing a period for preparation.

The introduction of a new taxpayer sign deserves special attention. This applies in cases where a foreign entity simultaneously sells its own goods and acts as an intermediary for the sale of third-party goods. This approach reflects the actual practice of electronic platforms and marketplaces, where a single participant can combine multiple roles within a single business model.

Distinguishing the functions of the seller and the intermediary is crucial for accurately determining tax liabilities, distributing responsibility, and generating reporting data. The updated declaration allows for these specifics to be taken into account without the need to submit multiple reporting forms.

Impact on business processes

• For foreign suppliers, such updates may impact operational efficiency. Adapting reporting forms requires revising internal accounting systems, including automated document generation software. This may lead to additional costs for IT infrastructure upgrades and staff training, especially for companies with a high volume of transactions via electronic platforms.
• On the other hand, standardizing reporting approaches promotes greater transparency and predictability in calculations. Simplifying the identification of roles (seller or intermediary) minimizes the risk of non-compliance, which in the long term reduces the administrative burden and potential fines for violations.
• In the e-services and commerce market, changes may stimulate the growth of practices focused on transparency and counterparty verification. Foreign companies actively working with individuals will likely face the need to strengthen their control over tax flows, which will increase overall discipline in the industry. As a result, there may be a shift toward more structured partnerships with local intermediaries or investments in specialized reporting services.
• However, for small and medium-sized businesses, such innovations potentially create barriers to entry, increasing the difficulty of entering the market. This could lead to sector consolidation, with larger players with developed infrastructure gaining an advantage.