Payment of VAT taxes when selling services by a foreign company in 2021

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Published: 07/28/2017

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When a Russian company enters international markets, it inevitably faces the question: is it necessary to pay VAT when providing services in foreign markets in favor of a foreign organization? To answer this, you should refer to the current tax legislation and established judicial practice.

• VAT when providing services to a foreign counterparty
• Rules and features
• Examples We pay VAT
• No payment required

Sales of works and services by foreign companies

The two main taxes levied on organizations are value added tax (VAT) and income tax. But in this article we will focus on the first and look at how it is calculated, by whom and when it is paid.

The management of a foreign organization that has decided to enter the fight for the Russian consumer must understand the specifics of our market and tax legislation. You can start small and find out, for example, whether foreign companies pay VAT if they sell their services in Russia. And although the concept of VAT is familiar to almost any average person (and even more so to a top manager), the procedure for working with this tax has its own characteristics in each country.

The Russian Federation is no exception in this sense: the activities of foreign companies are subject to taxation (including the already mentioned VAT). But our legislation cannot be called simple and unambiguous, because sometimes only lawyers can understand its intricacies. That is why, before expanding your presence area, you need to clarify how VAT is paid when selling services in the Russian Federation.

There are only two possible answers to this question: in the first case, the company contributes to the budget on its own; in the second, the intermediary, the tax agent, does the same thing. It all depends on whether the foreign organization is registered with the Russian tax authority - the Federal Tax Service (hereinafter referred to as the FTS).

In Russian legislation there are such concepts as resident and non-resident.

A resident is an individual or legal entity registered and registered with the tax authorities on the territory of the Russian Federation, and non-residents, as you might guess, include all those who do not have registration (including with the Federal Tax Service) in Russia.

We recommend that you read more detailed information about.

If a foreign company is registered with the Federal Tax Service, then interaction with the tax department will fall entirely on its shoulders. Otherwise - if there is no registration with the tax authorities - sooner or later the client will have to think about what to do with VAT when purchasing services from a foreign company.

After all, the Tax Code of the Russian Federation (hereinafter referred to as the Tax Code of the Russian Federation) leaves no choice: the tax must be paid in any case. And this is exactly the situation when the buyer will act as a tax agent who settles all issues with transfers to the budget.

Taxpayers

For legal relations with foreign participation, it is extremely important to determine the moment from which these relations fall under the jurisdiction of Russia. The object of taxation , in accordance with paragraphs. 1 clause 1 art. 146 of the Tax Code of the Russian Federation, is the sale of goods (works, services) on the territory of the Russian Federation. Due to the specifics of this tax, the location of the parties to the transaction itself is only of secondary importance: under certain circumstances, both a Russian and a foreign organization can be a VAT payer. For VAT purposes, all foreign organizations are divided into two groups: 1) foreign organizations registered with the tax authorities ; 2) foreign organizations that are not registered with tax authorities . Foreign organizations belonging to the first group calculate and pay VAT in the general regime provided for Russian organizations. Such organizations acquire the status of a Russian organization for VAT purposes. Foreign organizations belonging to the second group are subject to a special VAT procedure. VAT amounts for these taxpayers are calculated, withheld and transferred to the budget by tax agents.

If services are provided to a non-resident

The main purpose of this article is to highlight how taxes are paid by a foreign organization that provides services in our country. Nevertheless, we will pay a little attention to the reverse situation, when a service is provided by a Russian legal entity to a foreign one, and we will find out how VAT will be paid by the Russian company in this case.

Everything is quite simple: if the service was sold on the territory of the Russian Federation, then VAT is also subject to payment in the prescribed manner. If this happened outside Russian borders, there is no taxation. Now let's move on to the logical question: what is the place of sale of services and how is it determined.

In Russia, such a form of business organization as (hereinafter referred to as individual entrepreneur) is quite common, which is usually classified as a so-called small business. The activities of individual entrepreneurs can be related to both the sale of goods and the provision of services class=”aligncenter” width=”663″ height=”403″[/img]

Ambitious IP owners, as a rule, strive for constant development not only within Russian borders, but also beyond them. This explains their interest in whether an individual entrepreneur can provide services to foreign companies. And it must be said that in this case there are no prohibitions or legislative obstacles: individual entrepreneurs, just like legal entities, can enter into contracts, provide services, and conduct settlements with foreign companies. The taxation procedure will also not change. The only point that needs to be taken into account concerns currency control: in the case of individual entrepreneurs, it is more thorough.

Services to a foreigner, place of sale not in the Russian Federation, services not under Art. 149 Tax Code of the Russian Federation

The organization entered into an agreement with a foreign customer (Italy) for the provision of marketing services.

On August 05, marketing services were provided in the amount of EUR 2,000.

On August 26, consulting services were provided in the domestic market in the amount of RUB 240,000. (including VAT 20%).

Conditional EUR exchange rate according to the Central Bank of the Russian Federation:

• August 05 – 72.0000

Providing marketing services to the customer (Italy):

• the place of sale is not in the Russian Federation (clause 1, clause 1, article 146 of the Tax Code of the Russian Federation, clause 4, clause 1, article 148 of the Tax Code of the Russian Federation), not subject to VAT;
• operations not under Art. 149 of the Tax Code of the Russian Federation: input VAT is accepted for deduction in the general manner;
• it is not required to maintain separate VAT accounting (clause 4 of article 149 of the Tax Code of the Russian Federation, clause 4 of article 170 of the Tax Code of the Russian Federation), but it is needed in 1C for section 7 of the VAT return;
• To calculate the proportion, services are subject to VAT.

The main thing is Settings – Taxes and reports – VAT.

Administration – Program settings – Accounting parameters link Setting up a chart of accounts – Accounting for VAT amounts on purchased assets: link By counterparties, invoices received, accounting methods.

Card of the Agreement with the buyer.

Agreement Card

with the buyer -
Transaction code
.

Do not check the box The operation is not subject to taxation (Article 149 of the Tax Code of the Russian Federation)

:

Nomenclature Card

–
the transaction code
.

We can leave % VAT

20% if the same services are provided on the territory of the Russian Federation.

Sales – Sales – Sales (acts, invoices).

Sales – Sales – Sales (acts, invoices) – Sales of services:

• % VAT
  – Without VAT;
• Invoice
  – It is not required to issue an invoice (clause 1, clause 3, article 169 of the Tax Code of the Russian Federation, Letter of the Ministry of Finance of the Russian Federation dated 04/16/2012 N 03-07-08/107);
• Sales VAT
  register – a record with the type of value Services not on the territory of the Russian Federation for the
  VAT Allocation ;
• register Non- VAT-taxable transactions
  – entry with the movement type Receipt for section 7 of the VAT Declaration.

Algorithm:

• Operations – Closing the period – Regular VAT operations – Create: VAT distribution ,
• Generating records in section 7 of the VAT return;

Place of service provision

For the correct calculation of taxes, the place of provision of services is of great importance. The general rule can be formulated something like this: taxes must be transferred to the budget of the country in whose territory the services were provided. For tax purposes, it is customary to distinguish several characteristics that determine the place of sale of services.

Location of property

This sign assumes that the services were related to any property. The territory of the country where this property was located at the time of provision of services will be considered the place of their provision. Accordingly, taxes will be calculated in accordance with the legislation of the specified state.

Place of actual provision of services

This criterion is typical for services related to certain areas and objects of everyday life. As a rule, these include those services that are provided in stationary public institutions and organizations.

Buyer's place of business

The place of sale of services can be recognized as the territory of the country where the buyer carries out its activities. It is important that this activity must be registered in accordance with the laws of the state.

Supporting documents

The place of provision of services is confirmed by the following documents:

• Contract;
• documents confirming the provision of services (for example, acceptance certificates, receipts, etc.).
• when providing services in electronic form to individuals (not individual entrepreneurs) - registers of transactions indicating the cost of services.

Russian Federation: features of recognition of the place of provision of services

This article is devoted to the requirements of Russian tax legislation; accordingly, we are considering what kind of taxation services that are provided on the territory of the Russian Federation are subject to. How can we determine that work or services were implemented within the borders of our state? This issue is regulated by Art. 148 of the Tax Code of the Russian Federation.

Exceptions

Special conditions apply for services related to transportation and transportation. They can be provided by both Russian companies and individual entrepreneurs, as well as foreign organizations that are not registered with the Federal Tax Service.

The Russian Federation will be recognized as the place of sale of such services in the following cases:

• if vehicles for transportation (aircraft, sea vessels, inland navigation vessels) are provided by Russian companies or individual entrepreneurs, and the point of departure and/or destination is located on the territory of Russia;
• transportation of goods under the customs transit procedure is carried out by organizations or individual entrepreneurs whose place of business is Russia;
• transportation by pipeline transport is provided by Russian organizations;
• air transportation is carried out by Russian airlines.

Work on the continental shelf and offshore

Situation: is it necessary to pay VAT if a Russian contractor carries out work related to drilling an exploratory well for the extraction of hydrocarbons? Well drilling work is being carried out on the Russian continental shelf.

Yes need.

Clause 2.1 of Article 148 of the Tax Code of the Russian Federation states that Russia is recognized as the place of implementation of work (services) if their execution (provision) is carried out for the purposes of geological study, exploration and production of hydrocarbons in subsoil areas located wholly or partially on the continental shelf and ( or) in the exclusive economic zone of Russia. Such works (services) include:

• geological study and exploration of offshore hydrocarbon deposits, creation, bringing to readiness for use, maintenance, repair, reconstruction, modernization, technical re-equipment (other capital work) of artificial islands, installations and structures, as well as other property located on the continental shelf or in the exclusive economic zone of Russia;

• hydrocarbon production, construction and drilling of wells;

• preparation (primary processing) of hydrocarbon raw materials;

• transportation (transportation) of hydrocarbon raw materials from points of departure on the continental shelf or in the exclusive economic zone of Russia;

• work (services) directly related to the transportation (transportation) of hydrocarbon raw materials, performed (provided) by Russian or foreign organizations.

This means that work related to the drilling of an exploratory well on the Russian continental shelf, commissioned by a third-party organization, is considered to be performed on Russian territory. Therefore, charge VAT on their cost (clause 1 of Article 146, clause 2.1 of Article 148 of the Tax Code of the Russian Federation).

Situation: is it necessary to pay VAT when providing services for the provision of fishing vessels with a crew for use to Russian and foreign organizations for fishing in the Russian territorial sea (within 12 nautical miles from the coastal zone)?

Yes need.

To determine whether services for the provision of fishing vessels with crew are subject to VAT, it is necessary to establish the place of sale of these services (clause 1 of Article 146 of the Tax Code of the Russian Federation).

Article 67 of the Constitution of the Russian Federation determines that the territory of Russia includes the territories of its constituent entities, internal waters and territorial sea, as well as the airspace above them. In this case, the territorial sea is understood as a sea belt 12 nautical miles wide adjacent to land territory or internal sea waters (Article 2 of Law No. 155-FZ of July 31, 1998). Thus, the territorial sea is Russian territory.

Subclause 4.1 of clause 1 of Article 148 of the Tax Code of the Russian Federation states that the place of sale of services for the provision of sea vessels under a charter agreement (including a lease agreement with a crew) involving transportation on these vessels is recognized as the territory of Russia if:

• these services are provided by a Russian organization;

• the point of departure and (or) destination are located on the territory of Russia.

If these vessels are used for the extraction (catch) of aquatic biological resources, scientific research purposes, or transportation between points outside Russian territory, then Russia is not recognized as the place of such activity (paragraph 2, paragraph 2, article 148 of the Tax Code of the Russian Federation).

This means that services for the provision of fishing vessels with crew for temporary use in the Russian territorial sea are considered to be provided on the territory of Russia. Therefore, charge VAT on the cost of such services (subclause 1, clause 1, article 146 of the Tax Code of the Russian Federation). The validity of this conclusion is confirmed by arbitration practice (see, for example, the ruling of the Supreme Arbitration Court of the Russian Federation dated December 16, 2011 No. VAS-16505/11, the resolution of the Federal Antimonopoly Service of the North-Western District dated September 9, 2011 No. A42-8872/2010, dated May 24 2011 No. A42-4250/2010, Far Eastern District dated April 27, 2009 No. F03-1637/2009).

Situation: is it necessary to pay VAT if a Russian organization provides services for the rental of fishing vessels with a crew to Russian and foreign organizations for fishing in the exclusive economic zone of Russia?

No no need.

To determine whether services for the provision of fishing vessels with crew are subject to VAT, it is necessary to establish the place of sale of these services (clause 1 of Article 146 of the Tax Code of the Russian Federation).

Article 67 of the Constitution of the Russian Federation determines that the territory of Russia includes the territories of its constituent entities, internal waters and territorial sea, as well as the airspace above them. The exclusive economic zone of Russia is a maritime area with a special legal regime, located outside the territorial sea of ​​Russia and adjacent to it (Article 1 of the Law of December 17, 1998 No. 191-FZ). Thus, the exclusive economic zone of Russia is not its territory.

Subclause 4.1 of clause 1 of Article 148 of the Tax Code of the Russian Federation states that the place of sale of services for the provision of sea vessels under a charter agreement (including a lease agreement with a crew) involving transportation on these vessels is recognized as the territory of Russia if:

• these services are provided by a Russian organization;

• the point of departure and (or) destination are located on the territory of Russia.

At the same time, the territory of Russia is not recognized as the place of sale of services directly related to chartering and not listed in subparagraphs 1–4.3 of paragraph 1 of Article 148 of the Tax Code of the Russian Federation (subparagraph 5 of paragraph 1.1 of Article 148 of the Tax Code of the Russian Federation).

In addition, Russia is not recognized as the place of activity if the vessels transferred under a lease agreement with a crew are used outside the territory of Russia for the extraction (catch) of aquatic biological resources, scientific research purposes or transportation between points outside the Russian territory (paragraph 2, paragraph. 2 Article 148 of the Tax Code of the Russian Federation).

Thus, services for the rental of fishing vessels with crew in the exclusive economic zone of Russia are considered to be provided outside of Russia. Therefore, do not charge VAT on the cost of such services (subclause 1, clause 1, article 146 of the Tax Code of the Russian Federation).

Situation: should a Russian organization - a shipowner, which provided a vessel under a charter agreement under a time charter or bareboat charter (barreled charter) - be charged VAT?

The procedure for calculating VAT when transferring a vessel under a charter agreement on time charter terms (hire with crew) depends on the route of transportation of the chartered vessel. As for the contract for chartering a vessel under bareboat charter (lease without crew), VAT must be charged if the organization that provided the vessel for rent is registered for tax purposes in Russia.

Freight on time charter terms

Under a contract for chartering a vessel for a time (time charter), the shipowner undertakes to provide the charterer with a vessel and the services of the vessel's crew members for a certain period of time for the transportation of goods, passengers or for other purposes of merchant shipping (Article 198 of the Merchant Shipping Code of the Russian Federation).

If a chartered vessel is used for transportation between ports, one of which is located on the territory of Russia, then the place of sale of services for providing the vessel for charter is the territory of Russia (subclause 4.1 clause 1, paragraph 2 clause 2 of Article 148 of the Tax Code of the Russian Federation). Moreover, such services are subject to VAT at a rate of 0 percent (subclause 12, clause 1, article 164 of the Tax Code of the Russian Federation). The shipowner has the right to apply a zero VAT rate if he has the documents provided for in paragraph 14 of Article 165 of the Tax Code of the Russian Federation.

If a chartered vessel is used for transportation between Russian ports, then the place of sale of services for providing the vessel for charter is also recognized as the territory of Russia (subclause 4.1, clause 1, paragraph 2, clause 2, article 148 of the Tax Code of the Russian Federation). However, in this case, the shipowner must charge VAT on the cost of his services at a rate of 18 percent (clause 3 of Article 164 of the Tax Code of the Russian Federation).

If a chartered vessel is used for transportation between foreign ports, then the territory of Russia is not recognized as the place of sale of services for providing the vessel for charter (subclause 5, clause 1.1, clause 2, article 148 of the Tax Code of the Russian Federation). In this case, the object of taxation does not arise (subclause 1, clause 1, article 146 of the Tax Code of the Russian Federation), therefore, the shipowner does not have to pay VAT.

If a chartered ship is used for transportation on different routes, in order to apply VAT, the shipowner must organize separate accounting for such services (clause 4 of Article 149, paragraph 7 of clause 4 of Article 170 of the Tax Code of the Russian Federation).

Freight on bareboat charter terms

Under a contract for chartering a vessel without a crew (bareboat charter), the shipowner undertakes, for a specified fee (freight), to provide the charterer with the use and possession for a certain period of time of an unmanned and unequipped vessel for the transportation of goods, passengers or for other purposes of merchant shipping (Art. 211 of the Merchant Shipping Code of the Russian Federation).

Services for chartering a vessel without a crew (on bareboat charter terms) are subject to a VAT rate of 18 percent (clause 3 of Article 164 of the Tax Code of the Russian Federation). In this case, VAT must be paid if the place of sale of services is the territory of Russia (clause 1 of Article 146 of the Tax Code of the Russian Federation).

The place of sale of chartering services on bareboat charter terms is determined according to the rules of subparagraph 5 of paragraph 1 and paragraph 2 of Article 148 of the Tax Code of the Russian Federation. This is explained by the fact that subparagraphs 1–4.1 of paragraph 1 of Article 148 of the Tax Code of the Russian Federation do not list these services. And subclause 5 of clause 1.1 of Article 148 of the Tax Code of the Russian Federation does not apply to chartering services that do not involve the transportation of goods (Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated October 13, 2009 No. 6508/09).

According to subparagraph 5 of paragraph 1 and paragraph 2 of Article 148 of the Tax Code of the Russian Federation, the place of sale of services will be the territory of Russia if the organization that provided the vessel for rent is registered in Russia. In this case, services are subject to VAT at a rate of 18 percent.

Similar clarifications are contained in the letter of the Federal Tax Service of Russia dated June 26, 2015 No. GD-4-3/11196.

Tax agents for VAT payment

A tax agent is an intermediary who calculates, withholds from the taxpayer and transfers the amount of VAT to the budget. A taxpayer is an organization whose activities are subject to taxes under the laws of the Russian Federation.

In our case, the taxpayer is a foreign company that provides paid services, but is not registered with the tax authorities of the Russian Federation.

It is precisely because of the lack of registration with the Federal Tax Service that the payment of VAT for a foreign legal entity is carried out by a tax agent.

The duties of a tax agent include:

• timely and ;
• ;
• tax control (calculation, withholding, transfer to the budget);
• written notification to the tax inspectorate about the impossibility of withholding tax and the amount of debt of the taxpayer. The notification is sent to the inspectorate at the place of registration of the tax agent, the notification period is 1 month from the moment the agent learned about the formation of the debt;
• provision of supporting documentation;
• storage of documents on the basis of which taxes were calculated for 4 years;

For failure to perform its functions, a tax agent may be held liable:

1. In accordance with Art.
   123 Tax Code of the Russian Federation. Occurs if the agent did not withhold/remit or did not withhold/remit the tax in full. The preventive measure is a fine of 20% of the amount that must be withheld/transferred.
2. In accordance with Art. 199.1 of the Criminal Code of the Russian Federation.

Occurs if the failure to fulfill the duties of a tax agent was committed for personal interests. Information on how the amount of unfulfilled obligations for the calculation, withholding and transfer of taxes is classified, and on the penalties for failure to fulfill obligations is presented in the tables below.

Preventive measures depend on the amount of unfulfilled obligations.

Now let's look at who can conduct VAT calculations as a tax agent when paying for services to a foreign company. Calculations mean the whole range of activities: .

Taxation of services of foreign organizations on the territory of the Russian Federation

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This article examines typical situations of foreign organizations operating in the market of advertising and information services from the perspective of Russian tax legislation. In doing so, the author tried to answer the following questions:

1) What taxes and in what order must a foreign company providing information and advertising services independently or through an agent on the territory of the Russian Federation be paid?

2) Will the tax obligations of the parties change if its Russian subsidiary acts as an agent of a foreign company?

The tax regime applicable to foreign organizations in the Russian Federation largely depends on whether their activities constitute a permanent establishment in Russia.

In accordance with Article 246 of the Tax Code of the Russian Federation, foreign organizations operating in the Russian Federation through permanent representative offices and (or) receiving income from sources in the Russian Federation are recognized as income tax payers.

According to clause 2 of Article 306 of the Tax Code of the Russian Federation, a permanent representative office of a foreign organization in the Russian Federation for the purposes of Article 25 of the Tax Code of the Russian Federation means a branch, representative office, division, bureau, office, agency, any other separate division or other place of activity of this organization, through which The organization regularly carries out business activities on the territory of the Russian Federation. In this case, such activities must fall under one of the types listed in this paragraph. In particular, through a permanent representative office, activities related to the performance of work, provision of services, and other activities can be carried out.

Thus, the legislation on taxes and fees establishes the following signs of a permanent establishment, in the presence of a combination of which the activities of a foreign organization in the Russian Federation are recognized as leading to the formation of a permanent establishment: 1) the presence of a separate division or any other place of activity of the foreign organization in the Russian Federation, 2) the implementation a foreign organization of business activities on the territory of the Russian Federation, 3) carrying out such activities on a regular basis.

The fact that a foreign organization carries out preparatory and auxiliary activities on the territory of the Russian Federation in the absence of the indicated signs of a permanent representative office cannot be considered as leading to the formation of a permanent representative office (see clause 4 of Article 306 of the Tax Code of the Russian Federation). Thus, preparatory and auxiliary activities, in particular, include: maintaining a permanent place of business solely for the collection, processing and (or) dissemination of information, accounting, marketing, advertising or market research for goods (works, services) sold by a foreign organization, if such activity is not the main (usual) activity of this organization; maintaining a fixed place of business solely for the purpose of simply signing contracts on behalf of that organization, if the signing of contracts occurs in accordance with the detailed written instructions of the foreign organization.

Thus, when a foreign company carries out activities of an exclusively preparatory and auxiliary nature on the territory of Russia for itself personally, without directly providing advertising and information services (for example, only signing contracts without fulfilling obligations), it can be argued that such activities do not lead to the formation of a permanent establishment . However, the performance of any other actual and legal actions on the territory of Russia aimed at fulfilling obligations under contracts or performing preparatory actions in the interests of third parties (as an independent type of activity) constitutes a permanent establishment.

When providing services through an agent on the territory of the Russian Federation, the following must be taken into account. Based on clause 9 of Article 306 of the Tax Code of the Russian Federation, a foreign organization is considered to have a permanent representative office if this organization carries out activities that meet the criteria provided for in clause 2 of this article through a person who, on the basis of contractual relations with this foreign organization, represents its interests in the Russian Federation, acts on the territory of the Russian Federation on behalf of this foreign organization, has and regularly uses the authority to conclude contracts or agree on their essential terms on behalf of this organization, while creating legal consequences for this foreign organization (dependent agent).

A foreign organization is not considered to have a permanent establishment if it operates on the territory of the Russian Federation through a broker, commission agent, professional participant in the Russian securities market or any other person acting as part of its main (ordinary) activities.

Accordingly, when concluding an agency agreement under the agency agreement scheme, when a Russian organization undertakes to represent the interests of a foreign company in the Russian Federation and enter into contracts on its behalf for the provision of advertising and/or information services, the activities of such a foreign company should be considered as carried out through a permanent establishment on the territory of the Russian Federation. On the contrary, if an agency agreement is signed between a foreign company and a Russian company operating within the framework of its main activity, which involves the conclusion of contracts for the provision of advertising and/or information services on behalf of the Russian company (commission scheme), the foreign entity is not recognized as carrying out activities on territory of the Russian Federation through a permanent representative office.

The fact that a person operating on the territory of the Russian Federation is interdependent with a foreign organization, in the absence of signs of a dependent agent provided for in paragraph 9 of Article 306 of the Tax Code of the Russian Federation, is not considered as leading to the formation of a permanent representative office of this foreign organization in the Russian Federation (clause 10, Article 306 of the Tax Code of the Russian Federation).

However, it should be taken into account that agreements on the avoidance of double taxation concluded by the Russian Federation with foreign states may provide for other cases when the activities of a foreign organization can be considered as forming a permanent establishment on the territory of Russia, or, conversely, as precluding its formation.

The specifics of taxation of foreign organizations operating through a permanent representative office in the Russian Federation for profit tax are established by Article 307 of the Tax Code of the Russian Federation. The object of taxation for foreign organizations operating in the Russian Federation through a permanent representative office is:

· income received by a foreign organization as a result of carrying out activities on the territory of the Russian Federation through its permanent representative office, reduced by the amount of expenses incurred by this permanent representative office, determined taking into account the provisions of paragraph 4 of Article 307 of the Tax Code of the Russian Federation;

· income of a foreign organization from the possession, use and (or) disposal of property of the permanent representative office of this organization in the Russian Federation, minus the costs associated with obtaining such income;

· other income from sources in the Russian Federation, specified in paragraph 1 of Article 309 of the Tax Code of the Russian Federation, relating to a permanent establishment.

The tax base is defined as the monetary expression of the object of taxation established by paragraph 1 of Article 307 of the Tax Code of the Russian Federation.

According to paragraph 3 of the said Article 307 of the Tax Code of the Russian Federation, if a foreign organization carries out activities of a preparatory and (or) auxiliary nature on the territory of the Russian Federation in the interests of third parties, leading to the formation of a permanent representative office, and in relation to such activities there is no provision for receiving remuneration , the tax base is determined in the amount of 20 percent of the amount of expenses of this permanent establishment associated with such activities.

In accordance with paragraph 4 of Article 307 of the Tax Code of the Russian Federation, if a foreign organization has more than one branch on the territory of the Russian Federation, the activities through which lead to the formation of a permanent representative office, the tax base and the amount of tax are calculated separately for each branch. If a foreign organization carries out activities through such branches within the framework of a single technological process, or in other similar cases in agreement with the federal executive body authorized for control and supervision in the field of taxes and fees, such organization has the right to calculate taxable profit related to its activities through a branch on the territory of the Russian Federation, as a whole for a group of such branches (including all branches), provided that all branches included in the group apply a single accounting policy for tax purposes. In this case, the foreign organization independently determines which branch will keep tax records, as well as submit tax returns at the location of each branch. The amount of income tax payable to the budget in this case is distributed among departments in the general manner provided for in Article 288 of the Tax Code of the Russian Federation. This does not take into account the cost of fixed assets and intangible assets, as well as the average number of employees (payroll fund) not related to the activities of a foreign organization on the territory of the Russian Federation through a permanent representative office.

In relation to these types of services, foreign organizations operating in the Russian Federation through a permanent representative office pay tax at the rate of 24 percent established by paragraph 1 of Article 284 of the Tax Code of the Russian Federation.

When including in the amount of profit of a foreign organization income from sources on the territory of the Russian Federation, from which, in accordance with Article 309 of the Tax Code of the Russian Federation, tax was actually withheld and transferred to the budget, the amount of tax payable by this organization to the budget to which the amount of withheld tax was transferred is reduced. the amount of tax withheld. If the amount of tax withheld in a tax period exceeds the amount of tax for this period, the amount of overpaid tax is subject, in accordance with the Tax Code of the Russian Federation, to be refunded from the budget or offset against future tax payments of this organization.

Foreign organizations operating in the Russian Federation through a permanent representative office pay advance payments and tax in the manner prescribed by Articles 286 and 287 of the Tax Code of the Russian Federation. A tax return based on the results of the tax (reporting) period, as well as an annual report on activities in the Russian Federation in the form approved by the Ministry of Finance of the Russian Federation, are submitted by a foreign organization operating in the Russian Federation through a permanent representative office to the tax authority at the location of the permanent representative office of this organizations in the manner and within the time limits established by Article 289 of the Tax Code of the Russian Federation.

If the activities of a permanent representative office of a foreign organization in the Russian Federation are terminated before the end of the tax period, the tax return for the last reporting period is submitted by the foreign organization within a month from the date of termination of the activities of the permanent representative office.

The specifics of taxation of foreign organizations that do not operate through a permanent representative office in the Russian Federation and receive income from sources in the Russian Federation are established by Article 309 of the Tax Code of the Russian Federation.

In relation to the issues under consideration, on the basis of paragraph 2 of Article 309 of the Tax Code of the Russian Federation, income received by a foreign organization from the implementation of work, provision of services on the territory of the Russian Federation, which does not lead to the formation of a permanent representative office in the Russian Federation in accordance with Article 306 of the Tax Code of the Russian Federation, is subject to taxation source of payment are not subject to payment.

Thus, the income of a foreign company from the provision of advertising and/or information services in Russia through an agent acting as a commission agent (i.e. on its own behalf) is not subject to corporate income tax.

Now, regarding the value added tax. In accordance with subparagraph 1 of paragraph 1 of Article 146 of the Tax Code of the Russian Federation, the sale of work and services on the territory of the Russian Federation is recognized as subject to VAT. According to subparagraph 4 of paragraph 1 of Article 148 of the Tax Code of the Russian Federation, for the purposes of Chapter 21, the place of sale of works (services) is recognized as the territory of the Russian Federation if: the buyer of works (services) operates on the territory of the Russian Federation.

The place of activity of the buyer is considered to be the territory of the Russian Federation in the event of the actual presence of the buyer of the works (services) specified in this subclause on the territory of the Russian Federation on the basis of state registration of the organization or individual entrepreneur, and in its absence - on the basis of the place specified in the constituent documents of the organization , the place of management of the organization, the location of its permanent executive body, the location of a permanent representative office (if work (services) are provided through this permanent representative office), the place of residence of an individual.

The provisions of this subparagraph apply, inter alia, when:

· provision of advertising, marketing services, information processing services. Information processing services include services for collecting and summarizing, systematizing information arrays and making the results of processing this information available to the user;

· provision of services of an agent who engages, on behalf of the main party to the contract, a person (organization or individual) to provide the services provided for in this subclause;

· in other cases when the activities of an organization or individual entrepreneur that performs work (provides services) are carried out on the territory of the Russian Federation (in terms of performing types of work (providing types of services).

In this case, the place of activity of an organization performing such types of work (providing types of services) is considered to be the territory of the Russian Federation in the case of the actual presence of this organization on the territory of the Russian Federation on the basis of state registration, and in its absence - on the basis of the place specified in the constituent documents of the organization , the place of management of the organization, the location of the permanent executive body of the organization, the location of the permanent representative office in the Russian Federation (if the work is performed (services provided) are provided through this permanent representative office) or the place of residence of the individual entrepreneur.

Thus, when providing information and/or advertising services, the buyer of which is a person located in Russia, the proceeds from their sale are subject to VAT in accordance with Russian legislation, regardless of the place of activity of the foreign company.

The presence of a representative office on the territory of the Russian Federation in the case under consideration only affects the procedure for paying VAT. Foreign organizations have the right to register with the tax authorities as taxpayers at the location of their permanent representative offices in the Russian Federation. Registration as a taxpayer is carried out by the tax authority on the basis of a written application from a foreign organization (clause 2 of Article 144 of the Tax Code of the Russian Federation). In this case, these organizations will independently calculate the tax base, file tax returns and pay VAT at the place of their registration on the same rules as Russian organizations.

When selling goods (work, services), the place of sale of which is the territory of the Russian Federation, by taxpayers - foreign persons who are not registered with the tax authorities as taxpayers, the tax base is determined as the amount of income from the sale of these goods (work, services), taking into account tax According to clause 2 of Article 161 of the Tax Code of the Russian Federation, the calculation, withholding from the taxpayer and payment to the budget of the corresponding amount of tax is carried out by tax agents, regardless of whether they fulfill the taxpayer’s duties related to the calculation and payment of tax, and other duties established by Chapter 21 Tax Code of the Russian Federation. In this case, tax agents are recognized as organizations registered with the tax authorities that purchase goods (work, services) on the territory of the Russian Federation from foreign entities specified in paragraph 1 of Article 161 of the Tax Code of the Russian Federation.

Based on this definition of a tax agent, under contracts for the provision of advertising and/or information services concluded by a Russian organization - an agent on its own behalf, the functions of a tax agent must be performed by buyers (customers) of such services.

The interdependence of Russian organizations and a foreign company does not matter for the calculation and payment of VAT. However, it should be borne in mind that on the basis of paragraph 2 of Article 40 of the Tax Code of the Russian Federation, tax authorities, when monitoring the completeness of tax calculations, have the right to check the correct application of prices for transactions between related parties and when making foreign trade transactions.

© Selivanov Vitaly Vladimirovich, 2006

Taxes in IT International contract

Conditions for recognition as a tax agent

The basic requirements are described in Art. 161 part 2 of the Tax Code of the Russian Federation. We will focus on those that apply to tax agents of foreign companies selling services in the Russian Federation.

So, to be recognized as a tax agent, the following conditions must be simultaneously met:

• organization or (hereinafter referred to as individual entrepreneur);
• registration with the Federal Tax Service;
• purchase of services from these foreign companies on the territory of the Russian Federation.

Slightly different rules apply if a foreign company provides services in electronic form, that is, through information and telecommunication networks (including via the Internet), a full list of which is given in Art. 174.2 part 1 of the Tax Code of the Russian Federation.

The conditions for recognition as a tax agent depend on who acts as the buyer of such services and whether intermediaries are involved in the transaction.

Determination of the tax base for VAT

In general terms, the tax base refers to the income that is subject to taxation. But the procedure for determining the tax base depends on who calculates it: the taxpayer directly or the tax agent.

Taxpayer

The tax base is the total cost of services provided excluding tax. In other words, this is the amount of money received by the service provider, from which tax will be calculated and paid in the future.

If the foreign service provider received advance payments (full or partial payment), the tax base will be determined by their amount, including tax. However, prepayment does not increase the tax base in the following cases:

• the duration of the production cycle is more than 6 months (only when the tax base is determined as such services are provided);
• taxation is carried out at a zero rate;
• This type of service is not taxed.

Tax agent

If a foreign service provider organization is not registered with the Federal Tax Service, the VAT tax base is calculated by the tax agent. In this case, it will be determined by the amount of income from services sold, taking into account tax, while the formation of the tax base is carried out separately for each operation.

Moment of determining the tax base

It is impossible not to mention such a concept as the moment of determining the tax base. In general, it is the earlier of two dates:

• day of service provision;
• the day of advance payment (full or partial) for the subsequent provision of services.

However, in some cases different rules apply:

Calculation and payment of VAT

, like accounting, must be formed for a certain period (it is usually called reporting, and when it comes to taxes - tax) and provided within the established time frame. For VAT, there is a quarterly tax period. This means that every three months taxpayers must make all payments to the budget for VAT.

The calculation is carried out at the end of each tax period, and the calculation takes into account those transactions for which the moment of determining the tax base occurred in the reporting quarter.

The amount to be transferred to the budget is calculated by multiplying the tax base by the tax percentage rate; the base rate is 18%.

But if a foreign company sells services electronically, its activities will be subject to VAT at a rate of 15.25%.

If the organization maintains separate accounting, then the total tax will be equal to the amount of taxes calculated for each object or operation. This calculation procedure applies:

• tax agents of foreign organizations not registered with the Federal Tax Service of the Russian Federation;
• in the case of sales of services taxed at a zero rate.

The tax is paid in equal installments monthly (within 3 months following the reporting period) no later than the 25th of:

• foreign organizations registered with the Federal Tax Service - at the place of registration.
• if settlements with the budget are carried out through a tax agent - at the agent’s location.

Services to a foreigner, place of sale not in the Russian Federation, VAT distribution

5% rule

All taxpayers who have transactions subject to and not subject to VAT are required to keep separate records of incoming VAT (paragraph 7, clause 4, article 170 of the Tax Code of the Russian Federation).

If the share of “non-taxable” expenses

in the total expenses for the purchase of goods (works, services)
is less than 5%
, then the taxpayer has the right to accept “general business” input VAT for deduction in full (clause 4 of Article 170 of the Tax Code of the Russian Federation).

The procedure for determining the share of expenses for VAT-free transactions must be fixed in the accounting policies of the Organization.

In the 3rd quarter, the Organization provided services for renting office space, which are both non-taxable and VAT-taxable transactions, for a total amount of RUB 360,000. (including VAT 20%).

The 5% rule was not observed during the reporting period.

Organization in the same quarter:

• provided marketing services to a foreigner;
• transferred to a foreigner the rights to use the database under a license agreement;
• provided consulting services in the domestic market.

The main thing is Settings – Taxes and reports – VAT.

Administration – Program settings – Accounting parameters link Setting up a chart of accounts – Accounting for VAT amounts on purchased assets: link By counterparties, invoices received, accounting methods:

• Accepted for deduction
• Included in the price
• Blocked until confirmation 0%,
• Distributed.

Purchases – Purchases – Receipt (act, invoices) – Receipt class=”aligncenter” width=”1132″ height=”408″[/img]

VAT accounting method

—
Distributed
– for transactions subject to and not subject to VAT. In this case, the input VAT must be distributed, because it is presented for acquisitions that will simultaneously be used in activities subject to and not subject to VAT, for example, office rental (clause 4 of Article 170 of the Tax Code of the Russian Federation, clause 4.1 of Article 170 of the Tax Code of the Russian Federation).

Algorithm:

• Operations – Closing the period – Regular VAT operations – Create VAT Allocation
• Generating purchase ledger entries

Operations – Closing the period – Regular VAT operations – Create – VAT distribution, Sales revenue :

Checking the calculation

Breakdown of revenue: Reports - Standard reports - Universal report:

• proceeds from sales subject to VAT;
• revenue from the export of non-commodity goods (VAT 0%);
• revenue from sales of services outside the Russian Federation (excluding VAT);
• proceeds from sales not subject to VAT (not UTII);
• proceeds from sales not subject to VAT (UTII);
• proceeds from sales taxed at a rate of 0% (except for the export of non-commodity goods).

Checking the calculation

Operations – Closing the period – Regular VAT operations – Create – Generating purchase ledger entries.

Reports – VAT – Purchase Book.

Reports – 1C-Reporting – Regulated reports – Create – VAT declaration.

General algorithm:

• Operations – Closing the period – Regular VAT operations – Create VAT Allocation
• Generating records in section 7 of the VAT return
• Generating purchase ledger entries

See also:

• [10/17/2019 entry] Reporting for 9 months of 2021 in 1C: Accounting, part 2 (VAT)
• How to check sales amounts in a VAT distribution document
• 5 percent rule for maintaining separate accounting of incoming VAT
• How to keep separate accounting of incoming VAT in 1C if there are transactions subject to VAT and non-taxable transactions?
• Section 7 of the VAT return for non-taxable transactions
• Setting up accounting policies for NU in 1C: VAT
• VAT accounting policy

Preparation of invoice

An invoice is a document on the basis of which the buyer accepts for deduction the tax amounts presented by the seller of services.

The document is issued by the seller when selling services and contains the following data:

• number and date of registration;
• information about the taxpayer seller and buyer (name, address, identification numbers);
• payment document number (if payment methods for services such as full or partial advance payment were used);
• description of services and units of measurement (if applicable);
• volume of services provided;
• currency;
• price per unit (if applicable) excluding tax;
• the cost of the entire volume of services without tax;
• tax rate;
• tax amount;
• the cost of the entire volume of services including tax.

When a Russian organization is exempt from paying VAT

Article 149 of the Tax Code of the Russian Federation provides a list of transactions that are not subject to taxation, and it is its provisions that make it possible for a foreign company to provide services without VAT.

So, according to tax legislation, VAT is not paid when providing services:

• medical (except for veterinary, cosmetology and sanitary-epidemiological);
• for supervision and care of children in preschool organizations, sections, clubs, etc.;
• care for the sick, elderly and disabled;
• on acquisition, preservation and use of archives;
• for the transportation of passengers;
• ritual;
• on provision of residential premises for use;
• depository;
• repair and maintenance of goods and household appliances;
• on the preservation of cultural heritage sites;
• for film production;
• provided at airports;
• for servicing sea vessels;
• pharmaceutical organizations for the manufacture of drugs;
• on organizing and conducting gambling;

Services to a foreigner, place of sale not in the Russian Federation, services under Art. 149 Tax Code of the Russian Federation

The organization entered into a license agreement with a foreign customer (Italy) for the transfer of rights to use the database.

On August 12, the rights to use the database were transferred in the amount of 1,500 EUR.

Conditional EUR exchange rate according to the Central Bank of the Russian Federation:

• August 12 – 73.0000.

Transfer of rights to use the database under a license agreement to the customer (Italy):

• the place of sale is not in the Russian Federation (clause 1, clause 1, article 146 of the Tax Code of the Russian Federation, subclause 4, clause 1, article 148 of the Tax Code of the Russian Federation);
• operations under Art. 149 of the Tax Code of the Russian Federation are exempt from VAT (clause 26, clause 2, article 149 of the Tax Code of the Russian Federation): input VAT is included in the price (clause 2.1, clause 2, article 170 of the Tax Code of the Russian Federation)
• it is required to maintain separate VAT accounting (clause 4 of article 149 of the Tax Code of the Russian Federation, clause 4 of article 170 of the Tax Code of the Russian Federation)
• to calculate the proportion of services are subject to VAT exemption

The main thing is Settings – Taxes and reports – VAT.

Administration – Program settings – Accounting parameters link Setting up a chart of accounts – Accounting for VAT amounts on purchased assets: link By counterparties, invoices received, accounting methods.

Agreement Card

with the buyer.

Agreement Card

with the buyer -
Transaction
code .

Do not check the box The operation is not subject to taxation (Article 149 of the Tax Code of the Russian Federation)

.

Nomenclature

Card

–
the transaction code
.

Nomenclature Card

–
the transaction code
.

Check the box Operation is not subject to taxation (Article 149 of the Tax Code of the Russian Federation )

:

Sales – Sales – Sales (acts, invoices).

Sales – Sales – Sales (acts, invoices) – Sales of services:

• % VAT
  – Without VAT;
• Invoice
  – It is not required to issue an invoice (clause 1, clause 3, article 169 of the Tax Code of the Russian Federation);
• sales VAT
  register – an entry for calculating the proportion (taxable/non-taxable) for the VAT Allocation document;
• register Non- VAT-taxable transactions
  – entry with the movement type Receipt for section 7 of the VAT Declaration.

Algorithm:

• Operations – Closing the period – Regular VAT operations – Create: VAT distribution ,
• Generating records in section 7 of the VAT return;

See also:

• [10/17/2019 entry] Reporting for 9 months of 2021 in 1C: Accounting, part 2 (VAT)

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Procedure for taxation of organizations with foreign capital

As already mentioned, the Russian market is considered quite attractive for foreign investors. As a matter of fact, this is confirmed by a large number of foreign organizations that operate in a variety of fields of activity.

Insurance, banking, auditing are examples of industries where Russian companies have been competing with foreign ones for a long time. For foreign organizations, special operating conditions are provided: for example, there are restrictions on permitted types of activities and accounting.

The procedure for interaction with tax authorities is also somewhat different from that established for Russian companies: a special form of reporting on activities is provided, and there are specifics for filling out a tax return.

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