Despite the fact that construction and installation work has been subject to VAT since January 1, 2001, disputes regarding the interpretation of the term “construction and installation works for own consumption” are sometimes resolved only in court.
Carrying out construction and installation work (hereinafter referred to as construction and installation works) for one’s own consumption is subject to VAT taxation (clause 3, clause 1, article 146 of the Tax Code of the Russian Federation).
The tax base for these transactions is determined on the last day of each tax period (Clause 10, Article 167 of the Tax Code of the Russian Federation). The taxpayer has the right to deduct the accrued amount of VAT from the cost of construction and installation work (paragraph 2, clause 5, article 172 of the Tax Code of the Russian Federation).
Problematic issues related to the terminology “construction and installation work for own consumption”.
EXAMPLE No. 1
In one of the divisions of JSC “Lutik”, shelving for storing finished products was manufactured.
The following entries will be created in the accounting records of JSC Buttercup:
| Contents of a business transaction | Debit | Credit | Amount, in rubles |
| Construction materials purchased for the manufacture of shelving have been accepted for accounting. | 10-8 | 60 | 100 000 |
| VAT is taken into account on the cost of building materials. | 19-4 | 60 | 18 000 |
| VAT is accepted for deduction. | 68 | 19-4 | 18 000 |
| The cost of written-off building materials is taken into account. | 23 | 10-8 | 100 000 |
| The department's costs associated with the manufacture of shelving are taken into account. | 23 | 70,69,02 | 25 000 |
| Reflected as part of capital investments are the costs associated with the manufacture of racks. Calculation: 100,000 rub. + 25,000 rub. = 125,000 rub. | 08-3 | 23 | 125 000 |
EXAMPLE No. 2
A gear crushing machine has been installed in one of the divisions of Lyutik JSC. The installation of the machine was carried out by the organization's employees.
The costs of the department that installed the gear crushing machine include the following cost elements:
- workers' wages;
- deductions from payroll;
-electricity;
- other overhead costs of the workshop.
The above expenses in accounting increase the initial cost of the machine.
According to the All-Russian Classifier of Types of Economic Activities OK 029-2001, the above works do not relate to construction and installation works (installation of equipment has an OKVED code different from the construction and installation work code). As noted in the Resolution of the Federal Antimonopoly Service of the Moscow District dated March 28, 2012 No. A40-10464/11-129-46, “... the main feature that allows defining work as construction and installation work is the execution of construction, of which installation work is a part.”
Installation of equipment outside the scope of construction work does not fall under the definition of “construction and installation work for one’s own consumption.”
Thus, as in example No. 1, the organization does not have the obligation to calculate VAT on the cost of installation of the machine.
One of the criteria for classifying completed work as construction and installation work for one’s own consumption is the work being performed by the organization itself, i.e. employees who are in an employment relationship.
The moment of determining the tax base for construction and installation works for one’s own needs.
In accordance with clause 10 of Article 167 of the Tax Code of the Russian Federation, for VAT purposes, the moment of determining the tax base when carrying out construction and installation work for one’s own consumption is:
- the last date of each tax period*.
*The tax period for VAT is a quarter in accordance with Article 163 of the Tax Code of the Russian Federation.
