Russian VAT (НДС) for Authors

Russian Value Added Tax (VAT/НДС) is a tax imposed by the Russian Government on certain goods and services purchased by people located in Russia. Digital goods and services are included under this.

Envato’s platform, our online Marketplace which allows authors to sell to anyone in the world, is considered to be a digital service that Authors pay for as part of their Author Fees. This means that Russian VAT will be applied to Russian Author Fees each month.

Russian VAT will apply to all Russian Author Fees from the 16th November, 2020 at a rate of 16.67%. This will apply to both businesses and individuals, even if you’re not registered for VAT in Russia.

What does this mean for my earnings?

If you’re registered for VAT in Russia, there should not be much of an overall difference in your earnings. Envato will be supplying all Russian Authors with a compliant VAT invoice so that you can declare all relevant sales on your VAT return, and claim a tax adjustment for any VAT charged.

You’ll also be able to see VAT on your statement page, which you can access through your account settings, for all sales completed from the 16th November, 2020.

You can also find this information within our help centre. Let us know if you have any questions or comments below, and please remember the community guidelines as you post.

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Hello! Please explain why the Russian VAT is withheld from the author fee? If, according to the legislation of the Russian Federation, it is charged on the purchase amount and is actually paid by the buyer, and the seller only has to provide information in the tax reporting of the tax amount as payable to the budget.

What is Russian VAT?
VAT is a way for a country’s budget to receive a partial value of a product, service or work. As a result, the buyer pays the seller tax on the value of the goods (work, service), and the seller transfers VAT to the federal budget. In this case, the seller has the right to reduce the amount of VAT charged for payment by the amount of input VAT on the goods (work, services) purchased by him. Outcome
The seller is responsible for calculating VAT on the cost of the goods sold. And he also reflects in tax reporting the amount of tax as payable to the budget. But by making a payment, the buyer actually compensates for this payment by the receipt of payment from the buyer, which includes tax.
https://nalog-nalog.ru/nds/nds_obekt_nalogooblozheniya/kto_platit_nds_prodavec_ili_pokupatel/

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16.67% only from purchases from Russia or from all sales of the author from any country in the world?

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Hi @Alexiaction,

As mentioned in the post above, the Russian Author in this case is the ‘buyer’ and Envato is the ‘seller’ of the digital platform on which you sell your items. In a way you’re ‘buying’ this service from Envato as part of your ‘Author Fee’.

This is then in line with the section you pasted:

I hope this makes sense :slight_smile:

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It is applied to every sale for Russian Authors, because every sale has an Author Fee attached to it.

It’s not based on you selling an item to a customer, but of you paying Envato for a service (providing the platform to sell your items) with your Author Fees. So the Author Fees are what the VAT applies to.

I’m confused. So if you’re not a Russian Author, and the buyer is not Russian, that means it still applies?

Hey @Enabled, apologies for the confusion, it’s applied to all Russian Authors, but doesn’t matter where their customers are situated as it’s not about the sales themselves, but rather their Author Fees that are charged as part of each sale.

If you think about that section above, Russian Authors are the purchasers in Russia paying for digital goods (which in this case is the service that Envato provides, paid for with their Author Fees).

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There were no additional charges ( VAT ) for the buyers from Russia earlier.

For example, if the items price ( at Envato ) is 20$, when you purchase it from Russia as a Russian buyer, you will be paying 20$ before. But now, after the regulations changes, you will be buying the same item at 23.4$ if you’re located in Russia.

If you’re selling at Envato, there’s probably no differences as well as the buyer will be paying the additional tax, not you.

I believe this is the simple explanation :slight_smile:

Thank you Steve for your answer. Allow me to clarify one more point? Do I understand correctly that Envato will now provide information to the tax authorities of the Russian Federation, as well as pay monthly VAT from each Russian author to the tax authorities of the Russian Federation? Or is it an Envato internal tax? Thank you.

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Hey @Alexiaction I’ll check with the tax team for a clear answer on this one for you tomorrow :slight_smile:

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So guys, maybe someone will correct me, but I understood it this way:

  1. We come to envato and buy a service from Them (Author fee). that’s about 4 $.

  2. Envato provides it and since we are from Russia, Envato charges VAT.

  3. And relationships happen between Envato and Russia.

  4. and the tax is charged on $ 4 that we have always paid Envato and it is Envato who pays from their fee.

  5. And we pay taxes in our country for what we have earned.

That is, 4 × 0.1669 = 0.7 from each sale

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Hello new leadership of envato. It looks like a spit towards Russian authors. Explain to us in more detail.

1. Why did I become a customer? After all, I sell goods on your site. Suppose I buy the right to sell from you, okay. But if I am now a customer, why am I filling out various tax forms, including w8?

2. Where did the figure of 16.6% come from? from the ceiling? This is it just for Russia or for all countries? If only for Russians, why don’t others pay the same? After all, we all pay additional taxes in our countries.

3. If this is VAT, will you cooperate with the Russian tax authorities and transfer all this data there so that I do not pay taxes again?

4. This tax of 16.6% is added to $ 4 (Buyer fee) + 20% (Author fee) do I understand everything correctly? Or now the 20% (Author fee) will not be paid?

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Unfortunately, Envato’s team tells us something else entirely: It is applied to every sale for Russian Authors because every sale has an Author Fee attached to it.

It’s **not based on you selling an item to a customer, but of you paying Envato for a service (providing the platform to sell your items) with your Author Fees. So the Author Fees are what the VAT applies to.

The service you pay is the author fee, not the buyer fee.

This is completely nuts and backward! Once again this artificial author/buyer fee system creates this unfair absurdity. Authors pay VAT on Envato’s commission??!!

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It’s the wrong explanation. Envato may or may not be charging VAT to buyers from Russia (they’ve not mentioned that in this announcement), but if they are… then the VAT the buyer pays goes to the Russian tax authorities… it doesn’t go to covering whatever tax obligations the author may have.

So if you’re selling at Envato, and you’re a Russian author, then there will be differences to how much you pay, as stated in the announcement.

Hi!
Please write what will be the formula for calculating the author’s earning using the example of one track, the cost is $ 20. This example with numbers will be much clearer to everyone. (Now a similar formula for calculating the author’s income from a track is in the “Edit - Your Prite Network” tab).

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Thanks.
I corrected the message, made a mistake.

If I understood correctly, is now the Envato platform a paid service only for Russian authors?

I would like more clarifying information.

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Why is Russia only affected by this? The EU also impose VAT on digital goods and services. Will this be implanted for EU authors as well eventually?

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do I understand correctly that VAT will be charged on this amount?

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