Providing services to a foreign company in the Russian Federation. We are reaping the benefits of cooperation with a foreign company. How can a tax agent withhold and transfer VAT to the budget?
For unlawful non-withholding and (or) non-transfer of tax amounts by a tax agent, a tax sanction is provided - a fine in the amount of 20% of the tax amount. To avoid tax penalties, check your counterparties and transactions with them.
Below is a diagram that will help you figure out who is considered a tax agent for VAT.
Article 161 of the Tax Code of the Russian Federation describes situations when a tax agent calculates and pays VAT to the budget on behalf of a payer. Let's consider the two most popular situations.
Situation 1. Sales of goods, works, and services by foreign organizations in Russia
If a foreign organization has a representative office in Russia, then such an organization will calculate the VAT itself, pay it to the budget and issue you an invoice. If there is no representative office in the Russian Federation, then the buyer of goods, works, services will have to calculate VAT and withhold it from the amount paid to the foreign seller. Therefore, when concluding an agreement with a foreign organization, it is necessary to check the presence of a representative office or branch of the foreign organization in Russia.To confirm that you do not have the duties of a tax agent, it is best to request a copy of the tax registration certificate (indicating the Taxpayer Identification Number and Taxpayer Identification Number) of the representative office of a foreign organization in Russia.
At the same time, if the buyer enters into a contract with the head office of a foreign company (a branch registered in the Russian Federation does not take part in the transaction), then the buyer must fulfill the duties of a tax agent, despite the presence of registration of a representative office in the Russian Federation (letter from the Ministry of Finance of Russia dated November 12, 2014 No. 03-07-08/57178).
If a foreign organization sells goods, works, or services that are not recognized as subject to VAT in Russia, then the buyer does not need to calculate and withhold VAT.
The tax to be withheld from payments to a foreign organization is calculated using the formula:
Example. A foreign organization provides information services to a Russian organization. In accordance with Art. 148 of the Tax Code of the Russian Federation, the Russian Federation is recognized as the territory for the provision of services. Foreign partners did not provide a certificate of registration with the tax authority in the Russian Federation. The cost of the service is 100,000 rubles. A Russian organization is required to withhold VAT when paying for services. The VAT amount will be 100,000*18/118 = 15,254.24 rubles. The executor under the contract will receive 84,745.76 rubles “in hand”.
Often, foreign counterparties indicate in contracts that they wish to receive a certain fixed amount Money for their goods, works, services, and all amounts of taxes payable in Russia, the buyer must accrue in excess of the specified amount and pay at his own expense.
Such wording in agreements does not affect the manner in which the tax agent performs its functions and does not prevent the receipt of a deduction for VAT paid to the budget under such an agreement.
In a number of cases, Russian organizations are required to withhold from payments to foreign companies not only VAT, but also income tax (Article 309 of the Tax Code of the Russian Federation). If an organization is simultaneously a tax agent for both VAT and income tax, then taxes are calculated as follows: first, VAT should be calculated and withheld, and then income tax, excluding the VAT amount from the tax base.
For example, a Russian company pays a foreign company the cost property rights for the use of the developed site 100,000 euros. VAT = 100,000 *18/118 = 15,254.24 euros. Income tax = (100,000 -15,254.24) * 20% = 16,949.15 euros. Tax amounts are recalculated into rubles at the exchange rate on the date of transfer to the budget (Article 45 of the Tax Code of the Russian Federation).
According to Article 312 of the Tax Code of the Russian Federation, in order to apply exemption from taxation of income of a foreign company on the territory of the Russian Federation or to apply reduced tax rates, documentary evidence is required:
Residence in a country with which Russia has entered into an international agreement on the avoidance of double taxation;
The actual right to dispose of income received under the agreement (in particular, confirmation that the counterparty is not an intermediary).
Supporting documents must be provided by the foreign organization tax agent before the date of payment of income.
Situation 2. Provision of federal, municipal property, property of constituent entities of the Russian Federation by state authorities and management bodies, local self-government bodies
When concluding a lease agreement for state or municipal property, you must pay attention to who is the lessor under the agreement. The following options for concluding lease agreements are possible:1) Lessor - city administration, state property management committee, municipality or other similar body (bilateral agreement). In this case, the tenant is recognized as a tax agent.
2) Lessor - city administration, state property management committee, municipality or other similar body, balance holder - unitary institution (tripartite agreement). In this case, the tenant is also recognized as a tax agent.
3) Lessor - a municipal or federal unitary institution (school, hospital, bus station, etc.). Such institutions are independent taxpayers. The tenant is not a tax agent.
4) The lessor is a government institution. The services of such institutions are not subject to VAT. The tenant is not a tax agent.
If the tenant is a tax agent, then he is obliged to calculate VAT at the time of payment of rent. The tax amount is determined as follows:
Deadlines for paying VAT to the budget
When purchasing works or services from a foreign partner, tax payment to the budget is made by tax agents simultaneously with the payment of funds to the foreign partner. Banks will not accept a payment to a foreigner without a payment order to pay VAT to the budget (Article 174 of the Tax Code of the Russian Federation). When purchasing goods from foreign organizations, the tax must be transferred to the budget in equal parts no later than every 25th day within three months following the tax period in which the tax was calculated.The same deadlines are established for the transfer to the budget of VAT accrued in relation to rent for the use of state / municipal property.
In practice, it is more convenient for a tax agent to transfer VAT to the budget when making any purchase at the time of payment under an agreement with a foreigner or government agency/ municipality. This will allow you to avoid technical errors, and therefore avoid the accrual of penalties and fines for late transfer of taxes to the budget. In addition, the payment period affects the period for deducting the amount of VAT paid to the budget by the tax agent.
Invoices
The tax agent issues an invoice no later than 5 calendar days after payment for goods, works, services (the sale of which is recognized as subject to VAT on the territory of the Russian Federation) in two copies. One copy is registered in the sales book, the second - at the moment the right to deduction arises in the purchase book.In lines 2, 2a, 2b of the invoice, the tax agent indicates the details of the seller/lessor. In line 2b (TIN and KPP) of the invoice, dashes are added if the seller is a foreign organization. In line 5 of the invoice, if works or services are purchased from a foreign organization, the tax agent must indicate the number and date of the payment order that transferred VAT to the budget.
Deductions
Persons who are recognized as tax agents in the situations described above are required to submit VAT returns to the tax authorities, regardless of whether they themselves are VAT taxpayers or not. At the same time, tax agents who are VAT payers can accept the paid VAT as a deduction. Agents who are not VAT payers cannot claim VAT for deduction, but have the right to include the amount of VAT paid in the cost of purchased goods, works, and services.Mandatory conditions for accepting VAT for deduction:
1) there are payment documents confirming the payment of VAT to the budget;
2) goods (work, services) for their use in activities subject to VAT;
3) there is an invoice issued by you (the tax agent);
4) purchased goods (works, services) are accepted for accounting. VAT can be deducted in the same period in which VAT is paid to the budget, subject to other mandatory conditions.
Example: The organization rents premises from the municipality to accommodate an office for 300,000 rubles. per month. The VAT amount is 300,000 * 18/118 = 45,762.71 rubles. The share of transactions subject to VAT is 5% of total revenue (clause 4 of Article 170 of the Tax Code of the Russian Federation). On March 30, the organization transfers 254,237.29 rubles to the budget. towards the rent for March and RUB 45,762.71. towards payment of VAT. The corresponding rental payments have been accrued in the accounting records. When generating a declaration for the 1st quarter, the organization will reflect: - the accrual of tax payable as a tax agent in the amount of 45,762.71 rubles, - the amount of VAT deductible in the amount of 2,288.14 rubles. (45762.71 *5%). The difference between the VAT paid to the budget and the VAT accepted for deduction (RUB 43,474.57) will be taken into account by the organization when calculating income tax as part of the costs of renting premises.
Thus, by concluding an agreement with a foreign organization or government authority (municipality), the organization (entrepreneur) assumes additional functions and responsibilities. In order to plan tax consequences, before signing an agreement with an “unusual” counterparty, you should first research its status, assess how its status will affect the calculation of taxes, and stock up necessary documents and confirmations.
Tax revenues make up a significant part of budget revenues. This is not surprising, given that our vast country consists of 85 constituent entities, and taxes are paid by both individuals and organizations. As for the latter, many foreign companies find Russian market attractive (at least at first) and open their branches and representative offices here. And not the last question that should concern foreign entrepreneurs: how, according to the laws of the Russian Federation, taxation is carried out when providing services by a foreign company in 2019.
Sales of works and services by foreign companies
The two main taxes levied on organizations are value added tax (VAT) and income tax. But in this article we will focus on the first and look at how it is calculated, by whom and when it is paid.
The leadership of a foreign organization that decided to join the fight for Russian consumer, must understand the specifics of our market and tax legislation. You can start small and find out, for example, whether foreign companies pay VAT if they sell their services in Russia. And although the concept of VAT is familiar to almost any average person (and even more so to a top manager), the procedure for working with this tax has its own characteristics in each country.
The Russian Federation is no exception in this sense: the activities of foreign companies are subject to taxation (including the already mentioned VAT). But our legislation cannot be called simple and unambiguous, because sometimes only lawyers can understand its intricacies. That is why, before expanding your presence area, you need to clarify how VAT is paid when selling services in the Russian Federation.
There are only two possible answers to this question: in the first case, the company independently calculates and transfers the amount of tax to the budget, in the second, the same is done by an intermediary - a tax agent. It all depends on whether the foreign organization is registered with the Russian tax authority - the Federal tax service(hereinafter referred to as the Federal Tax Service).
In Russian legislation there are such concepts as resident and non-resident.
A resident is an individual or legal entity registered and registered with the tax authorities on the territory of the Russian Federation, and non-residents, as you might guess, include all those who do not have registration (including with the Federal Tax Service) in Russia.
If a foreign company is registered with the Federal Tax Service, then interaction with the tax department will fall entirely on its shoulders. Otherwise - if there is no registration with the tax authorities - sooner or later the client will have to think about what to do with VAT when purchasing services from a foreign company.
After all, the Tax Code of the Russian Federation (hereinafter referred to as the Tax Code of the Russian Federation) leaves no choice: the tax must be paid in any case. And this is exactly the situation when the buyer will act as a tax agent who settles all issues with transfers to the budget.
If services are provided to a non-resident
The main purpose of this article is to highlight how taxes are paid by a foreign organization that provides services in our country. Nevertheless, we will pay a little attention to the reverse situation, when a service is provided by a Russian legal entity to a foreign one, and we will find out how VAT will be paid by the Russian company in in this case.
Everything is quite simple: if the service was sold on the territory of the Russian Federation, then VAT is also subject to payment in the prescribed manner. If this happened outside Russian borders, there is no taxation. Now let's move on to the logical question: what is the place of sale of services and how is it determined.
In Russia, such a form of business organization as (hereinafter referred to as individual entrepreneur) is quite common, which is usually classified as a so-called small business. The activities of individual entrepreneurs can be associated with both the sale of goods and the provision of services. 
Ambitious IP owners, as a rule, strive for constant development not only within Russian borders, but also beyond them. This explains their interest in whether an individual entrepreneur can provide services to foreign companies. And it must be said that in this case there are no prohibitions or legislative obstacles: individual entrepreneurs, just like legal entities, can enter into contracts, provide services, and conduct settlements with foreign companies. The taxation procedure will also not change. The only point that needs to be taken into account concerns currency control: in the case of individual entrepreneurs, it is more thorough.
Place of service provision
For the correct calculation of taxes, the place of provision of services is of great importance. The general rule can be formulated something like this: taxes must be transferred to the budget of the country in whose territory the services were provided. For tax purposes, it is customary to distinguish several characteristics that determine the place of sale of services.
Location of property
This sign assumes that the services were related to any property. The territory of the country where this property was located at the time of provision of services will be considered the place of their provision. Accordingly, taxes will be calculated in accordance with the legislation of the specified state.
Place of actual provision of services
This criterion is typical for services related to certain areas and objects Everyday life. As a rule, these include those services that are provided in stationary public institutions and organizations.
Buyer's place of business
The place of sale of services can be recognized as the territory of the country where the buyer carries out its activities. It is important that this activity must be registered in accordance with the laws of the state.
Supporting documents
The place of provision of services is confirmed by the following documents:
- Contract;
- documents confirming the provision of services (for example, acceptance certificates, receipts, etc.).
- when providing services in electronic form to individuals (not individual entrepreneurs) - registers of transactions indicating the cost of services.
Russian Federation: features of recognition of the place of provision of services
This article is devoted to the requirements of Russian tax legislation; accordingly, we are considering what kind of taxation services that are provided on the territory of the Russian Federation are subject to. How can we determine that work or services were implemented within the borders of our state? This issue is regulated by Art. 148 of the Tax Code of the Russian Federation.
| Sign | When will the Russian Federation be considered the place of provision of services? |
|---|---|
| By location of the property | 1. Real estate (as you might guess, this includes everything that cannot be moved: buildings, structures, land etc.) – construction, installation, restoration, landscaping, rental, repairs, construction and installation work. 2. Movable property, vessels (sea, air, inland navigation) - maintenance, processing, assembly, installation, repair, processing |
| At the place of actual implementation | If the organization or place where the service is provided is located on the territory of the Russian Federation. This criterion applies to activities in the fields of art, culture, education, physical culture, sports, tourism and recreation. Examples include holding various exhibitions, seminars, courses, purchasing design services, selling services for organizing sporting events, recreation centers, children's and health camps, etc. |
| At the place of activity of the buyer of services | The buyer’s place of business is recognized as the Russian Federation if: 1) there is state registration; 2) there is no state registration, but the territory of the Russian Federation is the place: ● specified in the constituent documents; ● the presence of a permanent executive body of the company; ● finding a permanent representative office of the organization; ● organization management; ● residence of an individual. This criterion is applicable for the following services: ● development computer programs and databases; ● provision and transfer of licenses, patents, brands, copyright and similar rights; ● provision of personnel; ● accounting, consulting, auditing, legal, marketing, advertising, engineering, information processing; ● leasing of movable property (except for land vehicles); ● agency services; ● services in electronic form via telecommunication networks; ● transfer of emission reduction units. |
Exceptions
Special conditions apply for services related to transportation and transportation. They can be provided by both Russian companies and individual entrepreneurs, as well as foreign organizations that are not registered with the Federal Tax Service.
The Russian Federation will be recognized as the place of sale of such services in the following cases:
- If vehicles for transportation (aircraft, sea vessels, inland navigation vessels) are provided by Russian companies or individual entrepreneurs, with the point of departure and/or destination located in Russia;
- transportation of goods under the customs transit procedure is carried out by organizations or individual entrepreneurs whose place of business is Russia;
- transportation by pipeline transport is provided by Russian organizations;
- air transportation is carried out by Russian airlines.
Tax agents for VAT payment
A tax agent is an intermediary who calculates, withholds from the taxpayer and transfers the amount of VAT to the budget. A taxpayer is an organization whose activities are subject to taxes under the laws of the Russian Federation.
In our case, the taxpayer is a foreign company that provides paid services, but is not registered with the tax authorities of the Russian Federation.
It is precisely because of the lack of registration with the Federal Tax Service that the payment of VAT for a foreign legal entity is carried out by a tax agent.
The duties of a tax agent include:
- timely and correct calculation of tax, its withholding and transfer to the budget;
- accounting of accrued and paid income to taxpayers;
- tax control (calculation, withholding, transfer to the budget);
- written information tax office about the impossibility of withholding tax and the amount of debt of the taxpayer. The notification is sent to the inspectorate at the place of registration of the tax agent, the notification period is 1 month from the moment the agent learned about the formation of the debt;
- provision of supporting documentation;
- storage of documents on the basis of which taxes were calculated for 4 years;
For failure to perform its functions, a tax agent may be held liable:
- In accordance with Art. 123 Tax Code of the Russian Federation.
Occurs if the agent did not withhold/remit or did not withhold/remit the tax in full. The preventive measure is a fine of 20% of the amount that must be withheld/transferred.
- In accordance with Art. 199.1 of the Criminal Code of the Russian Federation.
Occurs if the failure to fulfill the duties of a tax agent was committed for personal interests. Information on how the amount of unfulfilled obligations for the calculation, withholding and transfer of taxes is classified, and on the penalties for failure to fulfill obligations is presented in the tables below.
Preventive measures depend on the amount of unfulfilled obligations.
| Unfulfilled tax obligations | Possible measures of influence |
|---|---|
| Large size | ● a fine of 100 to 300 thousand rubles or the amount of the convicted person’s income for a period of 1 to 2 years; ● or forced labor or imprisonment for up to 2 years (deprivation of the right to hold certain positions or carry out certain types of activities for up to 3 years is also possible); ● or arrest for up to 6 months. |
| In a particularly large size | ● a fine of 200 to 500 thousand rubles or the amount of the convicted person’s income for a period of 2 to 5 years; ● or forced labor for up to 5 years (deprivation of the right to hold certain positions or carry out certain types of activities for up to 3 years is also possible); ● or imprisonment for up to 6 years (deprivation of the right to hold certain positions or carry out certain types of activities for up to 3 years is also possible). |
Now let's look at who can conduct VAT calculations as a tax agent when paying for services to a foreign company. Calculations mean the whole range of activities: calculation, deduction, transfer to the budget.
Conditions for recognition as a tax agent
The basic requirements are described in Art. 161 part 2 of the Tax Code of the Russian Federation. We will focus on those that apply to tax agents of foreign companies selling services in the Russian Federation.
So, to be recognized as a tax agent, the following conditions must be simultaneously met:
- organization or individual entrepreneur (hereinafter referred to as individual entrepreneur);
- registration with the Federal Tax Service;
- purchase of services from these foreign companies on the territory of the Russian Federation.
Slightly different rules apply if a foreign company provides services in electronic form, i.e. through information and telecommunication networks (including via the Internet), full list which are given in Art. 174.2 part 1 of the Tax Code of the Russian Federation.
The conditions for recognition as a tax agent depend on who acts as the buyer of such services and whether intermediaries are involved in the transaction.
| Who are the services provided to? | Who acts as a tax agent |
|---|---|
| For individuals | Foreign intermediary organizations involved in settlements with individuals and acting on the basis of commission, commission, agency or other agreements with the service provider organization |
| Organizations and individual entrepreneurs registered with the Federal Tax Service | Buyers of services (mentioned organizations and individual entrepreneurs) |
| For individuals, organizations and individual entrepreneurs (settlements with buyers are carried out through intermediaries) | Intermediaries registered with the Federal Tax Service and participating in settlements with buyers as intermediaries on the basis of commission agreements, etc.: ● Russian organizations and individual entrepreneurs; ● separate divisions of foreign companies located on the territory of the Russian Federation |
Determination of the tax base for VAT
In general terms, the tax base refers to the income that is subject to taxation. But the procedure for determining the tax base depends on who calculates it: the taxpayer directly or the tax agent.
Taxpayer
The tax base is the total cost of services provided excluding tax. In other words, this is the amount of money received by the service provider, from which tax will be calculated and paid in the future.
If the foreign service provider received advance payments (full or partial payment), the tax base will be determined by their amount, including tax. However, prepayment does not increase the tax base in the following cases:
- the duration of the production cycle is more than 6 months (only when the tax base is determined as such services are provided);
- taxation is carried out at a zero rate;
- This type of service is not taxed.
Tax agent
If a foreign service provider organization is not registered with the Federal Tax Service, the VAT tax base is calculated by the tax agent. In this case, it will be determined by the amount of income from services sold, taking into account tax, while the formation of the tax base is carried out separately for each operation.
Moment of determining the tax base
It is impossible not to mention such a concept as the moment of determining the tax base. In general, it is the earlier of two dates:
- day of service provision;
- the day of advance payment (full or partial) for the subsequent provision of services.
However, in some cases different rules apply:
Calculation and payment of VAT
The calculation is carried out at the end of each tax period, and the calculation takes into account those transactions for which the moment of determining the tax base occurred in the reporting quarter.
The amount to be transferred to the budget is calculated by multiplying the tax base by interest rate tax; the base rate is 18%.
But if a foreign company sells services electronically, its activities will be subject to VAT at a rate of 15.25%.
If the organization maintains separate accounting, then the total tax will be equal to the amount of taxes calculated for each object or operation. This calculation procedure applies:
- tax agents of foreign organizations not registered with the Federal Tax Service of the Russian Federation;
- in the case of sales of services taxed at a zero rate.
The tax is paid in equal installments monthly (within 3 months following the reporting period) no later than the 25th of:
- foreign organizations registered with the Federal Tax Service - at the place of registration.
- if settlements with the budget are carried out through a tax agent - at the agent’s location.
An invoice is a document on the basis of which the buyer accepts for deduction the tax amounts presented by the seller of services.
The document is issued by the seller when selling services and contains the following data:
- number and date of registration;
- information about the taxpayer seller and buyer (name, address, identification numbers);
- payment document number (if payment methods for services such as full or partial advance payment were used);
- description of services and units of measurement (if applicable);
- volume of services provided;
- currency;
- price per unit (if applicable) excluding tax;
- the cost of the entire volume of services without tax;
- tax rate;
- tax amount;
- the cost of the entire volume of services including tax.
Agent VAT deduction
Tax agents paying VAT can deduct it if the following conditions are met:
- availability of an invoice;
- availability of payment documents confirming the transfer of tax to the budget;
- the services were provided to a buyer whose activities are subject to VAT;
- the services provided are accepted for accounting.
When can a tax agent claim a VAT deduction?
If all the specified conditions are met, then VAT can be deducted in the same quarter in which the tax was transferred to the budget. 
When a Russian organization is exempt from paying VAT
Article 149 of the Tax Code of the Russian Federation provides a list of transactions that are not subject to taxation, and it is its provisions that make it possible for a foreign company to provide services without VAT.
So, according to tax legislation, VAT is not paid when providing services:
- medical (except for veterinary, cosmetology and sanitary-epidemiological);
- for supervision and care of children in preschool organizations, sections, clubs, etc.;
- care for the sick, elderly and disabled;
- on acquisition, preservation and use of archives;
- for the transportation of passengers;
- ritual;
- on provision of residential premises for use;
- depository;
- for repairs and maintenance goods and household appliances;
- on the preservation of cultural heritage sites;
- for film production;
- provided at airports;
- for servicing sea vessels;
- pharmaceutical organizations for the manufacture of drugs;
- on organizing and conducting gambling;
Procedure for taxation of organizations with foreign capital
As already mentioned, the Russian market is considered quite attractive for foreign investors. In fact, this is confirmed big amount foreign organizations that operate in a variety of fields of activity.
Insurance, banking, auditing are examples of industries where Russian companies have been competing with foreign ones for a long time. For foreign organizations, special operating conditions are provided: for example, there are restrictions on permitted types of activities and accounting.
The procedure for interaction with tax authorities is also somewhat different from that established for Russian companies: a special form of activity report is provided, and there are specifics for filling out a tax return.
VAT on “export” and “import” of works and services: Video
The Russian purchasing company must act as a tax agent and pay VAT for a foreign seller if he sells goods on the territory of the Russian Federation, is not registered with the Russian tax inspectorate, and sales transactions are subject to VAT.
Quite often, Russian companies purchase goods (work, services) from foreign companies on the territory of our state. However, not all “foreigners” are registered for tax purposes in the Russian Federation and are VAT payers. The question may arise: when should the buyer remit VAT to the budget for a foreign seller?
When VAT must be paid for a “foreigner”
If a “foreigner” sells goods (performs work, provides services) on the territory of the Russian Federation * (1) and is not registered with the Russian tax authorities (does not have a tax identification number), then the tax authority must determine the tax base, calculate and pay VAT for it agent (Russian purchasing organization)*(2). This condition does not depend on whether the tax agent himself is a VAT payer*(3). In this case, transactions involving the sale by a “foreigner” of goods, performance of work, provision of services (including the sale of collateral and transfer of goods (results of work performed, provision of services) under an agreement on the provision of compensation or novation, as well as the transfer of property rights) must be subject to VAT*(4). The tax base is defined as the amount of income from the sale of goods (performance of work, provision of services), taking into account tax * (5).
It is necessary to include VAT in the contract price
In practice, the following approach has developed. If the agreement does not indicate the amount of VAT or it is stated that it is not included in the price of the agreement, then the tax agent must increase this price by the amount of tax (18% or 10%, respectively) (see table on page 75). These are the so-called provisions of grossup provision agreements, obliging the recipient of goods (works, services) to transfer the amount specified in the agreement to the counterparty, and to charge all necessary taxes on top of it. In this case, the Russian company pays the VAT amount to the budget from its own funds*(6). If the contract price is significant, this will temporarily lead to outflow working capital. Temporarily because, in essence, the amount of VAT specified in the agreement is the amount of tax withheld from the income of a foreign person. The buyer has the right to apply a tax deduction in respect of such amounts*(7) regardless of how they are reflected in the contract and regardless of whose account (his or a “foreigner”) the payment was made*(8). In this case, the condition must be met that the purchased goods (work, services) will be used in transactions subject to VAT *(9).
Please note that VAT amounts calculated in rubles at the Bank of Russia exchange rate on the date the tax agent incurred expenses and actually paid to the budget are subject to deductions. The rule on converting foreign currency into rubles at the Bank of Russia exchange rate on the date of registration of goods (work, services, property rights)*(10) is not applied in this case.
The buyer must transfer VAT to the budget simultaneously with the payment of funds to the “foreigner” (see example below) * (11). At the same time, the bank servicing the buyer does not have the right to accept an order from the latter to transfer money in favor of a foreign company if he has not submitted an order to pay VAT from an account opened with this bank (if there is enough money to pay the entire amount of tax) * (12). After paying VAT as a tax agent, the Russian organization issues an invoice, which is registered in both the sales book and the purchase book *(13).
Example
LLC "Service" is a foreign company that is not registered with the tax authorities of the Russian Federation, providing the Russian company "Aktiv" with highly qualified personnel to provide services at a hotel located in Sochi. The contract price was determined by the parties in the amount of RUB 2,000,000. per month (excluding VAT).
The provision of such services on the territory of the Russian Federation is recognized as subject to VAT*(14). The Aktiv company is recognized as a tax agent and is obliged to calculate, withhold and pay the appropriate amount of VAT to the budget *(15).
The Aktiv company independently calculated the tax base for VAT, increasing the cost of the contract:
2,000,000 rub. + 2,000,000 rub. x 18% = 2,360,000 rub.
The amount of VAT to be transferred by the tax agent to the budget was *(16):
RUB 2,360,000 x 18/118 = 360,000 rub.
The accountant of the Aktiv company made the following entries in the accounting books:
Debit 26 Credit 60
— 2,000,000 rub. — expenses for outstaffing services are recognized based on the act of provision of services for the reporting period;
Debit 19 Credit 68 subaccount “VAT”
— 360,000 rub. — reflects the amount of VAT on outstaffing services subject to withholding from the income of LLC “Service”;
Debit 68 subaccount “VAT” Credit 51
— 360,000 rub. — the amount of VAT was transferred to the budget for the foreign counterparty LLC “Service”;
Debit 60 Credit 52
— 2,000,000 rub. — payment under the agreement with LLC “Service” is transferred in foreign currency;
Debit 68 subaccount “VAT” Credit 19
— 360,000 rub. — VAT paid for a foreign counterparty is accepted for deduction.
Thus, when concluding an agreement with a “foreign” seller, we recommend including the amount of VAT in the contract price. First, it is fully consistent with the basic principles of taxation: tax is withheld from the income paid to the performer. Secondly, it does not divert the Russian organization’s own funds—the tax agent—from circulation.
If VAT was not included in the price of the contract, it should be withheld at the expense of the purchasing company’s own funds and presented for deduction on a general basis * (17). When using this option for setting the price, it is advisable to include a clause in the contract that the price is subject to increase by the amount of taxes that the Russian side is obliged to pay to the budget of the Russian Federation. We also recommend that you allocate the amount of VAT in invoices for payment.
When the price in the contract is set without VAT and the Russian buyer has not calculated it and paid it to the budget (including at his own expense), penalties may be applied to him *(18) - 20 percent of the amount of unpaid tax . The risk of claims from controllers in this case is high. Although in the recent past, the possibility of paying VAT by a tax agent at his own expense caused controversy * (19). However, on January 1, 2006, paragraph 4 of Article 173 of the Tax Code was adopted in a new edition * (20). Legislators excluded from it provisions on the calculation and payment of VAT by tax agents only at the expense of the seller. From this moment on, payment of VAT at the expense of the tax agent’s own funds became legitimate *(21). Consequently, the absence of a mention of VAT in the contract does not relieve the Russian purchasing company from the obligation to calculate and pay this tax for a foreign seller * (22). At the same time, we note that subparagraph 1 of paragraph 3 of Article 24 and paragraphs 2, 3 of Article 161 of the Tax Code have not been changed. And from the totality of these rules it follows that the tax must be withheld from the paid income of the taxpayer - a foreign person.
N. Yudenich,
tax consultant, member of the Chamber of Tax Consultants of Russia Expertise of the article:
V. Gornostaev,
Legal consulting service GARANT, auditor
Opinion. If the foreign counterparty is an individual
Anna Lozovaya, Leading Advisor to the Indirect Taxes Department of the Department of Tax and Customs Tariff Policy of the Russian Ministry of Finance
A Russian tax agent organization has the right not to calculate or pay VAT to the budget on transactions involving the acquisition of goods (work, services) from a foreign individual in the territory of the Russian Federation. This is explained as follows. VAT must be paid to the budget in the case of the sale of goods (performance of work, provision of services), when the place of sale is recognized as the territory of the Russian Federation, regardless of which state taxpayer carries out the sales operations. At the same time, according to Article 143 of the Tax Code, VAT payers are organizations and individual entrepreneurs. Hence, individuals(both Russian and foreign) are not recognized as payers of this tax.
An example is a situation in which a Russian company purchases the legal services of a foreign lawyer. In accordance with the Federal Law of May 31, 2002 N 63-FZ “On advocacy and the legal profession in Russian Federation» advocacy is not a business activity. Consequently, on transactions involving the purchase of the services of a foreign lawyer who is not an individual entrepreneur under the laws of the Russian Federation, a Russian organization should not calculate and pay VAT to the budget.
*(1) sub. 4 paragraphs 1 art. 148 Tax Code of the Russian Federation
*(2) clause 2 of Art. 161 Tax Code of the Russian Federation; letter of the Ministry of Finance of Russia dated August 19, 2013 N 03-07-13/1/33717
*(3) clause 4 art. 173 Tax Code of the Russian Federation
*(4) sub. 1 clause 1 art. 146 Tax Code of the Russian Federation
*(5) clause 1 art. 161 Tax Code of the Russian Federation
*(6) letters of the Ministry of Finance of Russia dated 09/08/2011 N 03-07-08/276, dated 02/04/2010 N 03-07-08/32, dated 11/13/2008 N 03-07-08/254
*(7) clause 3 art. 171 Tax Code of the Russian Federation
*(8) letters of the Ministry of Finance of Russia dated 02/28/2008 N 03-07-08/47, dated 10/16/2007 N 03-07-15/153, dated 10/09/2007 N 03-07-08/295, Federal Tax Service of Russia dated 17.03 .2008 N 03-1-03/908@, dated 10/31/2007 N ШТ-6-03/844@
*(9) clause 3 of Art. 171 Tax Code of the Russian Federation; letter of the Ministry of Finance of Russia dated 02/07/2007 N 03-07-08/13
*(10) clause 1 art. 172 Tax Code of the Russian Federation
*(11) clause 3 of Art. 153, paragraph 4 of Art. 174 Tax Code of the Russian Federation; letters of the Ministry of Finance of Russia dated November 1, 2010 N 03-07-08/303, dated July 3, 2007 N 03-07-08/170, Ministry of Taxes of Russia dated September 24, 2003 N OS-6-03/995@
*(12) para. 2, 3 p. 4 art. 174 Tax Code of the Russian Federation
*(13) post. Government of the Russian Federation dated December 26, 2011 N 1137
*(14) subp. 1 clause 1 art. 146, sub. 4 paragraphs 1 art. 148 Tax Code of the Russian Federation; letter of the Ministry of Finance of Russia dated November 2, 2010 N 03-07-08/304
*(15) clause 2 art. 161, paragraph 4 of Art. 173 Tax Code of the Russian Federation
*(16) clause 4 art. 164 Tax Code of the Russian Federation
*(17) clause 3 art. 171 Tax Code of the Russian Federation
*(18) art. 123 Tax Code of the Russian Federation
*(19) determination of the Supreme Arbitration Court of the Russian Federation dated 02/07/2008 N 827/08; fast. FAS UO dated June 23, 2008 N F09-5480/06-S2, FAS DO dated August 6, 2008 N F03-A73/08-2/2821
*(20) Federal Law of July 22, 2005 N 119-FZ
*(21) determination of the Supreme Arbitration Court of the Russian Federation dated September 23, 2010 N VAS-10832/10
*(22) post. FAS UO dated January 27, 2011 N F09-11127/10-S2, dated February 25, 2010 N F09-832/10-S2
