Advance payment is an advance payment for goods. That is, the contract has already been concluded, part of the money has been transferred to the seller in advance, and the rest will be transferred after the delivery of the goods.
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Do I have to pay VAT on advances received from buyers?
General information ↑
VAT can be “input”, that is, for the purchased product, service or work. There is also “outgoing” VAT. It is summed up from all bills paid by other organizations. The difference between these two VATs is payable to the budget.
For the buyer
The buyer takes into account all VAT on purchased goods, with the exception of goods that are not subject to taxation in accordance with Art. 149 of the Tax Code of the Russian Federation.
In order for such VAT to be taken into account, the buyer must receive an invoice from the seller and register it in the purchase book.
Payment for goods can be made in different ways:
- pay the entire amount at once and deduct the entire amount of VAT;
- pay for the goods in several stages, paying first an advance and then the remaining amount.
In this case, starting from October 2021, the seller is obliged to issue two invoices to the buyer - for the advance payment and for the principal amount, that is, the entire purchase amount.
An advance payment must be indicated. The buyer accepts both of these invoices and records them in his purchase ledger.
He also deducts VAT on both the advance and the principal amount. In this case, VAT accepted for accounting on the advance payment is deducted from the amount of VAT that relates to the principal amount.
Such amendments were made to the Tax Code of the Russian Federation by Federal Law No. 238-FZ dated July 21, 2014.
For the supplier
The supplier first accepted the advance from the buyer and then the entire remaining amount. He is obliged to pay to the budget the amount of VAT “attributable” to the advance.
Then this amount is deducted from the VAT amount, which will be calculated from the basic amount for the goods.
The seller issues two invoices to the buyer - for advance payment and upon shipment. In the invoice for the advance payment, it is necessary to specify the advance payment.
Only in this way will both the buyer and the seller be able to accept VAT from the advance payment for accounting. The seller enters the issued invoices into his sales book.
VAT 20 percent: what to do when receiving an advance in 2021 and shipping after 01/01/2019
The supplier organization to OSNO entered into long-term contracts in 2021 that provide for advance payments. In 2018, the supplier received advances, on which VAT was paid to the budget at a rate of 18/118. The goods will be shipped in 2021. From 01/01/2019 the VAT rate will be 20 percent. What should a supplier do when shipping goods in 2021? At whose expense should the tax payable to the budget be increased?
Law No. 303-FZ and the Tax Code of the Russian Federation do not contain a procedure for transition under long-term contracts concluded in 2021, providing for advance payments, the shipment of goods under which will be carried out in 2021.
In our opinion, the supplier should analyze the terms of the concluded contracts regarding the wording of the cost of goods and VAT.
If the contract does not indicate that VAT is not included in the price and this does not follow from correspondence with the counterparty, then the tax is included in the price specified in the contract. Then VAT should be calculated using the calculation method. Otherwise, VAT must be charged additionally on top of the price.
A similar opinion was expressed in the letter of the Federal Tax Service of the Russian Federation dated October 5, 2016 No. SD-4-3/18862: if from the terms of the contract and other circumstances related to its conclusion it follows that its price is formed without taking into account VAT, then the usual tax rate is applied.
Depending on the terms of the concluded contracts, we will consider the following situations.
In turn, the buyer must recover VAT from the advance payment in the amount of 180 rubles. And deduct VAT at a rate of 20 percent - 196.67 rubles.
Thus, in the situation under consideration, VAT increases at the expense of the supplier.
2. The total contract price payable to the supplier is indicated without VAT. But from the terms of the contract or the circumstances preceding its conclusion, it does not follow that the tax is not taken into account in the price of the contract. Therefore, VAT is included in the contract price by default. Therefore, from this price, the supplier independently allocates the amount of VAT using the calculation method (clause 17 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated May 30, 2014 No. 33).
In the situation under consideration, as in the first case, the VAT rate will be calculated using the calculation method, and with an increase in the VAT rate, the cost of goods will decrease. VAT will increase at the expense of the supplier.
In turn, the buyer must recover VAT from the advance payment in the amount of 180 rubles. And deduct VAT at a rate of 20 percent - 236 rubles.
In this situation, the total cost of goods including VAT is changed by the amount of additional VAT charged to the buyer.
Due to the increase in the VAT rate from 01/01/2019 to 20 percent, we recommend negotiating with buyers on contracts concluded in 2018. If the buyer agrees to sign an additional agreement to the contract, providing for an adjustment of the initial contract price by the amount of the increase in VAT, then it is necessary to agree on an increase in the total cost of delivery, including 20 percent VAT, and payment terms.
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The answer was prepared by the legal consulting service of the company RUNA
Is it necessary to pay VAT on advances ↑
There are a lot of nuances with paying advances for goods, work or services. And often accountants do not know what to do in a given situation. On some sites you can find VAT advances for dummies.
Received
The buyer is obliged to take into account the “input” VAT from the advance paid to the seller and the VAT taken into account from the advance.
It is then accepted for deduction when the invoice for all purchased goods is issued and payment is made in full.
This also applies to those transactions that occurred in different tax periods for the payment of VAT.
The buyer accepts VAT for accounting on the basis of an invoice, which is issued by the seller for each advance payment.
In other words, no matter how many advances the buyer pays, the seller is obliged to issue an invoice for each, and the buyer is obliged to register these invoices in his purchase book.
Video: VAT on Advance If the buyer paid an advance, and the amount of goods shipped turned out to be less than the advance payment, then the buyer must restore VAT in the part that is equal to the amount of goods shipped or work and services performed.
Issued (paid)
The situation is similar with issued invoices. The seller pays VAT to the budget on each advance payment that the buyer pays to him.
This is stated in paragraph 1 of Art. 172 of the Tax Code of the Russian Federation.
Then, each advance tax is taken as a deduction when calculating the total tax base for the shipped goods.
If the advance payment is returned to the buyer, the seller is still entitled to a tax deduction, only within a year from the date of return of the advance payment.
It is worth remembering that the invoice must be drawn up in full accordance with the Rules for the preparation of these documents. Otherwise, problems with deductions may arise for both the buyer and the seller.
However, neither the seller nor the buyer can deduct VAT from the advance payment if the goods sold are taxed at a rate of 0%, or one of the parties applies a preferential tax regime, that is, is not a VAT payer.
What VAT rates apply to food products? See the article: what percentage is VAT. An example of filling out a VAT return can be found here.
VAT is deductible on the basis of invoices. If there is no such document, then the deduction is impossible.
You can deduct VAT on a check that was issued when purchasing goods in cash using an advance report.
Procedure for issuing invoices
The rules for issuing invoices are specified in Decree of the Government of the Russian Federation dated December 26, 2012 No. 1137.
This is still a document of a strict unified form, which must contain many information about both the seller and the buyer.
The “Correction” column has appeared in the new sample invoice. It is intended to correct a previously made mistake.
This column indicates information about the erroneous document, in its place a new one is created.
Other changes:
- in the “seller” column you can now only indicate its full name, without other details;
- in the line “Currency: name, code” it is necessary to enter information in full accordance with the All-Russian Classifier of Currencies;
- all amounts are entered into the document without rounding, together with kopecks and other “hundredths” units;
- The “Units of Measurement” column is divided into 2 columns – “Code” and “Symbol”. Information is entered here in accordance with the All-Russian Classifier of Units of Measurement;
- “Country of origin” is also divided into 2 halves – “Code” and “Short name”. They are filled out in accordance with the All-Russian Classifier of Countries of the World.
In the invoice field you must enter the serial number of the document. If the tax authorities do not find any document numbers during the audit, the taxpayer may have problems.
In the “Corrections” column when filling out the document for the first time, you need to insert “not entered”, then a dash will be automatically added in this column.
If changes were made, then when selecting “Made” you will need to select the serial number of the document that is being corrected and the serial number of the correction.
If an invoice is issued for an advance payment, then in the column “For advance payment” you need to put “Yes”. In this case, in the columns “Consignor and his address”, as well as “Consignee and his address” there will be dashes.
In the “Document currency” you need to select the currency of the transaction, and in the line “To the payment document” you need to enter all the numbers of payments and other documents for which funds were received as payment for this product.
In the “Information about the seller” line, you need to select “Organization”, if the seller is a legal entity, or “Individual entrepreneur”.
You also need to indicate all the details of these parties, including INN and KPP, as well as the full name of the manager and chief accountant.
The remaining fields must be filled out in accordance with the above Procedure.
Calculation examples
In February 2021, ABC LLC enters into an agreement with OPR LLC for the supply of goods for a total amount of 354 thousand rubles (including 54 thousand is VAT). The agreement provides for an advance payment of 40% of the transaction amount.
ABC LLC transfers the advance in February, and the goods are shipped in April. The seller's actions are as follows:
First. He issues an invoice for the advance amount:
354,000 * 0.4 = 141,600 rubles.
The VAT amount is equal to:
(141,600 * 18) / 118 = 21,600 rudders.
These actions must be done in February. 1 copy of the invoice must be given to the buyer, and the second must be registered in your sales book.
Second. In April, after the entire shipment has been shipped, the seller issues an invoice for the entire transaction amount, that is, 354,000 rubles, including VAT of 54,000 rubles.
Third. Thus, in the 1st quarter of 2021, the seller paid VAT to the budget in the amount of 21,600 rubles, and in the second:
54,000 – 21,600 = 32,400 rudders.
How to calculate VAT on an advance received in non-standard situations
According to paragraph 1 of Art. 167 of the Tax Code of the Russian Federation, the tax base for VAT must be determined on one of the earlier dates: shipment of goods or receipt of payment from the buyer. On this basis, VAT should be charged upon receipt of an advance payment from the buyer on account of upcoming supplies (performance of work, provision of services). We suggest you figure out how to calculate VAT and prepare invoices in some difficult situations.
Let's start with the general rules for calculating VAT on advances received (Article 162 of the Tax Code of the Russian Federation). Upon receipt of an advance payment, the VAT payer must act as follows:
1. Determine the VAT rate in respect of goods, works or services for which the advance was transferred.
2. Calculate the VAT amount.
3. Issue an invoice for the advance payment in the name of the buyer (customer) and transfer one copy to the counterparty.
4. Make an entry in the sales book.
For your information
Until 2015, the advance invoice (like all other invoices) must still be registered in part 1 of the log of received and issued invoices. However, from January 1, 2015, only intermediaries, forwarders and developers will have to keep invoice logs (clause 3.1 of Article 169 of the Tax Code of the Russian Federation as amended, coming into force on January 1, 2015 in accordance with Federal Law dated July 21, 2015). 2014 No. 238-FZ). The obligation to register invoices, including advance payments, in the journal of issued documents will remain only with these categories of taxpayers.
Now let's give an explanation. On the advance amount, VAT is calculated at the calculated rate of 18/118 or 10/110 (clause 4 of Article 164 of the Tax Code of the Russian Federation), depending on the tax rate at which the goods, work or services for which the advance payment was made are taxed. That is, if an organization plans to ship flour to a buyer, for example, on the sale of which VAT is charged at a rate of 10% (subclause 1, clause 2, article 164 of the Tax Code of the Russian Federation), a rate of 10/110 should be applied to the advance payment. When receiving an advance for the supply of, say, building materials, a rate of 18/118 will apply.
An invoice must be issued and presented to the buyer or customer no later than five calendar days after receipt of the advance (clause 3 of Article 168 of the Tax Code of the Russian Federation). For an advance invoice, there are some features of filling out (the form and rules for filling out invoices are approved by Decree of the Government of the Russian Federation dated December 26, 2011 No. 1137, hereinafter referred to as Decree No. 1137). In lines 3 and 4 of the invoice, instead of the data of the consignor and consignee, dashes should be placed. In line 5 you must indicate the details of the payment document for which the advance was paid. In column 1 you need to record the names of the goods (works, services) for which the advance was received. If the exact names are not yet known, it is allowed to indicate general ones, for example, “dairy products” or “building materials”. There will be dashes in columns 2-6 and 10-11. Columns 7 and 8 show the VAT rate and amount, respectively. Column 9 shows the amount of the advance received.
An example of filling out an advance invoice is given in Appendix 1.
When registering in the sales book, invoices for the amount of the advance payment, columns 14-16 and 19 of the book are not filled in (clause 8 of the Rules for maintaining the sales book, approved by Resolution No. 1137).
After shipment of goods (performance of work, provision of services), the seller has the right to deduct the previously accrued VAT on the advance amount (clause 8 of Article 171 and clause 6 of Article 172 of the Tax Code of the Russian Federation) against the previously received advance payment. An entry in the purchase book is made on the basis of the invoice issued upon receipt of the advance payment.
Next, we will consider non-standard situations related to receiving advances.
When receiving an advance, it is not known which goods will be shipped to the buyer
In such a situation, difficulty arises for those organizations that trade in goods taxed at both a rate of 10% and a rate of 18%. And if, according to the agreement, the buyer is going to purchase goods taxed at different rates, and the advance payment is not 100 percent, it may not be clear which goods are paid in advance. Accordingly, the question arises: at what rate should VAT be charged on the advance payment: 10/110 or 18/118? Experts from the Russian Ministry of Finance recommend in this case that a rate of 18/118 be applied to the entire amount of the advance received (see letter dated March 6, 2009 No. 03-07-15/39). And after shipment against this advance, the organization will be able to deduct the entire amount of accrued VAT. In this case, there is no need to adjust the amount of VAT on the advance payment. This is confirmed by the Presidium of the Supreme Arbitration Court of the Russian Federation (see resolution No. 10120/10 dated January 25, 2011).
Example 1
Lakomka LLC is engaged in the wholesale trade of ice cream. At the same time, fruit and berry ice cream and fruit ice are subject to VAT at a rate of 18%; for other types of ice cream sold by the company, a VAT rate of 10% is applied (subclause 1, clause 2, article 164 of the Tax Code of the Russian Federation). On October 15, 2014, the organization received from the buyer a partial advance payment for ice cream in the amount of 50,000 rubles. According to the terms of the agreement, the buyer purchases fruit ice and ice cream, subject to VAT at a rate of 10%. What kind of ice cream will be shipped to the buyer on account of this advance is unknown on the date of receipt of funds. On November 5, 2014, ice cream, taxed at a 10% VAT rate, in the amount of RUB 44,000 was shipped to the buyer against this advance payment. (including VAT 4000 rubles) and fruit ice in the amount of 9440 rubles. (including VAT 1440 rub.). The total purchase price is RUB 53,440. How will these business transactions be reflected in the VAT tax base?
Since on the date of receipt of the advance payment, October 15, 2014, it is unclear what kind of ice cream will be shipped to the buyer, the VAT rate of 18/118 must be applied to the advance payment. The amount of VAT to be charged will be equal to RUB 7,627.12. (RUB 50,000 x 18: 118). Lakomka LLC must issue an advance invoice to the buyer no later than October 20, 2014. Based on this document, the company will make an entry in the sales book.
On November 5, 2014, the organization shipped ice cream to the buyer. No later than five calendar days, she must issue an invoice for the cost of goods sold, RUB 53,440. and make an entry in the sales book. Accordingly, VAT will be charged in the amount of 4,000 rubles. at a rate of 10% and 1440 rubles. at a rate of 18%. After the sale of ice cream, Lakomka LLC has the right to deduct previously accrued VAT on the advance in the amount of 7,627.12 rubles. An entry in the purchase book must be made on the basis of the invoice that was issued upon receipt of the advance.
Advance payment and shipment took place in the same period
The tax period for VAT is a quarter (Article 163 of the Tax Code of the Russian Federation), this is a fairly long period. Therefore, situations where an advance is received and goods are shipped in the same period are not uncommon. Many accountants wonder whether in this case it is necessary to charge VAT on the advance payment?
The Ministry of Finance of Russia and the Federal Tax Service of Russia are of the opinion that in such a situation it is necessary to charge VAT on advances, and on the day of shipment, determine the tax base for VAT on the cost of sales and deduct VAT on advances (letter from the Ministry of Finance of Russia dated October 12, 2011 No. 03-07 -14/99 and Federal Tax Service of Russia dated March 10, 2011 No. KE-4-3/3790). In this case, the same VAT return will show the tax accrued on both the advance and on the shipment made against this advance, as well as a deduction in the amount of VAT from the advance. Some courts also agree with this (resolution of the Federal Antimonopoly Service of the North Caucasus District dated June 28, 2012 No. A32-13441/2010).
However, the Presidium of the Supreme Arbitration Court of the Russian Federation, in its resolution dated February 27, 2006 No. 10927/05, expressed the opposite opinion. According to the arbitrators, payment on account of shipment in the same period cannot be considered as an advance payment for future deliveries. Similar conclusions were made in the decisions of some arbitration courts (see, for example, decisions of the Federal Antimonopoly Service of the Moscow District dated April 19, 2013 No. A40-86167/12-108-111 and the West Siberian District dated February 16, 2012 No. A81-6195/2010).
What should a taxpayer do in this case? In our opinion, it is worth agreeing with the Ministry of Finance and tax authorities. Let's explain why. Firstly, when VAT is calculated on an advance payment and the same amount is deducted in the same period, no additional tax burden arises. The accountant will only have to issue an invoice and make entries in the sales and purchase books. Secondly, it is much easier to charge tax on all advances received, rather than tracking whether there will be a shipment in the same quarter or not. Accordingly, in this case it is easier to check the correctness of tax calculation based on the results of the quarter. Thirdly, if you follow official explanations, there will be no risk of disputes with tax authorities regarding the calculation of the advance payment.
True, there is one nuance. If the goods were shipped (services provided, work completed) no later than five calendar days after receiving the advance payment, according to the Russian Ministry of Finance, an invoice for the advance payment may not be issued and, accordingly, tax on the advance payment may not be charged (letters dated 10/12/2011 No. 03-07-14/99 and dated 03/06/2009 No. 03-07-15/39). However, letters from the Federal Tax Service of Russia dated March 10, 2011 No. KE-4-3/3790 and dated February 15, 2011 No. KE-3-3/ [email protected] indicate that invoices for advance payments must be issued regardless of the date of subsequent shipment. So in this situation, we still recommend issuing invoices both upon receipt of the advance and on the date of sale against this advance. “Paper” (electronic, if documents are prepared electronically and transmitted via TCS) work will increase, but the likelihood of errors and disputes with regulatory authorities will decrease.
Advance received in non-cash form
When determining the tax base for VAT, revenue is based on all receipts, including in kind (clause 2 of Article 153 of the Tax Code of the Russian Federation). Therefore, when receiving advance payment in the form of, for example, securities or any goods, VAT must be charged. The value of the property is determined taking into account the provisions of Art. 105.3 of the Tax Code of the Russian Federation (clause 2 of Article 154 of the Tax Code of the Russian Federation). As a general rule, the price of goods (or other property) indicated by the parties to the transaction is recognized as the market price. In transactions between interdependent persons, tax authorities can check the correctness of the application of prices (clauses 3 and 4 of Article 105.3 of the Tax Code of the Russian Federation).
True, they have the right to check the correctness of VAT calculation only if one of the parties to the transaction is an organization or entrepreneur that is not a VAT payer or is exempt from taxpayer obligations (subclause 4, clause 4, article 105.3 of the Tax Code of the Russian Federation).
For your information
According to paragraph 2 of Art. 105.1 of the Tax Code of the Russian Federation the following persons are recognized as interdependent:
1) two organizations, if one organization directly or indirectly participates in another organization and the share of participation is more than 25%;
2) an individual and an organization, if the individual directly or indirectly participates in such an organization and the share of participation is more than 25%;
3) organizations if the same person directly or indirectly participates in these organizations and the share of participation in each organization is more than 25%;
4) an organization and a person who has the authority to appoint (elect) the sole executive body of this organization or to appoint (elect) at least 50% of the collegial executive body or board of directors (supervisory board) of this organization;
5) organizations whose sole executive bodies or at least 50% of the composition of the collegial executive body or board of directors (supervisory board) of which are appointed or elected by decision of the same person (an individual together with interdependent persons specified in subclause 11);
6) organizations in which more than 50% of the composition of the collegial executive body or board of directors (supervisory board) are the same individuals together with interdependent persons specified in subparagraph. eleven;
7) organization and person exercising the powers of its sole executive body;
organizations in which the powers of the sole executive body are exercised by the same person;
9) organizations and (or) individuals if the share of direct participation of each previous person in each subsequent organization is more than 50%;
10) individuals if one individual is subordinate to another individual due to official position;
11) an individual, his spouse, parents (including adoptive parents), children (including adopted children), full and half brothers and sisters, guardian (trustee) and ward.
Thus, having received property as an advance, it is necessary to determine the amount of VAT based on the value of this property specified in the contract. The need to issue invoices when receiving an advance in non-cash form is confirmed by the Ministry of Finance of Russia (letter dated 03/06/2009 No. 03-07-15/39). Please note that in line 5 of the invoice, when receiving a non-cash advance, a dash is placed instead of the details of the payment and settlement document (subclause “h” of clause 1 of the Rules for filling out an invoice, approved by Resolution No. 1137).
Example 2
Ryabinka LLC entered into an agreement with the buyer for the supply of goods. According to the terms of the agreement, the buyer must provide a bank bill worth 100,000 rubles as an advance payment for the goods; he will pay the remaining amount in cash after receiving the goods. Ryabinka LLC sells goods subject to VAT at a rate of 18%. What will be accounted for when receiving a bill of exchange from a buyer?
According to the terms of the agreement, the buyer transferred to Ryabinka LLC a bank draft with a nominal value of 100,000 rubles. The company received the security as an advance payment under a contract for goods subject to VAT at a rate of 18%. Therefore, upon receipt of the bill of exchange, the company must issue an invoice in the amount of 100,000 rubles, make an entry in the sales book and charge VAT in the amount of 15,254.24 rubles. (RUB 100,000 x 18: 118).
The advance payment has been transferred in full, but the cost of goods has decreased
If the seller terminates the contract and returns to the buyer the entire amount of the advance received, he has the right, after transferring the money, to take back the previously accrued VAT for deduction (clause 5 of Article 171 and clause 4 of Article 172 of the Tax Code of the Russian Federation). Moreover, the deduction can be made even if the advance is returned in non-monetary form (clause 23 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated May 30, 2014 No. 33).
But let's look at a more complex situation. The buyer transferred a 100 percent advance towards the upcoming delivery, and subsequently the cost of the goods decreased. For example, the parties entered into an additional agreement to the contract, in accordance with which the buyer chose other goods. Another option is that the buyer was given a discount. Question: what will happen to the seller with VAT?
Upon receipt of an advance, he must issue an invoice, charge VAT and make an entry in the sales book. Everything is as usual here. However, subsequently the parties come to an agreement to reduce the cost of delivery. The procedure for applying the VAT deduction depends on whether the seller will return to the buyer the amount of the overpaid advance payment or whether it will be counted as an advance payment for future supplies.
If the seller returns part of the advance payment, he has the right to deduct tax from the refund amount provided for in paragraph 5 of Art. 171 Tax Code of the Russian Federation. The deduction can be made after the corresponding adjustment operations are reflected in the accounting records (clause 4 of Article 172 of the Tax Code of the Russian Federation). The basis for recording in the purchase book will again be an invoice for the amount of the advance received. And on the date of shipment of the goods, against the remaining part of the advance payment, the seller will be able to deduct the remaining part of the VAT accrued on the advance payment (clause 8 of Article 171 and clause 6 of Article 172 of the Tax Code of the Russian Federation).
Example 3
On October 15, 2014, Yagodka LLC received from the buyer a 100 percent advance in the amount of RUB 177,000. The advance payment was received against the supply of goods subject to VAT at 18%. Therefore, VAT was charged on the advance amount at a rate of 18/118. However, the buyer was given a discount. The amount of the overpaid advance was returned to the buyer on November 18, 2014. And on November 20, 2014, goods worth RUB 165,200 were shipped to the buyer, including VAT of RUB 25,200. How will these transactions affect the calculation of VAT?
Upon receipt of the advance, the company had to issue an invoice in the amount of 177,000 rubles and charge VAT in the amount of 27,000 rubles. (RUB 177,000 x 18: 118) and make an entry in the sales book.
November 18, 2014 on the date of return of part of the advance in the amount of 11,800 rubles. (RUB 177,000 – RUB 165,200) the company has the right to deduct VAT (clause 5 of Article 171 of the Tax Code of the Russian Federation). The deduction amount is 1800 rubles. (RUB 11,800 x 18: 118). An entry in the purchase book must be made based on the invoice issued upon receipt of the advance payment.
On November 20, Yagodka LLC must charge VAT on shipments in the amount of 25,200 rubles. The basis for entry into the sales book will be the invoice issued to the buyer upon sale of goods. On the same day, the company has the right to deduct VAT from the amount of the advance received (clause 8 of Article 171 of the Tax Code of the Russian Federation). The deduction amount will also be equal to 25,200 rubles. (RUB 165,200 x 18: 118). An entry in the purchase book should be made on the basis of the same invoice issued upon receipt of the advance payment.
If the seller does not return the overpaid advance payment to the buyer, then he will be able to make a deduction only when he ships the goods against this advance payment. This is confirmed by the Ministry of Finance of Russia in letters dated 04/01/2014 No. 03-07-RZ/14444 and dated 08/29/2012 No. 03-07-11/337.
Tax paid on advance payment not subject to VAT
The VAT tax base does not include advances received in payment for goods, works and services (clause 1 of Article 154 of the Tax Code of the Russian Federation):
- which are not subject to taxation (exempt from taxation) in accordance with Art. 149 Tax Code of the Russian Federation;
— subject to VAT at a rate of 0% (clause 1 of Article 164 of the Tax Code of the Russian Federation);
- the duration of the production cycle of which is more than six months (clause 13 of article 167 of the Tax Code of the Russian Federation).
At the same time, for manufacturers of goods with a long production cycle, there are additional conditions, under which it is possible not to charge VAT on advances. According to paragraph 13 of Art. 167 of the Tax Code of the Russian Federation, the taxpayer must:
— keep separate records of operations with a long production cycle and other operations, including separate records of “input” VAT;
- when filing a declaration for the tax period in which the advance was received, submit to the tax office a copy of the contract with the buyer and a document issued by the Ministry of Industry and Trade of Russia, which confirms the duration of the production cycle of goods (work, services) indicating their name, production time, name of the organization - manufacturer. The administrative regulations for issuing such a document were approved by order of the Ministry of Industry and Trade of Russia dated June 7, 2012 No. 750.
If the organization paid VAT on the advance payment, but it turned out that it should not be subject to VAT, then the overpaid tax can be offset or returned in the manner prescribed by Art. 78 Tax Code of the Russian Federation. This, in particular, is stated in the letter of the Ministry of Finance of Russia dated November 8, 2012 No. 03-07-07/115.
Invoices are not drawn up when receiving advances for supplies that are not subject to VAT or taxed at a rate of 0% (letters of the Ministry of Finance of Russia dated December 13, 2010 No. 03-07-09/54 and dated March 6, 2009 No. 03-07-15/ 39).
Advance received through an intermediary
A situation that occurs quite often in practice. The organization trades through an intermediary involved in settlements. The intermediary involved in settlements enters into an agreement with the buyer and receives an advance payment from him. He transfers the advance to the committent or principal. Question: should the principal (principal) charge VAT on this advance? Yes, of course, because the VAT tax base is determined on the date of receipt of funds on account of the upcoming sale (subclause 2, clause 1, article 167 of the Tax Code of the Russian Federation).
It is worth mentioning separately how invoices will be issued in such cases. Let us recall that from October 1, 2014, some changes were made to the procedure for issuing invoices, maintaining accounting journals, sales and purchase books (Resolution of the Government of the Russian Federation dated July 30, 2014 No. 735). In particular, the issuance of invoices upon receipt of an advance payment by an intermediary as part of the execution of an order from the principal or principal is now mentioned in clauses 7 and 11 of the Rules for maintaining an invoice journal, approved by Resolution No. 1137. Upon receipt from the buyer of an advance payment due to the principal or principal , the intermediary issues an invoice for the amount of this advance. He registers this document in part 1 of the invoice journal and transmits the data (or a copy of the document) to the principal (principal). The intermediary does not make any entries in the sales book (clause 20 of the Rules for maintaining the sales book, approved by Resolution No. 1137).
Based on the intermediary's invoice data, the principal (principal) issues his own invoice. According to the Ministry of Finance and tax authorities, in line 6 of the invoice, the principal (principal) must indicate the name of the actual buyer, and not the intermediary (letter of the Ministry of Finance of Russia dated May 10, 2012 No. 03-07-09/47 and the Federal Tax Service of Russia dated August 5, 2013 No. ED-4-3/ [email protected] ). He then records the document in Part 1 of the journal and in the sales ledger. Let us emphasize once again that starting from 2015, only intermediaries, freight forwarders and developers will keep invoice logs (clause 3.1 of Article 169 of the Tax Code of the Russian Federation as amended, effective from 2015).
The intermediary, having received an invoice for the advance payment from the principal or principal, will register it in part 2 of the accounting journal. He will not have any entries in the purchase book (clause 19 of the Rules for maintaining the purchase book, approved by Resolution No. 1137).
Further, after shipment of the goods, on account of the previously received advance payment, the principal or principal has the right to accept VAT accrued from the advance payment for deduction in the usual manner (clause 8 of Article 171 and clause 6 of Article 172 of the Tax Code of the Russian Federation).
Example 4
Romashka LLC trades through a commission agent participating in settlements. On October 20, 2014, the intermediary received an advance from the buyer for the supply of finishing materials in the amount of RUB 118,000. On October 21, the entire amount was transferred to Romashka LLC. How will these transactions affect the calculation of VAT?
Since finishing materials are subject to VAT at a rate of 18% (clause 3 of Article 164 of the Tax Code of the Russian Federation), when calculating the advance tax, a rate of 18/118 should be applied. After receiving funds from the buyer, the intermediary must issue an invoice for the advance payment, then transfer the data of this document to Romashka LLC. Next, Romashka LLC will issue its invoice for 118,000 rubles, then make an entry in the sales book and charge VAT in the amount of 18,000 rubles. (RUB 118,000 x 18: 118). The intermediary will not make any entries in the sales and purchase books.
Emerging nuances ↑
VAT is a rather “ambiguous” tax, and when calculating it, even experienced accountants have many questions.
How not to pay?
Many taxpayers are concerned with the question of how to avoid paying this VAT? This tax is not paid by those organizations and individual entrepreneurs that apply preferential tax regimes.
In this case, they do not have the right to issue invoices and accept VAT deductions on shipped and purchased goods, works or services.
It is also possible not to pay VAT, on the basis of Art. 145 of the Tax Code of the Russian Federation, becoming a participant in a research project.
With long-term continuous supplies
If an agreement has been concluded between counterparties for the implementation of long-term continuous supplies of goods, provision of services or performance of work, then the seller has the right to issue an invoice simultaneously with the receipt of payments for payment for the goods.
This must be done no later than the 5th day of the next month in which the goods were shipped or any contractual services were provided.
This is stated in the Letter of the Ministry of Finance dated July 18, 2005 N 03-04-11/166 “On the deduction of VAT for long-term supplies of goods.”
