Zero VAT rate for international transport by Russian organizations

Application of a 0% rate on transport services

In accordance with paragraph 1 of Art. 164 of the Tax Code of the Russian Federation, sellers apply VAT on transport services using a 0% rate when carrying out:

• international transportation of goods with a point of departure/destination outside the Russian Federation, including transport and forwarding services by sea and river transport, mixed vessels, aircraft, railway and road transport;
• transportation of oil and natural gas outside the Russian Federation or into the territory of the Russian Federation;
• services for the transportation of goods placed under the customs transit regime;
• transportation of passengers and luggage with a point of departure/destination outside the Russian Federation;
• passenger transportation by rail in suburban traffic in the Russian Federation (in the period from 01/01/2015 to 12/31/2029);
• transportation of passengers and luggage by public railway transport in long-distance traffic across Russia (from 01.01.2017 to 31.12.2029);
• domestic air passenger and baggage transportation with a point of departure/destination in the territory of the Republic of Crimea or the city of Sevastopol, as well as in the territory of the Kaliningrad region.

You can find out more about how VAT is paid and tax deductions for freight forwarding services are applied in the Ready-made solution from ConsultantPlus. Get trial access to the system for free and proceed to the material.

Since 2021, the norm according to which the provision of railway trains and containers for the transportation of export goods was subject to 0% VAT only if these trains and containers were owned by the taxpayer or were rented has been excluded from the Tax Code of the Russian Federation.

In order to take advantage of this rate for transportation outside the Russian Federation, the taxpayer must submit the following package of documents:

• copies of agreements with counterparties (in the form of a single or several documents);
• copies of shipping/transport documents or their register;
• copies of customs declarations or their register.

The listed documents are submitted to the tax authorities within 180 days, counted from the date of marking by customs officers on shipping documents (clause 9 of Article 165 of the Tax Code of the Russian Federation). If the taxpayer does not collect the required package of documents on time, he will be forced to pay VAT to the budget at a rate of 20%.

NOTE! The 0% VAT rate can be waived. Read more here.

Error 2: the company confirms the zero rate with the wrong registers

There are 14 registers that can be used to confirm the zero VAT rate depending on the type of transaction (Order of the Federal Tax Service of Russia dated September 30, 2015 No. ММВ-7-15/427).

From April 2021, two more registers will appear to confirm the following transactions:

• if goods are sent by international mail;
• if the customs declaration of goods uses a goods declaration for express cargo.

The order of the Federal Tax Service, which approves the form and format of these documents, has been adopted, but has not yet been published.

It is difficult to navigate in such abundance, and taxpayers often choose a register that does not correspond to the completed transaction.

To reduce such errors, we have developed a table by which you can compare the name of the registry with the corresponding transaction codes. Let us remind you: the meanings of transaction codes are reflected in Appendix No. 4 to the Procedure for filling out a VAT return (approved by Order of the Federal Tax Service dated October 29, 2014 No. ММВ-7-3 / [email protected] ).

Fill out and send the register of customs declarations via Kontur.Extern

Application of a 10% rate for transport services

A rate of 10% can be applied to domestic Russian air passenger and baggage transportation (subclause 6, clause 2, article 164 of the Tax Code of the Russian Federation). The exception is similar transportation with a point of departure/destination in the territory of the Republic of Crimea, Sevastopol, Kaliningrad region - for them the rate is 0% (subclauses 4.1, 4.2, clause 1, article 164 of the Tax Code of the Russian Federation).

You can read more about products whose sales are subject to VAT at a rate of 10% in the following articles:

• “What is included in the list of goods subject to VAT at a rate of 10%?”;
• “New list of medical products for a VAT rate of 10%.”

Nuances of confirming the 0% rate and reflecting deductions in the declaration when exporting

Export from Russia to the countries of the EAEU has the peculiarities of documentary confirmation. This is due to the lack of customs at the border and the need to fill out an application for importation and payment of indirect taxes.

When exporting to the EAEU countries, the documents confirming the 0% VAT rate for export are not customs declarations, but documents accompanying the goods, data on which are included in the import application. Submitting a set of shipping documents to the Federal Tax Service can be avoided if an electronic list of import applications drawn up in a legally approved form is sent there (clause 1.3 of Article 165 of the Tax Code of the Russian Federation). At the same time, controllers have the right to request documents that interest them from the list provided to them.

If the export is carried out to a state that is not part of the EAEU, but through a country that is a member of the EAEU, then a customs declaration is issued, but it contains a customs mark not about the release of the goods, but about placing it under the appropriate customs regime (subclause 3, clause 1 Article 165 of the Tax Code of the Russian Federation).

The moment when exporting may differ is when the tax imposed by suppliers of goods, works or services invested in the creation of the object of sale is allowed to be taken as deductions. This depends on whether the product being sold is a commodity or non-commodity product. It does not matter where exactly it is shipped, but what matters is when it is purchased (after 06/30/2016).

For raw materials shipped abroad, as well as for services that allow the application of a 0% rate, VAT on costs can be deducted only after the sale is recognized as having taken place, that is, after confirmation of the fact of export (clause 3 of article 172, subsection 1 Clause 1 of Article 167 of the Tax Code of the Russian Federation). Accordingly, export data will be included in the VAT return after confirmation of the zero rate. In this case, the amounts of deductions are shown in section 4 of the declaration.

For non-commodity goods, clause 3 of Art. 172 of the Tax Code of the Russian Federation does not apply (this is directly stated in its text). Thanks to this, they can be deducted for VAT claimed by suppliers in the usual manner, i.e. until the right to use the 0% rate is confirmed. The rule regarding the deduction of the amount of tax accrued for payment in case of violation of the deadline for confirming the 0% VAT rate on exports does not work here either. Show deductions for non-resource sales for export in section 3 of the declaration (letter of the Federal Tax Service of Russia dated October 31, 2017 No. SD-4-3 / [email protected] ). At the same time, recognition of the very fact of sales at a zero rate for non-commodity goods is subject to the general rule - the right to use it must be documented (clause 1 of Article 165 of the Tax Code of the Russian Federation).

Application of a 20% rate for transport services

According to paragraph 3 of Art. 164 of the Tax Code of the Russian Federation, in all other cases, sellers using OSNO as a tax regime are subject to VAT on transport services at a rate of 20%. When a Russian organization provides transportation services under an agreement with a foreign organization that does not have a representative office on the territory of the Russian Federation, if the points of destination and departure are located on the territory of the Russian Federation, by virtue of the norms of sub. 4.1 clause 1 art. 148 of the Tax Code of the Russian Federation, a Russian organization must accrue and pay VAT to the budget at a rate of 20%.

Another case of applying a 20% rate on transport services is when a foreign carrier that does not have a representative office in the Russian Federation provides services to a Russian organization or individual entrepreneur on the territory of the Russian Federation. In this situation, the Russian company - the customer of the services - has the obligation of a tax agent: according to sub-clause. 4 paragraphs 1 art. 148 of the Tax Code of the Russian Federation, the place of provision of these services will be determined by the location of the buyer of the services - a Russian organization that is obliged to withhold VAT from the cost of services at a rate of 20% and transfer it to the budget.

It should be noted that transport services can be provided both within the framework of a contract for the supply of any products, and within the framework of an intermediary agreement. It should be borne in mind that in the case when the cost of transport services is subject to reimbursement by the buyer, he cannot deduct VAT on them (letter of the Ministry of Finance of the Russian Federation dated 02/06/2013 No. 03-07-11/2568). In the case of concluding intermediary agreements, the carrier charges VAT only on the amount of remuneration (letter of the Ministry of Finance of the Russian Federation dated December 29, 2012 No. 03-07-15/161).

In addition, if there is an intermediary agreement, the seller of the goods, purchasing these services on his own behalf, acts as an agent (commission agent) for transport services, therefore, in addition to the invoice for the goods, he also issues an invoice for this service to the buyer. Moreover, in this invoice in line 2, he indicates as the seller not himself, but the transport company (its full or abbreviated name) that delivered the goods (subclause “c” of clause 1 of the Rules for filling out the invoice used in calculating the tax on added value, approved by Decree of the Government of the Russian Federation dated December 26, 2011 No. 1137).

For a sample of filling out an invoice, see the article “Invoice for services - sample of filling out in 2019-2020.”

In a situation in which, within the framework of an intermediary agreement, a Russian company or individual entrepreneur performs the functions of an agent (commission agent) for transport services, being on the simplified tax system, the obligation to calculate and pay VAT follows from the provisions of sub-clause. 1 clause 5 art. 173 Tax Code of the Russian Federation.

Features of taxation of international cargo transportation

O. Sumina, lawyer

International transport is a troublesome business. Delivery of goods from the seller to the buyer is an independent business. It attracts close attention from tax authorities. In order not to give them unnecessary grounds for tax claims, all sharp corners must be smoothed out at the stage of preparing the draft agreement.

Attached file (6 Kb)
The degree of transport burden imposed on each of the parties to the purchase and sale agreement depends on the point at which the risk of loss of the goods passes from the seller to the buyer. The transition can occur at the seller’s warehouse, at the time of transfer of the goods to the carrier, after delivery of the goods to the place of unloading, or in the territory of the buyer’s country*. This determines the choice of delivery option.