How to claim a VAT refund in Russia — standard desk audit process, accelerated refund, FTS scrutiny, counterparty due diligence and documentation…
Input VAT recovery is one of the most practically significant — and most frequently mishandled — areas of Russian tax compliance for foreign-owned companies. When input VAT exceeds output VAT in a quarter, the Russian LLC has a refund entitlement from the Federal Tax Service (FTS). The refund process is more complex than in most EU jurisdictions and triggers automatic FTS scrutiny. This guide covers when a refund arises, how to claim it, and how to navigate the FTS review.
A VAT refund position (НДС к возмещению) arises when input VAT (VAT paid on purchases and imports) exceeds output VAT (VAT charged on sales) in a quarter. The most common situations for foreign-owned Russian companies:
Export-oriented operations: Russian companies that export goods apply the 0% VAT rate on exports but recover 22% input VAT on their Russian purchases. This creates a structural refund position in every quarter.
Start-up phase: a newly registered Russian LLC making significant capital expenditure (equipment, fit-out, IT) before generating significant revenue. Large input VAT, little output VAT.
Seasonal businesses: capital-intensive periods (purchasing, construction) precede revenue periods.
VAT rate change: input VAT at 22% on imported goods or services, where output VAT on pre-2026 contracts is still at 20% (transitional period).
After filing a VAT return showing a refund, the FTS conducts a desk audit (камеральная проверка) of the return. The desk audit takes up to 2 months (reduced from 3 months for refund claims). During this period, the FTS may request primary documents supporting the input VAT claims. After a positive audit completion, the FTS issues a decision to refund and the amount is credited to the company's tax account within 12 business days.
Available to certain categories of taxpayer, the accelerated refund procedure allows the company to receive the refund before the desk audit is complete — subject to a bank guarantee or surety from a Russian bank. The guarantee must cover the full refund amount plus potential interest. The FTS refunds within 5 business days of accepting the application.
Eligible for accelerated refund: taxpayers who paid more than RUB 2bn in taxes in the preceding 3 years; companies operating in special economic zones; companies with a bank guarantee from an approved bank. For most foreign-owned companies, the standard route is more practical.
Every VAT refund claim triggers enhanced FTS scrutiny. The FTS is specifically looking for:
"Fly-by-night" counterparties (фирмы-однодневки): if the company's suppliers have signs of being shell companies — no real employees, no assets, no actual business — the FTS will deny the input VAT from those suppliers. The buyer is responsible for counterparty due diligence.
Document defects: VAT invoices (счета-фактуры) that are missing required details, have incorrect VAT numbers, or are signed by unauthorised persons are rejected. Primary documents must be complete and correctly formatted.
Import VAT: VAT paid on customs declarations must be confirmed against FTS import data. Discrepancies trigger additional review.
Related-party transactions: input VAT from related parties is scrutinised for commercial substance — is there a genuine supply of goods or services?
The FTS rejects a significant proportion of VAT refund claims — either partially (rejecting input VAT from specific suppliers) or in full (where the FTS believes the refund is fraudulent or unjustified). A rejection does not mean the company has to repay — it means the refund is deferred pending further evidence. The company can contest the rejection through objections and pre-trial appeal. Engaging a tax adviser during the desk audit significantly improves refund outcomes.
During the desk audit of a VAT refund claim, the FTS typically requests:
All VAT invoices (счета-фактуры) for the quarter — purchase and sales
Primary documents for major purchase transactions: contracts, delivery notes (товарные накладные), acts of services completed (акты выполненных работ)
Bank statements confirming payment for purchased goods/services
Customs declarations for imported goods
Documentation confirming export (for 0% rate claims)
Counterparty due diligence documents
Russian tax law (Article 54.1 Tax Code) places responsibility on the buyer for selecting bona fide suppliers. If a supplier fails to pay its output VAT to the FTS, the FTS may deny the buyer's input VAT deduction — even if the transaction was genuine. Proactive counterparty due diligence protects the company's input VAT position:
EGRUL extract confirming the supplier is a registered Russian legal entity
Evidence of actual business activity — employees, assets, operational history
Practical support for international business in Russia.