The Russian Ministry of Finance has noted that the VAT treatment of services generally depends on the place of their supply. Recently they issued Letter No. 03-07-08/4775 on February 20, 2013 regarding the VAT treatment of agency services supplied by a foreign taxable person to a Russian taxable person in connection with alienation of emission reduction units (ERUs) to a foreign purchaser.
According to section 148 of the Tax Code, the place of supply of agency services is determined based on the place where the supplier of such services carries out its business activities when the supplier is registered in Russia. The place of supply of agency services rendered by a foreign taxable person in connection with alienation of ERUs by a Russian taxable person falls outside the territory of Russia. The Letter concludes that agency services in connection with alienation of ERUs should not be subject to VAT in Russia.
