Transition from 18% to 20% VAT: recommendations, examples, questions and answers

General procedure for switching to 20% VAT

The new tax rate is automatically applied from 01/01/2019 to all shipments subject to 18% VAT - without exception. Including those contracts that were concluded in 2021 (and earlier) and transferred to 2021.

This means that there is no need to take any special actions in order to “legalize” the transition to an increased VAT rate. Nobody obliges you to change the terms of the contracts either. But, if you deem it necessary, you and your counterparties can adjust the settlement procedure and the contractual value.

Learn in detail how to audit transitional contracts and clarify the wording of their terms.

Still, the automatic transition to a new VAT rate does not mean that it will be easy. We all understand that in practice many problems will arise. Let's consider the main ones, based on the recommendations of the Federal Tax Service of the Russian Federation, given in Letter dated October 23, 2018 N SD-4-3/ [email protected]

Commentary to the Letter of the Ministry of Finance of Russia dated 08.20.18 No. 24-03-07/58933

Unfortunately, the Ministry essentially did not answer anything, referring to the provisions of the law governing changes in the terms of the contract. At the same time, the issue may cause certain difficulties in practice regarding contracts whose price indicates a VAT rate of 18%, but which are executed after 01/01/2019. This will primarily apply to long-term contracts that are concluded for several years, long before before changes are made to tax legislation.

We believe that in such a situation the parties have the right to change this term of the contract by indicating the current VAT rate effective from the beginning of 2021. We believe that such a change does not contradict the provisions of Art. 95 of Law No. 44-FZ, since this condition (on the VAT rate) is not significant. Moreover, it complies with the tax legislation in force since 2019. In this case, the contract price must remain unchanged.

At the same time, unfortunately, there is no official position on this matter from the regulator or controller on this issue yet. We continue to monitor the situation as it develops.

Advance payment - in 2021, shipment - in 2021: at what rate to deduct VAT

The first and most important thing sellers . If in 2021 you receive an advance on account of future supplies, then VAT on the advance will be calculated at the rate of 18/118 (clause 3.4 of Article 164 of the Tax Code of the Russian Federation). However, when shipping in 2021, you will be charged VAT at a rate of 20%. PDF What VAT is allowed to be deducted when offsetting an advance payment in 2021? Only at the old rate - 18/118.

In 2021, an agreement for the provision of services was concluded between the parties. The price includes VAT, so the total amount under the contract in 2021 will not change due to changes in the VAT rate (20%).

10/24/2018 The selling organization received a 100% advance payment under the service agreement in the amount of RUB 118,000. (including VAT 18% - 18,000 rubles), put SF on advance payment.

On January 15, 2019, on account of the advance received, the Organization provided services worth RUB 118,000. (including VAT 20% - 19,666.67 rubles), put up the SF for sale.

She will only accept advance VAT in the amount of 18,000 rubles for deduction. - the same as was calculated in 2021.

In turn, the buyer , who took VAT as a deduction from the advance payment transferred in 2021, will restore the tax in 2019 also at the rate of 18/118 (clause 3, clause 3, article 170 of the Tax Code of the Russian Federation).

What VAT rate should be included in the contract?

The closer we get to January 1, 2021, the more unclear it is what amount of VAT should be included in the contract concluded at the end of 2021, if deliveries under it will take place in whole or in part in 2021. On the one hand, since the contract is concluded in 2021, then the rate should be indicated in the amount of 18%. On the other hand, part of the supply may be carried out in 2021, when the VAT rate will be 20%. Is there a special procedure for such “transitional” agreements?

No, not provided. And the main tax department confirmed this. In a letter dated 10/23/2018 No. SD-4-3/ [email protected] the Federal Tax Service of Russia indicated that the legislation does not provide for any exceptions for goods sold under contracts concluded before the entry into force of the law increasing the VAT rate and lasting from transition to 2021 and subsequent years.

Supplies made from January 1, 2021 must be taxed at the new rate, regardless of the date the contract was concluded. And, accordingly, regardless of what VAT is specified in the contract.

The question immediately arises: is it possible to immediately include 20% VAT in the contract if it is known in advance that the delivery will be carried out in 2019?

Officials do not directly address this point, but admit that this option is possible. And we will add that with this option, no violations or any pitfalls arise.

The only thing that needs to be taken into account - and officials warn about this - is that if under such an agreement you receive an advance payment before the beginning of 2021, then the tax on it must be calculated at the current rate (18/118), despite the fact that VAT is indicated in the agreement 20%. However, at the time of shipment, the tax must be calculated based on the new rate of 20%. And at this moment, the “advance” VAT that was calculated at the previous rate will be deducted.

If the contract is concluded in 2021, part of the goods will be shipped in 2021, and part - in 2021, then you can separately indicate in the contract the cost of one unit of goods shipped before January 1, 2021 (for example, the cost is 118 rubles (incl. including VAT 18%)). And separately - the cost of one unit of goods shipped from January 1, 2021 (for example, the cost is 120 rubles (including 20% ​​VAT).

There is another option. You can include in the contract the cost of the goods excluding VAT, but additionally state that VAT is charged in addition to the cost of the goods at the following rates:

• 18% – for goods shipped before December 31, 2021 (inclusive);
• 20% – for goods shipped from January 1, 2021.

How to take into account the buyer's additional payment for advances

Due to the increase in the tax rate, the buyer, before the date of shipment, in addition to the advance payment transferred in 2021 for supplies in 2019, can pay the seller 2% VAT.

In this case, three situations are possible:

Example 1: Buyer transfers 2% in 2021

If the buyer transfers 2% in 2021, this will be an additional tax payment . The seller receiving such a surcharge must issue an adjustment invoice for the difference between:

• VAT taken from the primary invoice issued at the rate of 18/118,

And

• VAT calculated at the rate of 20/120 (including additional tax). PDF

In 2021, an agreement for the provision of services was concluded between the parties. The price does not include VAT, so the total amount under the contract in 2021 will increase due to changes in the VAT rate (20%).

11/05/2018 The selling organization received a 100% advance payment under the service agreement in the amount of RUB 118,000. (including VAT 18%), put the SF on advance. The buyer is a VAT payer.

On January 21, 2019, an additional VAT payment in the amount of RUB 2,000 was received from the buyer.

On May 24, 2019, on account of the advance received, the Organization provided services worth RUB 120,000. (including VAT 20%), put up the SF for sale.

Show the difference between the VAT amounts indicated in the adjustment invoice in Section 3, page 070 gr. 5 VAT returns and take them into account when calculating the total VAT amount for the tax period. According to page 070 gr. Enter 3 declarations as “0”. PDF

If an additional payment of 2% in 2021 is made by a buyer who does not pay VAT , to whose address an invoice is not issued, then the seller reflects the additional payment in the sales book on the basis of a separate corrective document (accounting certificate) , which includes summary data on all such additional VAT payments for the month (or quarter).

Example 2: Buyer transfers 2% in 2021

If the buyer makes an additional payment of 2% in 2021, it is considered an additional payment of the cost , on which VAT must be charged at the rate of 18/118. In this case, the seller can:

• issue an adjustment invoice for the difference in cost according to the model recommended by the Federal Tax Service. PDF

or

• issue a regular advance invoice for VAT with additional payment at the rate of 18/118. PDF

In 2021, an agreement for the provision of services was concluded between the parties. The price does not include VAT, so the total amount under the contract in 2021 will increase due to changes in the VAT rate (20%).

11/20/2018 The selling organization received a 100% advance payment under the service agreement in the amount of RUB 118,000. (including VAT 18%), put the SF on advance. The buyer is a VAT payer.

On December 25, 2018, an additional payment of the cost in the amount of 2,000 rubles was received from the buyer.

Adjustment invoice

Invoice for advance received

On May 27, 2019, on account of the advance received, the Organization provided services worth RUB 120,000. (including VAT 20%), put up the SF for sale.

Show the additional payment received in Section 3, page 070 gr. 3 VAT returns. According to page 070 gr. 5 of the declaration, show the advance tax calculated at the rate of 18/118, take it into account when calculating the total amount of VAT for the tax period. PDF

Example 3: The buyer transfers the full amount of the advance in 2021, determined at a rate of 20%

By agreement with the seller, the buyer can increase the advance payment by 2% already in 2021 , essentially paying it at a rate of 20 percent. However, VAT on such an advance must be calculated based on the current rate for 2021 of 18/118 (clause 4 of Article 164 of the Tax Code of the Russian Federation), and for shipment in 2021, a rate of 20% must be applied. An adjustment invoice will not be needed in this case.

In 2021, an agreement for the provision of services was concluded between the parties. The price does not include VAT, so the total amount under the contract in 2021 will increase due to changes in the VAT rate (20%).

10/25/2018 The selling organization received a 100% advance payment under the service agreement in the amount of RUB 120,000. (including VAT 18%) on account of sales 2021, taking into account an increase in VAT by 2% (RUB 118,000 + RUB 2,000), put the SF on an advance. PDF

On January 16, 2019, on account of the advance received, the Organization provided services worth RUB 120,000. (including VAT 20%), put up the SF for sale. PDF

How to correct invoices for shipments made before 2021

As a general rule, invoices are corrected by the seller by issuing new, correct invoices. If you need to correct an invoice issued for a 2021 shipment in 2021, c. 7 of the corrected document, indicate the rate of the “shipping” invoice—18%.

Don't forget that in the new document:

• page 1 does not indicate new details, but the number and date of the “rejected” invoice;
• page 1a provides the serial number and date of correction.

How to return goods in 2019

This is a special case of the previous situation. Let's consider how both parties to the contract should act.

Recommendation for the seller

When returning goods in 2021, the Federal Tax Service recommends issuing an adjustment invoice for the cost of the returned goods, regardless of whether:

• what year were they shipped?
• whether registered by the buyer,
• All or part of the product is returned.

At the same time, if the initial invoice contains a rate of 18%, then in gr. 7 of the adjustment document, indicate the same rate. Give one copy of the adjustment invoice to the buyer.

If a product is shipped in 2021, and is returned in 2021 by a VAT non-payer , register an adjustment document (accounting certificate) in the purchase book, including summary data on such returns for the month (or quarter).

Recommendation for the buyer

When returning goods in 2021, restore VAT based on the seller’s adjustment invoice (clause 4, clause 3, article 170 of the Tax Code of the Russian Federation), regardless of the period in which the goods were purchased.

What rate should be indicated in new contracts?

Taking into account the increase in value added tax from January 1, 2019, the content of supply contracts is changing. Now, instead of the incoming duty of 18%, 20% is indicated. In order not to get confused in further cooperation on payment for products or services, there are two options for the development of events. So, the contract can be updated or not indicate the interest rate:

1. In the first case, cooperation with the supplier can be terminated under the current contract in 2021 and concluded again next year. This will avoid complications when calculating duties for transfer to the tax budget.
2. In the second option, it is allowed to indicate instead of the tax tariff a reference to the legislation of the Russian Federation - clause 3 of Art. 164 Tax Code of the Russian Federation Federal Law No. 117 dated 08/05/2000 (as amended on 10/11/2018). Now the article states a tariff of 18%, but from January 1, 2021, according to Art. 1 Federal Law No. 303 of 08/03/2018 (as amended on 10/30/2018), the law will be updated to indicate a rate of 20%. This is also convenient for further work, because tax rates may change in the future.

The latter method is useful for companies that enter into long-term projects. In such situations, the supplier organization carries out contractual operations over a long period of time. So, one company supplies a product to another organization every month for a year. The contract is valid from October 2021 to October 2019. If the contract does not reflect the tariff, then the accountant of the supplier company will write down in the invoice the rate specified in clause 3 of Art. 164 of the Tax Code of the Russian Federation (link above).

But if two firms enter into a contract in 2021, when the tariff is 18 percent, then the contract specifies 18%. In addition, it is worth drawing up an additional agreement to the contract, which specifies additional conditions. For example, that from January 1, 2021, supplies under the concluded contract are assessed at a tariff of 20%.

The transition period from an 18% tax rate to a 20% tax rate is a difficult time for companies. But taking into account the recommendations and analyzing examples, organizations can easily figure out what rates to indicate in contracts and how to correctly calculate input and output VAT on the cost of goods, deductions and payments to the tax budget.

How to switch to the new VAT for tax agents

This depends on the basis on which the tax agent is considered such.

Let's turn to clause 2 of Art. 161 of the Tax Code of the Russian Federation: when goods (work, services) are sold on the territory of the Russian Federation by foreign companies that are not registered with tax authorities in Russia, VAT is calculated and paid to the budget by buyers-tax agents (clauses 1, 2 of Article 161 of the Tax Code of the Russian Federation). The tax is paid simultaneously with the payment of funds to the foreign seller (final or advance). No VAT will be charged on subsequent shipments.

This means the following:

• if an advance payment for supplies made in 2021 is transferred to a foreign company in 2021, then VAT is calculated by the tax agent based on the rate of 18/118;
• if the buyer-agent pays a foreigner for goods (work, services) purchased in 2021 in 2021, VAT must also be calculated at the old rate of 18/118: after all, the 20% rate applies only to shipments in 2021;
• If in 2021 a tax agent transfers an advance (or payment) to a foreign company for goods (work, services) purchased in 2021, then VAT is calculated based on the new rate of 20/120.

A similar procedure is provided for tax agents specified in paragraph 3 of Art. 161 Tax Code of the Russian Federation.

The nuances of applying VAT rates during the transition period for tax agents listed in clauses 2, 3 of Art. 161 of the Tax Code of the Russian Federation, are given in the table:

Other tax agents (clause 4, clause 5, clause 5.1, clause 8 of Article 161 of the Tax Code of the Russian Federation) - buyers of animal skins, scrap metal, second-aluminum, etc. - must follow the general rules for calculating VAT, determining the tax base and the advance payment , and on shipment.

Recommendations for switching to the new VAT rate of 20%

Transferable contracts

General rule
On prepayments received in 2021, the seller must calculate VAT at the rate of 18/118. When shipping in the new year, a rate of 20% will need to be applied, and a tax rate of 18/118 can be taken as a deduction.

Additional tax difference of 2% after advance payment

The buyer made an advance payment, and then decided to pay the difference of 2% before shipment.

— If the difference is transferred in 2021, this is an additional cost. You need to pay VAT on it at the rate of 18/118. Issue an adjustment invoice for the cost difference.

Another option is possible, which the Federal Tax Service does not talk about: draw up another advance invoice with a rate of 18/118.

— If the difference is transferred in 2021, this is an additional tax payment. Issue an adjustment invoice for the difference in tax amount.

At the time of shipment, the seller calculates VAT at a rate of 20%, and deducts the tax calculated on the basis of adjustment invoices.

You can create a correction invoice for several invoices that were previously created. The Federal Tax Service allowed this to be done.

Please note: if the buyer is not a VAT payer, then instead of an adjustment invoice, you can draw up another document, for example, an accounting certificate.

Additional payment of the tax difference of 2% is included in the advance payment

If the parties have agreed to make an advance payment, calculated taking into account the VAT rate of 20%, before the new year, adjustment invoices do not need to be drawn up. Upon receipt of an advance payment, VAT must be calculated at the rate of 18/118, and upon shipment - at a rate of 20%. VAT can be deducted from the entire prepayment amount.

Features for Tax Agents

when purchasing goods from foreigners who are not registered in Russia and leasing state and municipal property .

If the prepayment was received in 2021, then the tax agent must transfer VAT at the rate of 18/118. There is no need to calculate tax for subsequent shipments in 2019.

If the shipment took place in 2021, and the organization transfers payment in 2021, then VAT must still be paid at the rate of 18/118 . After all, the 20% rate applies to shipments in the new year.

The Federal Tax Service draws attention to the fact that these features cannot be used by other tax agents, for example, buyers of raw animal skins, scrap metal, and secondary aluminum. They need to be guided by general rules and determine the tax base twice: by advance payment and by shipment.

Correcting errors, changing prices or quantities of goods

If in the new year you need to clarify the quantity or price of goods shipped in 2021, then indicate on the adjustment invoice the same rate as on the original one . After all, the shipment was before the new year.

The same goes for correcting invoices.

Return of goods

Tax officials recommend that sellers always issue return of goods with adjustment invoices. It doesn't matter:

— whether the buyer accepted the goods for registration;

- when was the shipment - before the new year or after;

— the entire batch of goods or part of it is returned.

The department draws attention to the fact that the same rate must be entered into the adjustment invoice as was in the original document.

Give one copy of the adjustment invoice to the buyer if he is a VAT payer. The buyer will have to reinstate the tax deducted.

Review: “VAT 20%: tax authorities have issued recommendations on the transition to a new rate” (ConsultantPlus, 2018)

How to calculate VAT on electronic services provided by foreign companies

From 01.01.2019, when foreign companies provide electronic services listed in clause 1 of Art. 174.2 of the Tax Code of the Russian Federation, on the territory of the Russian Federation, they are obliged to independently calculate and pay VAT. And it doesn’t matter who the buyer of such services is - an individual entrepreneur, a citizen or an organization. The moment of determining the tax base is the last day of the tax period in which such services are paid (clause 4 of Article 174.2 of the Tax Code of the Russian Federation).

Let’s imagine that payment for these services was received by a foreign seller in 2021, then:

• if services are provided in 2021, then VAT must be calculated at the calculated rate for 2021 - 15.25% (clause 5 of Article 174.2 of the Tax Code of the Russian Federation);
• if services are provided in 2021, then VAT will be calculated at the estimated rate of 2021 - 16.67%.

If payment for the future supply of services is received by a foreign supplier in 2021, then the VAT will be paid not by the foreign company, but by the Russian buyer himself (organization or individual entrepreneur) as a tax agent (clause 2 of Article 174.2 of the Tax Code of the Russian Federation). However, if the buyer is an individual, then the foreign company itself must pay VAT by registering for tax purposes in the Russian Federation.

Reducing losses during the transition period: practical advice

The transition to an increased VAT rate is associated not only with complex issues in tax accounting, but also with controversial situations and possible losses. Here are some recommendations to help your company survive this difficult period:

• Conduct an audit of your suppliers. First of all, those who work for OSNO. Calculate prices at new rates, plan future payments. Analyze whether the company has enough working capital, including to pay taxes at the new rate. In case of a lack of funds, the solution to the problem may be: attracting borrowed funds;
• agreement with suppliers on deferred payment;
• attracting simplified suppliers.

If VAT is included in the price of the goods or the VAT clause is not specified in the contract, the seller will pay for the increase in rate at his own expense. To avoid losses, we recommend that such sellers sign an additional agreement with buyers, according to which the price excluding VAT will remain the same and will not include VAT.

Find out in more detail how the increase in the VAT rate of 20% in 2021 will affect the contract amount.

• Protect yourself by drawing up additional agreements with simplified suppliers: after all, they may lose the right to a special regime, and therefore change prices. The phrase enshrined in the contract “The price of the product includes all taxes and fees” will protect you from risks associated with price increases in the future.
• If possible, speed up January shipments for which an advance has already been received: this way you will pay less VAT. Or another option - think in advance about the size of the advance, which will cover the increase in the VAT rate in 2021.
• Try to negotiate with suppliers to postpone prepayments to January: this way you can deduct a larger amount of tax.

This option will not be profitable if you have a high VAT payable for the fourth quarter of 2021.

The transition to a new VAT rate will require attention, effort and responsibility not only from accountants, but from almost all employees of the organization. We will keep you updated on new developments related to the transition to a 20% VAT rate, explain what is not clear, and answer your questions.

Dear Colleagues!

BukhExpert8 will soon hold a series of seminars as part of the “Hard transition to 20% VAT” - with expert advice, analysis of practical situations, and answers to the most tricky questions.

If you want to understand in detail all the nuances of legislation and practical changes in 1C related to 20% VAT, we invite you and your company to take part in our online consulting seminars, which will be held:

[11/30/2018 broadcast] VAT 20%: hard transition to a rate of 20% (detailed legislative analysis)

[12/21/2018 broadcast] Transition to 20% VAT. Workshop in 1C - Part 1

[02/15/2019 broadcast] Transition to 20% VAT. Workshop in 1C - Part 2

[04/02/2019 broadcast] How to prepare an ideal response to VAT requirements from the Federal Tax Service

You will be able to take part in live broadcasts or watch the full recording of the seminar the next day.

Submit an application on behalf of a legal entity or individual. persons to participate →

Continued in the publication:

• Increase in the VAT rate and its impact on the contract amount

If you are a subscriber to the BukhExpert8: Rubricator 1C Accounting system, then read additional material about the transition to the new VAT rate in 2021:

• VAT accounting policy
• Responsibilities of a tax agent for VAT
• What's new in the VAT return
• VAT on travel documents: 20% rate allowed already in 2021

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