Summary
- Russia’s parliament adopted draft law No. 1203640-8 amending article 168 of the Tax Code, addressing situations where a tax-law change imposes a VAT liability after a long-term contract is signed and the buyer cannot deduct input VAT.
- In such cases, VAT will be calculated by the estimated method from the contract price – i.e. included in the agreed price rather than added on top – with the seller bearing the additional liability and no invoice required.
- The measure implements Constitutional Court Resolution No. 41-P of 25 November 2025 (VTB Bank v. Sitronics IT) and is expected to enter into force one month after publication, but no earlier than 1 October 2026.
Extended article
Russia’s parliament has adopted draft law No. 1203640-8 to close a gap in the VAT treatment of long-term contracts when tax legislation changes mid-contract. At present, under article 168 of the Tax Code, the seller may charge VAT in addition to the contract price. The new rule provides that, where (i) the tax law changes after a contract is signed; (ii) the seller becomes liable for VAT; (iii) the buyer is not entitled to an input VAT deduction; and (iv) the parties have not revised the price, terminated the contract or provided a resolution mechanism, VAT is calculated using the estimated method from the contract price. The VAT is therefore included in the agreed price rather than calculated additionally, the seller bears the additional liability, and issuing an invoice is not required.
The reform implements Constitutional Court Resolution No. 41-P of 25 November 2025, arising from a dispute between VTB Bank and Sitronics IT JSC over a three-year sublicensing agreement for foreign software. When 2021 amendments imposed VAT on such transactions, the seller charged VTB an additional RUB 141 million on top of the agreed price. The Court found that automatically collecting VAT on top of the price from a buyer who cannot deduct it shifts uncompensated losses to the buyer, and ordered the legislature to close the loophole (allowing, during the transition, court recovery of only up to 50% of the additional VAT).
The draft law was adopted by the Federation Council on 24 July 2026 and awaits the President’s signature. It is expected to enter into force one month after official publication, but no earlier than 1 October 2026.
Sources: Valen – new VAT calculation mechanism analysis; Pepeliaev Group – Constitutional Court Ruling No. 41-P.
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