Recipients of government subsidies
The authors of the changes regarding VAT on subsidies have prepared a number of innovations for recipients of such funds. Individual entrepreneurs and companies of various organizational forms that purchase goods or make payments for work or services with budget money are not entitled to deduct input VAT. This is stated in the amendment to the tax code.
The restriction norm is quite understandable and prevents doubling of budget funds.
Let's look at the main points of the new regulations in the table.
| No. | Rule | Characteristic |
| 1 | Tax deduction | Now the ban applies only to that part of the purchased goods that was partially paid for with government money. That is, it will not be possible to deduct VAT on that partial purchase that concerns budget funds, and thus you will still be able to return part of the tax. The tax amount is equally proportional to the purchased part of the product. In order to find out this proportion, take into account the input VAT in the cost of the product. The norm applies to both domestic and imported products. When maintaining separate accounting for VAT paid with government money on goods, then that part of the unaccepted tax is taken into account in such goods or services . If this option is not applied, then the tax cannot be attributed to expenses. |
| 2 | Separate accounting support | With the introduction of innovations, separate accounting loses all meaning. That is, the entire tax not accepted is applied by the company to other costs of manufacturing and selling the goods, but is not included in the price of the purchased property. The legislator also allowed the wording to be written in documents for receiving investments and subsidies that funds from the treasury do not cover the payment of input taxes. This occurs when a product is paid for with budgetary funds without VAT, and the company covers the tax on its own |
| 3 | VAT recovery | Previously, the condition was that the adopted tax was restored when the budget covered the costs. And it didn’t matter whether the tax was included in the budget subsidy. Now you will have to restore the tax only on the money issued from the treasury and on the tax too. This condition must be included in the documentation for the allocation of funds. When you were not allocated money for tax, then it is not worth restoring it. As for imports, when allocating money only for it, it is the importing company’s responsibility to restore the previously deducted tax. Upon purchasing goods at personal expense, the company could subsequently receive partial government coverage. In this case, it is worth restoring part of the tax equivalent to the part of the acquisition without input VAT |
If the above conditions for separate accounting are met, the company can easily accept a tax deduction.
The formula for calculating the proportionality of purchases has been changed and input VAT is now included in the purchase price. But it is important to remember that the rules apply only to subsidies starting in 2021.
VAT deduction
| VAT deduction and write-off | Until 01/01/2019 | From 01/01/2019 |
| VAT deduction (clause 2.1 of article 170 of the Tax Code of the Russian Federation) | When purchasing goods, works, services (including fixed assets and intangible assets) using budget funds, it was impossible to deduct input VAT | VAT is deductible in full if the documents for the provision of subsidies contain a clause that budget funds do not go to pay VAT: only the cost of goods (work, services) without tax is paid through the subsidy, and VAT is paid by the company from its own funds. If only part of the purchase is paid for with the subsidy, the prohibition on deduction does not apply to the entire VAT, but only to its share. The tax share is determined in proportion to the part of the purchase that was paid for with budget money. When calculating the proportion, input VAT must be taken into account in the purchase price. |
| Accounting for VAT not accepted for deduction when calculating income tax (paragraph 5, clause 2.1, article 170 of the Tax Code of the Russian Federation) | VAT not accepted for deduction could be included in income tax expenses if 2 conditions are simultaneously met:
In the absence of separate accounting, such amounts could not be taken into account as expenses when calculating income tax. | Non-deductible VAT is not included in the cost of goods, but is recognized at a time in other expenses (Article 264 of the Tax Code of the Russian Federation), regardless of the presence of separate accounting. |
From 2021, legislators have eliminated the requirement to keep separate records of costs incurred through subsidies. However, it is impossible to do without separate accounting if, when providing subsidies, specific goods (works, services) for the purchase of which budget funds are allocated are not identified. In this case, in the absence of separate accounting, VAT will have to be restored.
What will change in warranty repairs?
In a situation where your company is engaged in the maintenance and repair of medical equipment and other goods, this paragraph will be of interest to you. Before the changes, the code exempted this type of activity from tax, but only when they were not paid. All parts associated with the repair were also not subject to VAT when replaced free of charge.
The amendment preserves the right to exemption from VAT, but the taxpayer of the business we are studying has the right to write a refusal to have his business exempted from tax. All guarantors of individual entrepreneurs and companies are given the right to freedom of choice to use the required tax benefit or not.
You can apply for a waiver of VAT benefits by submitting a special application to the tax office at the place of registration of the business.
Subsidy after purchase
The subsidy was received after the purchase of goods (work, services) to reimburse expenses incurred, including VAT.
Its amount is also not included in the VAT tax base, since it is not related to payment for goods (work, services) sold by the taxpayer. But VAT, which was accepted for deduction on purchased goods (works, services), will need to be restored.
If the subsidy was received to reimburse expenses incurred for the purchase of goods (work, services) and includes VAT, the subsidy amount is not included in the tax base, and the VAT deduction is restored.
There is an exception. It concerns a targeted subsidy under Government Decree No. 976 of July 2, 2021, related to the prevention of coronavirus.
If a company fulfills the conditions for providing a targeted subsidy under Resolution No. 976 and purchased goods (work, services) for the prevention of coronavirus before receiving it, then the VAT accepted for deduction is allowed not to be restored.
Read in the berator “Practical Encyclopedia of an Accountant”
Deduction and restoration of VAT on goods purchased with targeted subsidies for the prevention of coronavirus
Purchasing waste paper
Before the introduction of changes, all companies and individual entrepreneurs purchasing scrap metal and raw animal skins. Counterparties issue invoices to their clients with the note “VAT is calculated by the tax agent” and, accordingly, do not pay it to the treasury. Clients of such companies, except those who are not registered as individual entrepreneurs, issue invoices with allocated VAT and withhold such tax accordingly. They are obliged to pay it to the treasury and are entitled to a tax deduction.
With the introduced amendments, waste paper is added to the product group.
The Tax Code contains a definition of what is included in it. This is all paper and cardboard considered as waste, their defects, other papers and printing products whose archival shelf life has expired. The advantage will apply to those companies that purchased waste paper starting this year and they will be tax agents for VAT.
Accounting for subsidies with VAT
Tatyana, hello!
Please clarify which norm of the Tax Code of the Russian Federation you are guided by in this paragraph “VAT on a subsidy must be paid to the tax office” and for what purpose you are drawing up the document “Reflection of VAT accrual”.
Let's look at your situation in detail.
We received a subsidy for the Organization's account. Bank and cash desk – Bank statements – Receipts – Transaction type Other receipts . The wiring looks like D 51 K 76.09 . We take analytics with/without VAT and the VAT rate from the primary document, i.e. if the Bank Statement indicates without VAT, then it will be the same in the accounting. If VAT is highlighted and it is indicated, for example, including VAT 18%, then this information is reflected in the program.
Also, by the date of the Notification, our accounts reflect the following business transaction D 76.09 K 98.01 The subsidy is included in deferred income on the basis of the Notification of receipt of the subsidy. Operations – Operations performed manually.
Next about VAT . Accounting depends on the purpose for which the subsidy is allocated. Let's turn to the Tax Code of the Russian Federation. Article 162 of the Tax Code of the Russian Federation, paragraph 2, paragraph 1, states that if the Subsidy is related to payment for goods (work, services) sold by the taxpayer, then the tax base increases by these amounts. This is not your case because the subsidy is not related to sales, but rather to reimbursement of costs.
Let's go further according to the legislation and look at Article 170, paragraph 3, paragraph 6 of the Tax Code of the Russian Federation - here we are talking about subsidies from the federal budget for reimbursement of costs . “6) in the event that a taxpayer, in accordance with the legislation of the Russian Federation, receives subsidies from the federal budget to reimburse costs associated with payment for purchased goods (work, services), taking into account tax, ... are subject to restoration in the amount previously accepted for deduction. Tax amounts subject to restoration in accordance with this subparagraph are not included in the cost of the specified goods (works, services), but are taken into account as part of other expenses in accordance with Article 264 of this Code. Reinstatement of tax amounts is carried out in the tax period in which subsidies provided were received .” We just have cost reimbursement. This means we analyze the primary documents on the subsidy, the source of funding, etc. and if this is a subsidy from the federal budget, then restore the VAT previously accepted for deduction through Operations – VAT Regulatory Operations – Create – VAT Restoration. The posting will look like D 19 K 68.02 + entries in the VAT registers.
Next, the question arises of what to do with the amount of restored VAT. As discussed above, Article 170, paragraph 3, paragraph 6 of the Tax Code of the Russian Federation states that VAT amounts “are taken into account as part of other expenses in accordance with Article 264 of this Code.” Therefore, the amount of recovered VAT should be recognized in other expenses. Posting D 91.02 K 19 is executed through Operations – VAT routine operations – Create – VAT write-off.
ATTENTION! For subsidies from the local budget , as well as from the budget of a constituent entity of the Russian Federation, the Taxpayer has no obligation to restore the VAT previously accepted for deduction .
And since the topic of subsidies is touched upon, let us at the same time remember how we reflect income . If, at the time of receiving the subsidy, the fixed assets (I assume that the rolling stock belongs to the fixed assets) have already been put into operation and are being depreciated, then we recognize in income an amount equal to the depreciation. Wiring D 98.01 K 91.01. Transactions – Transactions entered manually. The remaining part of the subsidy, reflected in the DBP on account 98.01, will be recognized in income according to a similar principle, i.e. as expenses are recognized. At the same time, in NU in the full amount no later than 3 years starting from the tax period in which the subsidy was received.
Standards that are required to be studied if there are subsidy transactions in accounting: – Article 78 of the Budget Code “Provision of subsidies to legal entities (except for subsidies to state (municipal) institutions), individual entrepreneurs, individuals”; – Article 154 of the Tax Code of the Russian Federation “The procedure for determining the tax base for the sale of goods (work, services)”; – Article 162 of the Tax Code of the Russian Federation “Features of determining the tax base, taking into account amounts associated with settlements for payment for goods (work, services)”; – Article 170 of the Tax Code of the Russian Federation “Procedure for allocating tax amounts to costs of production and sale of goods (work, services)”; – Article 264 of the Tax Code of the Russian Federation “Other expenses associated with production and (or) sales”; – Article 271 of the Tax Code of the Russian Federation “Procedure for recognizing income using the accrual method”; – Rules for maintaining the Sales Book, Decree of the Government of the Russian Federation dated December 26, 2011 No. 1137 ; – Ruling of the Supreme Court dated January 21, 2016 N310-KG15-13228 in the case NА09-7805/2014; – Letter of the Ministry of Finance of the Russian Federation dated February 17, 2016 N03-07-11/8728 ; – Letter of the Ministry of Finance of the Russian Federation dated December 30, 2016 N03-07-11/79600 (railway rolling stock); – PBU 13/2000 “Accounting for state aid.”
Features of accounting
State aid as a subsidy, subvention and government loans, as well as a non-financial resource, is regulated by the accounting provisions for accounting for state aid. All types of loans I have listed fall under targeted financing. Budget money is recognized using one of the following options:
- When targeted financing occurs, debts for such money are displayed.
- Upon their actual receipt, when such financing increases in the accounting accounts of the placement of such money.
The regulation states that budget money can be written off from the account for targeted financing to improve the company’s financial results.
State finances covering the company’s expenses of the previous reporting period are reflected as part of the debt for them and increase the financial results of the company’s activities through other income. For this purpose, accounting records are carried out:
Debit 76 Credit 91-1
I can provide you with an example of indicative accounting entries:
- Display of public finance debt: Debit 76 Credit 86.
- Increase in other income of the company when management makes an order to allocate compensation: Debit 86 Credit 91-1.
- According to the leasing agreement, money came to the account as payment reimbursement: Debit 51 Credit 76.
The Department of Tax and Customs Policy has considered the appeal on the issue of accounting for the purposes of income tax and value added tax of subsidies received by organizations to compensate for lost income, and reports the following.
By virtue of Article 248 of the Tax Code of the Russian Federation (hereinafter referred to as the Tax Code of the Russian Federation), income for the purpose of taxing the profits of organizations includes proceeds from the sale of goods (work, services) both of their own production and those previously acquired, proceeds from the sale of property rights (Article 249 of the Tax Code of the Russian Federation ) and non-operating income (Article 250 of the Tax Code of the Russian Federation).
In accordance with paragraph 2 of Article 249 of the Tax Code of the Russian Federation, sales revenue is determined on the basis of all receipts associated with payments for goods (work, services) sold or property rights expressed in cash and (or) in kind.
Thus, if a subsidy is allocated as compensation for the cost of a product sold at a reduced price, then it is taken into account when forming the tax base for corporate income tax as part of sales proceeds.
Otherwise, if the subsidy is not allocated as compensation for the cost of goods sold, but is at the same time lost income, then for income tax purposes it is taken into account in the manner established by paragraph four of clause 4.1 of Article 271 of the Tax Code of the Russian Federation, at a time on the date of enrollment.
In accordance with the Rules for the provision of subsidies from the federal budget to manufacturers of machinery and equipment for the food and processing industry in order to provide buyers with discounts when purchasing equipment, approved by Decree of the Government of the Russian Federation dated May 10, 2017 No. 547, a subsidy is provided to the manufacturer in the amount of 15 percent of the price of the equipment (with taking into account value added tax), and in case of sale of equipment to buyers registered in the territories of the Siberian and Far Eastern federal districts, as well as the Republic of Crimea, Sevastopol and the Kaliningrad region - in the amount of 20 percent of the price of the equipment (including value added tax) subject to certain conditions being met.
Thus, the subsidy provided from the federal budget to manufacturers of machinery and equipment for the food and processing industries in accordance with the above-mentioned resolution of the Government of the Russian Federation is subject to reflection when forming the tax base for corporate income tax as part of sales revenue.
As for the value added tax (hereinafter referred to as VAT), we inform you that in accordance with paragraphs two and three of paragraph 2 of Article 154 of the Tax Code of the Russian Federation, when selling goods (work, services), taking into account subsidies provided by the budgets of the budget system of the Russian Federation in connection with the use by the taxpayer state regulated prices, or taking into account benefits (including discounts on the price of goods (work, services) excluding VAT) provided to individual consumers in accordance with the law, the VAT tax base is determined as the cost of goods (work, services) sold, calculated based on their actual selling prices. In this case, the amounts of these subsidies are not taken into account when determining the tax base for VAT.
If subsidies from the federal budget are provided to a taxpayer in order to compensate for lost income in connection with the provision of discounts to individual buyers on goods (work, services) sold, including VAT, then the amounts of such subsidies are included in the VAT tax base in the tax period in which subsidy amounts have been received.
Deputy Director of the Department A.A. SMIRNOV
Postulates of the code
Please note that the object of taxation is income from the sale of a product, other property and rights thereto, as well as all non-operating income. Separately, you should not keep accounting for the subvention allocated to your business. How you spend such finances You are not required to report. A complete list of income that is not applicable to taxable profit is indicated in the code and it fully satisfies the requests of users. At the same time, free products and rights received are included in non-operating income, with the exception of certain exceptions.
There is a wording that all subsidies are provided to legal entities, individual entrepreneurs and individuals who produce goods irrevocably and free of charge in order to compensate for expenses and lost income due to the production of such a product. The norm does not apply to government agencies of various budgets. Consequently, all budget funding issued to the company is applicable to be added to the income tax base as non-operating income at the time the funds are credited to the company's current account.
What rules for VAT recovery when receiving subsidies were in effect in 2021?
Until 01/01/2018, there was a rule on the need to restore the amounts of “input” VAT when receiving subsidies for reimbursement of costs (including VAT) associated with the payment of purchased goods (works, services), including VAT, as well as when receiving subsidies for reimbursement of costs of payment VAT when importing goods into the territory of the Russian Federation. This followed from the provisions of paragraph 1 and paragraphs. 6 clause 3 art. 170 of the Tax Code of the Russian Federation as amended in force before the entry into force of Federal Law No. 335-FZ of November 27, 2017.
From 01/01/2018, when purchasing goods (work, services), property rights at the expense of subsidies or budget investments received by the taxpayer from the budget, the amounts of VAT presented to the taxpayer or actually paid by him when importing goods into the territory of the Russian Federation were not subject to deduction. It did not matter whether VAT amounts were included in subsidies or budget investments. This followed from paragraphs 1, 2.1 and paragraphs. 6 clause 3 art. 170 of the Tax Code of the Russian Federation as amended by Federal Law No. 335-FZ.
At the same time Art. 4 of Federal Law No. 303-FZ dated 08/03/2018, which entered into force on 08/03/2018, a number of taxpayers were given the right to be guided by paragraph 1 and paragraphs. 6 clause 3 art. 170 of the Tax Code of the Russian Federation as amended, in force before the entry into force of Federal Law No. 335-FZ, in particular, restore VAT only when receiving subsidies, taking into account the tax on reimbursement of costs for the acquisition of goods (work, services), including VAT, and not restore VAT when receiving subsidies without tax.
Among the taxpayers specified in Art. 4 of Federal Law No. 303-FZ, organizations are listed as subjects of natural monopolies. Provisions of paragraph 1 and paragraphs. 6 clause 3 art. 170 of the Tax Code of the Russian Federation as amended until 01/01/2018, they apply to goods (works, services) (including fixed assets, intangible assets, property rights) acquired through budget investments received up to 12/31/2018 inclusive from budgets budget system of the Russian Federation.
For the purposes of applying the Budget Code, budget investments are understood as budget funds allocated for the creation or increase at the expense of budget funds of the value of state (municipal) property (Article 6 of the Budget Code of the Russian Federation).
Also among persons who can apply the old version of Art. 170 of the Tax Code of the Russian Federation, named:
– taxpayers – agricultural producers who purchased goods (work, services), property rights at the expense of subsidies received up to December 31, 2018 inclusive from the budgets of the budget system of the Russian Federation; – manufacturing organizations that received subsidies from the federal budget until December 31, 2018 inclusive, to compensate for part of the costs associated with the production and support of warranty obligations in relation to wheeled vehicles, high-performance self-propelled and trailed equipment, the use of energy resources by energy-intensive enterprises of the automotive industry, the implementation of scientific research and development work and testing of wheeled vehicles; – concessionaire organizations implementing projects for the construction (reconstruction) of highways (sections of highways and (or) artificial road structures) and making purchases using budget investments received before 12/31/2022 (initially - until 12/31/2018) inclusive from the budget on the basis of concession agreements concluded before 01/01/2018.
That is why the Ministry of Finance in Letter No. 03-07-11/90902 dated December 13, 2018 indicated: from August 3, 2018, taxpayers named in Art. 4 of Federal Law No. 303-FZ, have the right to apply the provisions of paragraph 1 and paragraphs. 6 clause 3 art. 170 of the Tax Code of the Russian Federation as amended before the entry into force of Federal Law No. 335-FZ, in case of receiving subsidies or budget investments before 01/01/2019. In this case, the date of purchase of goods (works, services) is unimportant.
Let's pay attention to the next point. Originally Part 5.1 Art. 9 of Federal Law No. 335-FZ it was provided that the provisions of paragraphs 1, 2.1, paragraphs. 6 clause 3 art. 170 of the Tax Code of the Russian Federation in the new edition in relation to goods (works, services) acquired by organizations - subjects of natural monopolies, property rights at the expense of budget investments will be applied from 01.01.2019. This part has become invalid on the basis of Federal Law No. 303-FZ.
The foregoing means that organizations - subjects of natural monopolies could act taking into account the norms of paragraph 1 and paragraphs. 6 clause 3 art. 170 of the Tax Code of the Russian Federation as amended in force before the entry into force of Federal Law No. 335-FZ, and in the period from 01/01/2018 to 08/03/2018.
RNO could use this opportunity if it was a subject of natural monopolies.
