The Ministry of Finance of the Russian Federation issued a clarification that Russian VAT taxpayers which acquire the access to the on-line hotel reservation system Booking.com from foreign companies shall pay VAT. It should be noted that not the hotel clients but the hoteliers are implied under the circumstances.
The Russian tax law stipulates that services are subject to VAT if they deemed provided in the territory of Russia. There are special rules of determining the place of services provision for VAT purposes. If a foreign service provider renders services deemed to be provided in Russia to a Russian company then the latter is entrusted with the liability for VAT, i.e. shall as a fiscal agent pay VAT for a foreign service provider.
In 2017 the concept of electronically provided services (e-services) was introduced in the Russian tax law. According to the Tax Code, e-services are considered to be provided in the place of client.
Recently the Russian Ministry of Finance clarified that the services of on-line hotel reservation system Booking.com is a kind of e-services. Hence, a Russian hotelier buying such a service from a foreign service provider shall pay VAT.