equipment delivery and assembly works in russia · equipment delivery and assembly works in russia...
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Equipment Delivery and
Assembly Works in
Russia Helge Masannek
Director Tax & Legal, Attorney at law (Germany)
RUSSIA CONSULTING
Turin, 12th November 2013
An order from Russia…
Contract drafting
Taxes and tax registration of an assembly site
Customs
Work permit
After Sales Service
Content 2
An order from Russia…
Contract drafting
Taxes and tax registration of an assembly site
Customs
Work permit
After Sales Service
Content 3
Order + confirmation by e-mail or fax not sufficient, but necessary:
Contract
In writing,
In Russian or bilingual,
Signed and stamped by both parties.
Clear separation of different parts of the project
Contract Drafting 4
Engineering
– Is usually done in Italy
– Subject to Russian VAT (VAT is withheld and paid by the
purchaser of the documentation in the reverse-charge procedure)
Russian VAT shall be mentioned in the contract
Delivery
– Price of shipment (value of goods + freight costs to border of
customs union) is basis for calculation of customs value
Price shall be shown separately from price for engineering
and assembly works
Contract Drafting 5
Assembly works
Assembly works are subject to VAT in Russia
– If performance of the works via a registered
branch of the foreign legal entity in Russia:
payment by the branch
– If contractor is not registered in Russia:
payment of VAT via the Russian customer
(reverse-charge-procedure)
Contract Drafting 6
An order from Russia…
Contract drafting
Taxes and tax registration of an assembly site
Customs
Work permit
After Sales Service
Content 7
Pure delivery contract: no registration in Russia
necessary
Delivery contract with assembly works < 30 days and no or little
input-VAT
No tax registration required
Project with assembly works > 30 days: obligatory tax registration at
the place of economic activity, i.e. at every assembly place
Taxation: VAT, Profit Tax, DTT, Registration 8
Tax Reporting & Profit Tax
No separate VAT-registration in Russia
Even if according to DTT no obligation to pay profit tax:
quarterly filing of simplified profit tax declaration (declaration,
that there is no liability to pay profit tax)
Liability to pay profit tax according to DTT between Russia and Italy:
– Assembly site of more than 12 months
– Beginning and end: Signing of handover- and acceptance-
protocol or actual beginning/end of works
– Temporary stop of works does not interrupt the term
Taxation: VAT, Profit Tax, DTT, Registration 9
An order from Russia…
Contract drafting
Taxes and tax registration of an assembly site
Customs
Work permit
After Sales Service
Content 10
Foreign trade transaction: Russian legal entity (customer) is obliged to
perform customs clearance
Delivery DDP not possible
Customer shall perform customs clearance
• Attention: Payments from entities different from the customer indicate
that the customer performs “grey“ imports!
Risk for the Russian customer
Limitation of possibility to enforce a claim by legal action
Reputation – supplier is recorded in Customs database
Customs – Delivery to Customers 11
Delivery of goods (equipment, tools) needed for assembly works
A) Delivery together with equipment to the Russian customer
B) Delivery to the assembly site/customs clearance by the assembly
site
Only possible in case of accredited representative office or
branch
Only for own needs of the representative office/branch
Not possible in case of pure tax registration or if no registration
at all.
Customs – Delivery to Assembly Site 12
An order from Russia…
Contract drafting
Taxes and tax registration of an assembly site
Customs
Work permit
After Sales Service
Content 13
No work permit required if
Employee performs assembly or repair works of delivered equipment
Stay not longer than 90 calendar days within 180 day period
Long-term projects: work permit and work visa required
Regular work permit:
– Issued for one year, prolongation possible
– Attention: very long lasting application procedure (min. 4-5 months,
partially more than 1 year)
“High Qualified Specialist“ – work permit
– Simplified procedure, issued for up to 3 years
– Requirement: annual salary in Russia of at least 2 million RUR
(approximately 45.500 Euro)
– Only possible for employees of branches, not for representative offices
Work Permit & Visa 14
An order from Russia…
Contract drafting
Taxes and tax registration of an assembly site
Customs
Work permit
After Sales Service
Content 15
Theoretical Options:
Customs procedure “re-export“: Re-export of equipment + new
delivery
Customs procedure “Processing of goods outside the customs
territory“: Return of equipment and repair abroad or delivery of
spare parts
Problems:
– Applicant: importer, i.e. Russian customer
– Complicated procedure: at least 1-2 months
– Defective parts shall be exported in case of delivery of spare
parts (transportation costs)
After Sales Service & Customs Clearance of Spare Parts 16
“Approach in the practice“:
Service technician takes spare parts in his private luggage to
Russia
Problem: Import only allowed for private purposes; import of goods
“for the employer“ is forbidden. Risk of administrative and criminal
penalties.
Legal and feasible options:
Delivery of equipment plus a spare part packages, sufficient for
guarantee period
Incorporation of a service company in Russia or usage of services
local service companies
After Sales Service & Customs Clearance of Spare Parts 17
Accounting Outsourcing
Tax Consulting
IT Services / ERP
Interim Management
Office Sublease
Recruiting
Outstaffing
Visa and Work Permit
Thank you for your Attention! 18
Helge Masannek
Lawyer,
Tax & Legal Director
+7 / 495 / 956 55 57
Foto
10x15
Our Offices
www.russia-consulting.eu
Moscow
Ulf Schneider, Lars Flottrong
ul. Bakhrushina 32/1
115054 Moscow, Russia
T +7 / 495 / 956 55 57
Frankfurt
Anna Bryanchaninova
Wilhelm-Leuschner-Street 41
60329 Frankfurt/Main, Germany
T +49 / (0)69 / 271 38 99 18
St. Petersburg
Andreas Bitzi
Finlyandskiy pr. 4a
194044 St. Petersburg, Russia
T +7 / 812 / 458 58 00
Kiev
Sven Henniger
vul. Shovkovychna 42-44
01601 Kiev, Ukraine
T +38 / 044 / 490 55 28
Minsk
Yulia Pliuto
ul. Surganova 29
220012 Minsk, Belarus
T +375 / 17 / 290 25 57
Almaty
Kirill Afanasyev
Tole Bi Street 101, Block 9 B
050012 Almaty, Kazakhstan
T +7 / 727 / 355 44 48
Aktau
Kirill Afanasyev
Microdistrict 29 A
BC “Nur Plaza” Office 46
130000 Aktau, Kazakhstan
T +7 / 7292 / 201 151
Warsaw
Ulf Schneider
Al. Jerozolimskie 81
02-001 Warsaw, Poland
T +48 / 22 / 695 03 10