- For a state/municipal contract paid from budget funds, the institution cannot claim VAT input deductions, including on advances, under Russian Tax Code Articles 170(2) and 170(2.1).
- Therefore, if such a contract is later declared invalid, the institution does not need to restore VAT.
- If a budgetary or autonomous institution claimed input VAT deductions on goods, works, or services bought for taxable activities under income-generating operations, it must restore the deducted VAT if the contract is declared invalid.
- The VAT must be restored in the tax period when the contract terms changed or were terminated and the related payment/advance was returned.
Source: garant.ru
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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