What is VAT?
VAT is the abbreviation of Value-Added Tax and is in general due when goods and/or services are sold. It generally applies to all taxable goods and services that are bought and sold for use or consumption in Russia. It is a Consumption Tax because it is borne ultimately by the final consumer.
Who must pay VAT?
Generally, VAT is invoiced by the supplier that is selling goods or services and collected from the customer. Subsequently, the supplier reports and remits the collected VAT to the tax authorities.
Why am I being charged VAT?
Freshworks provides Software-as-a-Service that falls within the rules concerning Electronically Supplied Services in Russia. As a VAT registrant in Russia, Freshworks is required to collect Russian VAT on all supplies made to customers in Russia.
How is Freshworks determining which customers Russian VAT applies to?
Freshworks will apply VAT based on the place of supply rules for a non-resident supplier making supplies of ESS to customers in Russia.
It is your responsibility as a customer to ensure that your bill-to/ship-to address is correct.
Does Freshworks provide VAT exempt or non-VATable services?
No. All services currently provided by Freshworks to customers in Russia are subject to Russian VAT.
Are there any special exemptions applicable for charities under which VAT may not be charged?
No. There are no exemptions from VAT available under Russian VAT rules for the services Freshworks supplies to charities in Russia.
Will VAT apply even if a Russian company provides a valid VAT number to Freshworks?
Yes. VAT applies to all the products/ services that Freshworks makes to customers in Russia.
Are there any VAT obligations for me as a customer?
No. The customer in principle has no VAT obligations. If you are a registered for VAT in Russia and you want to claim an input tax credit for the VAT paid to Freshworks, as a minimum, you should ensure to keep a copy of Freshwork’s invoice for your records.
Every customer is unique and so are their specific tax circumstances. The above stated information should not be considered as tax advice, but as a general overview of relevant tax rules. Freshworks cannot provide you with tax advice for your individual situation, and therefore we strongly recommend speaking with a professional tax advisor for tailored advice.