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.
What exactly has changed?
Now there is no need to calculate VAT on the entire advance amount. The taxable base is the difference between the advance and the amount of the claim, the rights to which are assigned, or the expenses for acquiring this claim. Expenses are set in proportion to the share of the prepayment.
Let's look at an example. Let's look at an example. The amount of the right to claim is 220 rubles. The organization transfers it to another company for 200 rubles. The prepayment is 200 rubles. These calculations are made: ((200 rubles – 220 rubles) * 18/118). That is, the VAT amount in this case will be 0 rubles.
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.
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.”
Additional payment and shipment of goods will be in 2021.
— When the seller receives an advance in 2021, he must calculate VAT at the rate of 18/118. The buyer may deduct this tax.
If an additional payment of 2% (in the part attributable to the increase in VAT) occurs on January 1, 2019 and later, but before the goods are shipped, then the Federal Tax Service recommends considering such an additional payment as a direct additional payment of net VAT (and not the cost of the goods), calculated at a rate of 20/120. After such an additional payment, the Federal Tax Service recommends generating an adjustment invoice.
When goods are shipped in 2021, a 20% rate must apply. In this situation, the seller:
— calculates VAT on the cost of goods excluding tax at a rate of 20%; it is this rate and the corresponding amount of tax that he must indicate in the invoice;
- accepts for deduction two advance VAT: the first - which was calculated in 2021 at the rate of 18/118; the second – calculated in 2021 in the amount of net 2% VAT (at a rate of 20/120).
- when accepting goods received for accounting on the basis of an invoice, the seller can deduct VAT calculated by the seller at a rate of 20% (of course, subject to other conditions for deduction);
- must restore the advance VAT previously accepted for deduction. And in the same amount - without any recalculations.
