How to keep records of bank guarantees: rules and transactions

In order to take part in obtaining profitable contracts and government orders and financially confirm the truth of your intentions, it is not necessary to withdraw funds from circulation or use credit loans.

In the modern world of economic relations, such an instrument as a bank guarantee has long been used, accounting in a budgetary institution is carried out in accordance with Instruction No. 157n. The convenience of this type of security for an obligation is undeniable; it is confirmed by its simplicity and reliability. But, like every financial document, it has its own characteristics and nuances in its design, which characterize its main essence.

How are rights and responsibilities distributed when issuing a bank guarantee?

A bank guarantee (or bank guarantee) is a credit institution’s obligation to pay a third party’s agreement if it does not fulfill its terms.
Widely used in government procurement, in this way suppliers guarantee the execution of contracts or participation in tenders. Warranty obligations are documented. They represent one of the risk insurance tools. There are three parties involved in registration:

• principal;
• beneficiary;
• guarantee.

Trilateral cooperation is mutually beneficial. Each side has certain bonuses. Of course, drawing up guarantee obligations is not always convenient and beneficial for the main debtor - the principal. But in some cases, obtaining a bank guarantee is the only way to conclude a contract. For example, it is necessary to carry out procurement activities within the framework of 44-FZ. It will not be possible to receive a profitable state or municipal contract without registration.

Parties of the bank guarantee:

What affects the accounting treatment of payment of a fee for issuing a guarantee?

Issuing a guarantee is a paid service. The credit institution's fee for issuing a guarantee can be set in different ways:

• in a fixed amount;
• as a percentage of the guarantee amount;
• in a different way.

In addition, the guarantor may establish additional conditions for paying the commission for issuing a bank guarantee. He may require the principal to pay the commission in one lump sum in full or in installments during the validity period of the guarantee.

All this affects not only the accounting procedure for this type of expense, but also requires the principal to additionally elaborate his accounting policy (we will talk about this in subsequent sections).

Find out what to consider when drawing up your accounting policies in 2021 in this publication .

Next, we will talk about the nuances of accounting for the commission for issuing a bank guarantee and the entries used to reflect this type of expense.

Documents and grounds for accounting for guarantees

All transactions and operations of the company must be reflected appropriately in accounting. Issuing a bank guarantee is no exception. But regardless of which accounting accounts the transactions will be reflected in, supporting documents are required.

According to Ch. 23 of the Civil Code of the Russian Federation, an agreement between the principal and the guarantor is not a mandatory condition for cooperation. For example, the procedure for providing a bank guarantee is specified in the main contract. But banks require you to sign a separate agreement to provide a guarantee. It is this document that will be the basis for reflecting the bank guarantee in accounting.

The BG is issued in the form of a paper document or an electronic certificate is issued. Both documents have the same legal force. But the electronic one must be certified by enhanced qualified signatures of the parties. Both electronic and paper versions must disclose the key terms of provision. This is the guarantee amount, validity period, terms of provision and commission amount.

Obtaining guarantees: registration with the beneficiary

To reflect the received bank guarantee in the beneficiary's accounting, a separate off-balance sheet account 008 is provided. The cost of the guarantee cannot be accepted into balance sheet accounts.

Upon receipt, reflect the amount on account 008 “Securities for obligations and payments received” by debit operation. It is necessary to provide analytical accounting for each collateral received. The write-off of the bank guarantee upon full fulfillment of obligations should be reflected in the credit turnover on account 008.

Accounting for a bank guarantee received:

Obtaining guarantees: accounting with the principal

Officials' opinions on whether the principal's bank guarantee is registered vary. Some experts believe that debtors should not reflect warranty obligations in their accounting. This is explained by the fact that the principal does not receive the money in fact. The guarantee is issued for the beneficiary. And it is issued by the credit institution, and not by the principal himself. Consequently, there is no reason to make entries for a bank guarantee in accounting.

The second opinion obliges the principal to record the bank guarantee in off-balance sheet accounts. Which account the company will use should be determined in its accounting policy. For example, account 008 or 009 “Securities for obligations and payments issued.”

The need to reflect the principal in the accounting is due to the fact that this allows you to show information:

• about a change of creditor;
• on the imposition of additional sanctions for non-fulfillment of the contract;
• on changing the conditions for providing a bank guarantee.

IMPORTANT!

If the receipt of a bank guarantee is classified as a major transaction, disclosure of information about it is mandatory in the financial statements. It is necessary to organize reliable accounting of guarantee obligations on off-balance sheet accounts.

Bank guarantee under a government contract: what type of expense and how to take it into account?

If a bank guarantee is required to fulfill obligations under a government contract (or government order), the amount of remuneration to the guarantor can be taken into account as:

• expenses for ordinary activities; or
• other expenses.

Whether the guarantor's remuneration is taken into account at one time or gradually depends on the type of company's obligations secured by the guarantee:

The correspondence of accounts for accounting for remuneration to the guarantor is similar to those described above:

The materials on our website will introduce you to the nuances of concluding and executing government contracts:

• “Concluding a contract without limits on budgetary obligations”;
• “Is it legal to pay UTII when selling goods under state and municipal contracts?”.

Failure to fulfill obligations: accounting features

If the obligations of the main debtor are not fulfilled on time or not in full, then a warranty case occurs. That is, the beneficiary makes claims against the guarantor.

Requirements are documented. The creditor must send a written request to the guarantor. Documents confirming the occurrence of a warranty claim should be attached to the letter. That is, papers confirming the fact of non-fulfillment of obligations. These can be acts, conclusions of commissions, photographs, etc.

The guarantor reviews the beneficiary's claims and makes a decision. If the claim is accepted, the beneficiary’s accounting records the following transactions:

An example of reflection in the accounting of a beneficiary

Buyer LLC and Supplier JSC entered into an agreement for the supply of goods with deferred payment. JSC Supplier requested a guarantee for the full amount of delivery of goods - 800,000 rubles.

The beneficiary (JSC Supplier) will account for the bank guarantee in the accounting department as follows:

The principal (Buyer LLC) did not fulfill the obligation to pay for the delivery. For failure to fulfill obligations, the beneficiary filed a claim with the bank. The banking organization accepted the claim from Supplier JSC. The bank guarantee was transferred in full to the benefit of the beneficiary.

The beneficiary reflected the transactions in accounting:

IMPORTANT!

When fulfilling the principal's obligations, only transactions on off-balance sheet accounts are reflected in accounting.

Accounting for unfulfilled obligations of the principal

After payment of the bank guarantee, the credit institution submits claims to the principal. A claim is sent to the debtor demanding compensation for the cost of the guarantee obligations transferred to the creditor.

The recourse banking claim is reflected in the principal’s accounting records with the following entries:

Example of accounting for the principal

A supply agreement for the amount of 3,000,000 rubles was concluded between LLC More and LLC Solntse. Under the terms of the agreement, More LLC issued a bank guarantee from a credit institution in the amount of 3 million rubles for 1 calendar month.

More LLC did not fulfill the terms of the agreement, and the bank paid 3 million in favor of Solntse LLC. The credit institution filed a recourse claim. The following entries were made in the principal's accounting:

Entries in the accounting of the beneficiary and the principal in case of failure to fulfill the obligation

A situation may arise when the principal issued a guarantee for a certain period, but during this period was unable to pay the beneficiary. Then the latter has the right to demand payment for the transaction from the guarantor. The creditor must set out in writing all the circumstances of the case and demand payment of the agreed amount.

The bank, having examined the beneficiary’s documents, decides that the principal’s debt must be paid. After receiving the relevant document, the supplier records:

Dt 76 subaccount “Calculations for claims” Kt 62 - for the amount of the guarantee.

At the same time, the credit institution informs the principal that the guarantee has been terminated and now he must pay this amount to the bank. The principal makes entries in his accounting:

• Dt 60 Kt 76 – for the amount of the guarantee, i.e. recognizes the credit institution's recourse claim;
• Dt 76 Kt 51 - for the same amount (the obligation to the guarantor has been repaid - the entry is made after the debt is paid).

Accounting in the budgetary sector

Explanations on how to keep records of bank guarantees in a budgetary institution were given by officials in the official letter of the Ministry of Finance dated July 27, 2014 No. 02-07-07/31342.

The transaction is reflected on the balance sheet:

Grounds for write-off: the contractor fulfilled the terms of the contract or violated them, or the contract was terminated in the prescribed manner.

IMPORTANT!

In the case of a collateral form of security carried out on the basis of Art. 96 of Law No. 44-FZ, recording cash receipts on off-balance sheet account 10 is unacceptable!

The contractor violated the terms of the contract, the bank transferred the money to a budgetary (autonomous) organization, accounting of the bank guarantee received in this case:

• Dt 2.201.11.510 Kt 2.205.41.660 - reflects the receipt of funds from the bank under an official guarantee to the current account. Simultaneous increase in off-balance sheet 17 KOSGU 140;
• Dt 2.205.41.560 Kt 2.401.10.140 - income is accrued on funds received under a bank guarantee.

Encyclopedia of solutions. Account 10 “Ensuring the fulfillment of obligations” (for the public sector)

Information block “Encyclopedia of solutions. Public sector: accounting, reporting, financial control" is a set of unique updated analytical materials aimed at accountants and specialists in financial and economic services of public sector organizations

The material is updated as of November 2021.

See Solutions Encyclopedia for updates

See Solution Encyclopedias

The materials in the information block will help you quickly and at a high level solve problems in the field of accounting, use of budget classification, as well as correctly apply regulatory legal acts in the context of improving the legal status of state (municipal) institutions.

Each material in the block is supported by references to regulatory legal acts, takes into account existing judicial practice and is updated as legislation changes.

Authors' team:

S. Bychkov, Deputy Director of the Department of Budget Methodology and Financial Reporting in the Public Sector of the Russian Ministry of Finance

Yu. Krokhina, Head of the Department of Legal Disciplines of the Higher School of State Audit (Faculty of M.V. Lomonosov Moscow State University), Doctor of Law, Professor

V. Pimenov, head of the “Budget Sphere” direction, expert at the Laboratory for Analysis of Information Resources of the Research Computing Center of Moscow State University. M.V. Lomonosov

A. Kulakov, head of the accounting and reporting department of the Federal State Budgetary Institution “Main Military Clinical Hospital named after Academician N.N. Burdenko" Russian Ministry of Defense, professional accountant

E. Yancharin, deputy. Head of the Department for Organization of Capital Construction of the DT Ministry of Internal Affairs of Russia from 2021 to 2021

A. Semenyuk, State Councilor of the Russian Federation 3rd class

A. Shershneva, adviser to the state civil service of the Russian Federation, 2nd class

O. Levina, adviser to the state civil service, 1st class

O. Monaco, auditor

A. Kuzmina, Candidate of Legal Sciences

N. Andreeva, professional accountant, member of the IPB of Russia

D. Zhukovsky, head of the budget accounting automation department, specialist in the implementation of software products in public sector organizations

A. Sukhoverkhova, expert of the Legal Consulting Service GARANT, member of the Union for the Development of Public Finance

I. Sapetina, expert of the Legal Consulting Service GARANT

V. Evsyukova, expert of the Legal Consulting Service GARANT

V. Suldyaykina, expert of the Legal Consulting Service GARANT, specialist in automation of budget accounting

and etc.

List of abbreviations:

Law N 402-FZ - Federal Law of December 6, 2011 N 402-FZ “On Accounting”

Instruction N 157n - Instructions for the application of the Unified Chart of Accounts for state authorities (state bodies), local governments, management bodies of state extra-budgetary funds, state academies of sciences, state (municipal) institutions, approved by order of the Ministry of Finance of Russia dated 12/01/2010 N 157n

Instruction N 162n - Instructions for the use of the Chart of Accounts for Budget Accounting, approved by Order of the Ministry of Finance of Russia dated December 6, 2010 N 162n

Instruction N 174n - Instructions for the use of the chart of accounts for accounting of budgetary institutions, approved by order of the Ministry of Finance of Russia dated December 16, 2010 N 174n

Instruction N 183n - Instructions for the use of the chart of accounts of accounting of autonomous institutions, approved by order of the Ministry of Finance of Russia dated December 23, 2010 N 183n

Instructions N 65n - Instructions on the procedure for applying the budget classification of the Russian Federation, approved by order of the Ministry of Finance of Russia dated 01.07.2013 N 65n

Order N 52n - Order of the Ministry of Finance of Russia dated March 30, 2015 N 52n “On approval of forms of primary accounting documents and accounting registers used by public authorities (state bodies), local government bodies, management bodies of state extra-budgetary funds, state (municipal) institutions, and Guidelines for their use"

Instruction N 33n - Instructions on the procedure for drawing up and submitting annual and quarterly financial statements of state (municipal) budgetary and autonomous institutions, approved by order of the Ministry of Finance of Russia dated March 25, 2011 N 33n

Instruction N 191n - Instructions on the procedure for drawing up and submitting annual, quarterly and monthly reports on the execution of budgets of the budget system of the Russian Federation, approved by order of the Ministry of Finance of Russia dated December 28, 2010 N 191n

KOSGU - Classification of operations of the general government sector

FCD Plan - Financial and economic activity plan

Accounting in government institutions

A bank guarantee and accounting in the accounting departments of government institutions are carried out differently. When funds are received into a current account, they are accounted for according to KFO 3, since they are received at temporary disposal and are required to be transferred to budget revenues. Accounting entries for transactions depend on the powers delegated to a particular government institution to administer budget funds.

Postings for accounting in a government institution are reflected in the table:

Bank guarantee: tax accounting

Let's determine how to keep tax records of a bank guarantee in 2020:

1. Income tax. Bank guarantees are not taken into account in the base for calculating income tax until it is received in cash and income is accrued. Such instructions are contained in subparagraph 2 of paragraph 1 of Article 251 of the Tax Code of the Russian Federation.
2. VAT. The amount of the bank guarantee is not taken into account when calculating the base for value added tax. Why? Funds received under a bank guarantee are not income from the sale of goods or provision of services, and therefore should not be taken into account in VAT calculations.
3. USN. Guarantee funds accounted for in off-balance sheet account 10 should not be included in the calculation of the tax base (Article 251, 346.15 of the Tax Code of the Russian Federation), since this is a liability, not income. When crediting money to a current account under a bank guarantee, the amount should be reflected when calculating income under the simplified tax system. Receipts are included in non-operating income when calculating the single tax.

Bank guarantee - how to take it into account in accounting?

Today, a bank guarantee is one of the most popular services. With its help, they insure financial risks that sometimes arise when a counterparty refuses to fulfill its obligations in connection with the execution of a contract. On January 1, 2014, the new 44-FZ “On the contract system” will come into force. In it, the bank guarantee will be used in a much more expanded version, which means that the accounting department will have more questions about how to take into account accounting expenses, how and in what way to reflect transactions? First of all, we need to explain what a bank guarantee is? A bank guarantee is a written (or electronic) obligation of a bank (or a credit institution or an insurance organization), which it issued at the direction of another person, called the principal, to pay the creditor (beneficiary) a sum of money in accordance with the terms of the agreement. The guarantor pays the amount fixed in the contract if the beneficiary makes a request for this in writing. The validity of the bank guarantee begins on the day of its issue, and the validity period is specified in the contract. It can be concluded for any amount and for any period with both legal entities and individual entrepreneurs. In some cases, a bank guarantee must be provided. For example, it is provided before concluding government contracts; according to the new 44-FZ, it can also be provided to ensure participation in tenders, auctions and competitions. What documents can confirm the validity of accounting for a bank guarantee? Sometimes an accountant has a question: how can all this be documented? Of course, bills and invoices are provided along with the bank guarantee itself, but sometimes the guarantee is provided in the form of an electronic message. What to do with this option of providing a bank guarantee? The fact is that in accordance with paragraph 3 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated March 23, 2012 N 14 “On certain issues of dispute resolution practice .....” a bank guarantee issued in the form of an electronic message using the SWIFT telecommunication system is identical to a bank guarantee in writing. And if, when issuing a bank guarantee, certain requirements, sometimes imposed by the beneficiary or guarantor on the form of the guarantee, were not met, then this is not a reason not to accept it for accounting. Interested parties can, quite legally, provide various evidence that can confirm this transaction. Bank guarantee - its distinctive features A bank, or a credit institution or an insurance organization always acts as a guarantor. Naturally, a bank guarantee is not issued to the principal free of charge, which means that the accountant will need to take into account the transactions carried out on the accounting accounts. A bank guarantee cannot depend on the underlying obligation. In addition, this guarantee cannot be revoked, that is, it is irrevocable. Rights under a bank guarantee cannot be transferred to another person, unless, of course, otherwise provided in the document itself. The bank guarantee must indicate the period for which it is issued. If the period is not specified, then it (bank guarantee) in accordance with Art. 432 of the Civil Code of the Russian Federation is considered not to have arisen. In this case, the guarantee period may be equal to, greater than, or less than the period for fulfillment of obligations. Typically, the guarantee specifies who the beneficiary is, but due to established dispute resolution practices, if the beneficiary is not indicated in the document, the bank guarantee is still considered valid. If a guarantor issues a bank guarantee to a beneficiary without a prior written agreement between the principal and the guarantor, the guarantee is not considered invalid. However, before issuing a bank guarantee to the beneficiary, the principal may enter into an agreement with the guarantor, which will stipulate the conditions under which the bank guarantee will be concluded. In the contract, the guarantor may stipulate, in particular, the right to demand from the principal, by way of recourse, a certain remuneration if he pays the beneficiary a certain amount of money in connection with the demands made. Neither the guarantor nor the beneficiary pays VAT when the guarantor fulfills obligations under the bank guarantee. That is, there is no need to pay VAT when performing such operations as payment under a guarantee, issuance and cancellation of a bank guarantee, and so on. Transactions that are carried out in connection with the repayment of obligations under a loan agreement are also not subject to VAT, since in accordance with current legislation all loan transactions are exempt from taxation. The exception is transactions that arise when issuing bank guarantees by insurance organizations - these services are subject to VAT. The guarantor is obliged to reflect the accounting entries when fulfilling obligations under the bank guarantee. As soon as the beneficiary receives money from the guarantor (in connection with the fulfillment of obligations), the accountant makes a corresponding entry in a special book in the debit of account 51 “Current accounts” and the credit of account 76 “Settlements with various creditors and debtors”. The principal's debt is recorded in accounting depending on the type of obligation. This may be subaccount 58-3 “Loans provided,” account 62 “Settlements with buyers and customers,” account 76 or 58 “Financial investments.” Below is an example of a table with accounts:

The letter “G” in the account indicates settlements with the guarantor, the letter “K” – settlements with counterparties. Accounting for the beneficiary's receipt of funds from the guarantor The beneficiary, upon receipt of funds from the guarantor (using the cash method), must recognize the proceeds from the sale of goods (works, or services), since the payment was secured by a guarantee. When securing obligations to pay interest under an irrevocable bank guarantee, the beneficiary reflects non-operating income in the form of interest on the loan. Methods for reflecting accounting records by the beneficiary when fulfilling obligations under a bank guarantee If the principal fails to fulfill the main obligation (or if performed improperly), the beneficiary makes a demand to the guarantor for the payment of funds in accordance with the guarantee agreement (in writing). This requirement must indicate what exactly the principal violated during the execution of the contract. The bank guarantee expires when the beneficiary receives the amount due to him under the agreement, or if the validity period of the bank guarantee expires. The guarantee itself is accounted for in off-balance sheet account 008 “Securities for obligations and payments received.” The amount in the account is equal to the figure specified in the contract. The amount is debited from the off-balance sheet account gradually as the debt is repaid. Simplified taxation system - features of accounting for a bank guarantee Under the simplified taxation system, the beneficiary who received funds from the guarantor is obliged to reflect in accounting the proceeds from the sale of goods and / or non-operating income in the event of receipt of funds from interest on the loan. As soon as the beneficiary receives funds from the guarantor (in accordance with the execution of the agreement), the accountant records entries in a special book in the debit of account 51 “Current accounts” and the credit of account 76 “Settlements with various creditors and debtors”. In this case, the principal’s debt is reflected in the debit of account 76 - in the credit of (58-3, 62, 76.78) accounts, depending on the type of obligations. This may be subaccount 58-3 “Loans provided,” account 62 “Settlements with buyers and customers,” account 76 or 58 “Financial investments.” In this case, the bank guarantee is accounted for in off-balance sheet account 008 “Securities for obligations and payments received.” The amount in the account is equal to the amount specified in the agreement. This amount is debited from the off-balance sheet account gradually as a result of debt repayment. Accounting for a bank guarantee from the principal First of all, you need to know that such a service as the provision of a bank guarantee by a bank or credit institution is a banking transaction, and in accordance with Federal Law No. 395-1, such a service is not subject to VAT taxation. But if the bank guarantee was issued by an insurance company, then such a service is subject to mandatory VAT taxation. In this case, the principal must accept VAT for deduction, having previously reflected this service in accounting. But at the same time, a bank guarantee must be provided to carry out transactions that are subject to tax. The principal cannot deduct input VAT if the transactions carried out in connection with the issuance of a guarantee do not incur VAT. If the bank guarantee is issued by a bank or credit organization, the amount of income tax is taken into account as part of non-operating expenses. When a bank guarantee is issued by an insurance organization, this operation is accepted for accounting for income tax. Accounting for remuneration to the guarantor This accounting will depend on the type of obligations. For example, if, when purchasing property, the buyer provides the seller with a bank guarantee, then this will be considered an expense that is associated with the acquisition of the property. The costs in this case will include the cost of acquiring property, interest paid on a loan provided for the purchase of property, various markups (surcharges), commissions, customs duties and payments, and so on. The amounts of remuneration to the guarantor are included in the actual cost of the acquired assets if the guarantee was issued before the assets were accepted for accounting. The postings in this case are as follows: The amount of remuneration to the guarantor, included in the actual value of the asset - debit account (01/07/08/10/41...) - credit account 76. Payment of remuneration to the guarantor: Debit account 76 - credit account 51. If a bank guarantee issued after the formation of the actual value of assets, the accountant must reflect the following entries: Debit account 91.2 - credit account 76. Borrowing expenses are recognized as other expenses if a guarantee is issued to secure debt obligations. Additional costs are included, if desired, evenly as part of other costs throughout the entire term of the contract. The accounting policy must reflect the chosen method of accounting for additional loan costs, either accounting evenly throughout the entire loan period, or at a time during the period when they arose. As a result, the following entries will appear in accounting: Debit of account 91.2 – Credit of account 76 (reflects the amount of remuneration to the guarantor). Debit of account 76 - Credit of account 51 (payment of remuneration to the guarantor is reflected) Bank guarantee issued to secure other obligations In this case, the tax amount is included either in non-operating expenses or in expenses associated with production and sales. Moreover, the organization itself decides which group of expenses to include this amount of remuneration (payment for guarantor services). Typically, in practice, other expenses include, for example, the customer’s obligation to pay for work (services), the supplier’s obligation to supply products, etc. As part of non-operating expenses, the amount of remuneration is taken into account, for example, to apply the application procedure for VAT refund, to ensure payment of customs duties, taxes, etc. Expenses under the guarantee are recognized for profit tax purposes, provided that these expenses are economically justified and confirmed, and they must also be aimed at generating income. In this case, the remuneration is taken into account for tax purposes in full.

In the current economic situation, a bank guarantee is one of the most popular financial services. It is an instrument for insuring financial risks that may arise due to the counterparty’s refusal to fulfill obligations.

Bank guarantee agreements can be concluded by credit (insurance) organizations for any required amount and for almost any period not only with legal entities, but also with individual entrepreneurs.

Based on clause 1 of Article 369 of the Civil Code of the Russian Federation, a bank guarantee ensures the proper fulfillment by the principal of his obligation to the beneficiary (the main obligation). Thus, a bank guarantee is one of the forms of securing obligations and is a guarantee of a bank *, which guarantees the fulfillment of the obligation assumed by the company that applied for such a guarantee.

*Another credit organization that has the appropriate license from the Central Bank of the Russian Federation.

In accordance with Article 368 of the Civil Code of the Russian Federation, under a bank guarantee agreement, the bank acting as a guarantor issues, at the request of the client (principal), a written obligation to pay the client’s creditor (beneficiary) a sum of money* upon submission by the beneficiary of a written demand for its payment.

*In accordance with the terms of the obligation given by the guarantor.

Providing a bank guarantee is mandatory in some cases, for example:

• for concluding government contracts,
• when fulfilling government orders,
• to participate in tenders, auctions, competitions,
• and so on.

According to clause 2 of Article 369 of the Civil Code of the Russian Federation, the principal pays a fee to the guarantor for issuing a bank guarantee.

The issuance of guarantees by banks relates to banking operations in accordance with clause 8, part 1, article 5 of the Federal Law of December 2, 1990. No. 395-1 “On banks and banking activities.”

In accordance with the provisions of paragraph 3 of paragraph 3 of Article 149 of the Tax Code of the Russian Federation, operations for the execution of bank guarantees are not subject to taxation (exempt from taxation) of VAT on the territory of the Russian Federation:

• issuance and cancellation of a bank guarantee,
• confirmation and modification of the terms of the specified guarantee,
• payment under such guarantee,
• preparation and verification of documents under this guarantee.

Accordingly, VAT on the amount of remuneration by the bank-guarantor of the company-principal is not charged.

The situation is different with guarantees issued by insurance organizations. When the guarantor is an insurance company, the remuneration for its services is subject to VAT. The amount of “input” VAT on remuneration to the guarantor can be deducted by the principal company subject to the conditions specified in clause 1 of Article 172 of the Tax Code of the Russian Federation.

Our article will discuss the features of accounting and tax accounting of expenses for remuneration to the guarantor of the principal organization.

Accounting for commission on bank guarantee

Issuing a bank guarantee is a paid service. The commission set by the bank is one of the sources of income for the financial institution. The fee for providing warranty obligations is determined as follows:

Moreover, the bank has the right to establish a special procedure for repaying the commission fee. For example, the principal will pay the commission in one amount. Or the bank guarantee fee is charged monthly, similar to loan payments. All these conditions must be enshrined in the agreement on the provision of a bank guarantee.

The commission can be taken into account in two ways:

1. Include a bank guarantee in the price of the property. This procedure is allowed only if the guarantee is issued before the property asset is accepted onto the balance sheet. After an asset has been accepted for accounting, it is not allowed to include a guarantee in the initial cost of the property.

Typical wiring:

1. Attribute the costs of paying the commission to other company expenses. This method is used if a bank guarantee commission is presented for property that has already been accepted onto the balance sheet.

Typical wiring:

Accounting for guarantor remuneration

It should be noted that the accounting of remuneration to the guarantor directly depends on the type of obligation to ensure the fulfillment of which the bank guarantee was issued.

Situation 1: A bank guarantee was received to ensure the fulfillment of obligations to pay for the purchased property.

If the buyer provides a bank guarantee to the seller of the property, then the remuneration to the guarantor is an expense directly related to the acquisition of such property.

According to clause 23 of the Regulations on accounting and financial reporting, the assessment of property acquired for a fee is carried out by summing up the actual costs incurred for its purchase.

The actual costs incurred include, in particular:

• costs of acquiring the property itself,
• interest paid on the commercial loan provided upon acquisition,
• markups (surcharges),
• commissions (cost of services) paid to supply, foreign trade and other organizations,
• customs duties and other payments,
• costs of transportation, storage and delivery carried out by third parties.

In accordance with clause 6 of PBU 5/01 and clause 8 of PBU 6/01, the actual cost of assets includes other costs directly related to the acquisition of inventories and fixed assets.

Thus, the amounts of remuneration to the guarantor are included in the actual cost of the acquired assets if the bank guarantee was issued before these assets were accepted for accounting.

In this case, the following transactions are made:

• Debit of the asset accounting account (01/07/08/10/41, etc.) Credit account 76 “Settlements with various debtors and creditors” - reflects the amount of remuneration to the guarantor, included in the actual cost of the asset.

• Debit of account 76 “Settlements with various debtors and creditors” Credit of account 51 “Settlement accounts” - reflects the payment of remuneration to the guarantor.

If the guarantee is issued after the actual value of the assets has been formed, then the amount of remuneration to the guarantor is taken into account as part of other expenses:

• Debit account 91.2 “Other expenses” Credit account 76 “Settlements with various debtors and creditors” - reflects the amount of remuneration to the guarantor, not included in the actual cost of the asset.

Situation 2: A bank guarantee was received to ensure the fulfillment of debt obligations (loans, credits, etc.).

If a bank guarantee is obtained by the borrower in order to obtain borrowed funds, then in accordance with clause 3 of PBU 15/2008, the costs of remuneration to the guarantor are included in other costs directly related to obtaining loans (credits).

Based on clause 7 of PBU 15/2008, borrowing costs are recognized as other expenses.

According to clause 8 of PBU 15/2008, additional borrowing costs can be included evenly as part of other expenses during the term of the loan (loan agreement).

Accordingly, the organization in its accounting policy for accounting purposes must establish a method for accounting for additional borrowing costs:

• Or at a time in the reporting period to which they relate (clause 6 of PBU 15/2008),
• Or evenly throughout the loan term (clause 8 of PBU 15/2008)*.

*Currently, in accordance with clause 65 of the Regulations on accounting and financial reporting, expenses incurred by the organization in the reporting period, but relating to the following reporting periods, are reflected in the balance sheet in accordance with the conditions for recognition of assets established by regulatory legal acts on accounting, and are subject to write-off in the manner established for writing off the value of assets of this type.

However, the costs of remuneration to the guarantor associated with obtaining borrowed funds do not relate to any specific assets, and therefore the organization must provide for this point in its accounting policies (such costs can be reflected as part of other current assets).

The following entries will need to be reflected in the accounting records:

• Debit account 91.2 “Other expenses” Credit account 76 “Settlements with various debtors and creditors” - reflects the amount (in whole or in part) of remuneration to the guarantor.

• Debit of account 76 “Settlements with various debtors and creditors” Credit of account 51 “Settlement accounts” - reflects the payment of remuneration to the guarantor.

Situation 3: A bank guarantee was received to ensure the fulfillment of other obligations.

The amounts of remuneration to the guarantor for guarantees related to other obligations (for example, with the conclusion of government contracts and the execution of government orders) are included in:

• expenses for ordinary activities,
• or as part of other expenses,

depending on the type of company's obligations secured by the guarantee.

If a bank guarantee is related to the fulfillment of obligations under an agreement, the receipt of income under which is expected over several reporting periods, the costs of remuneration of the guarantor should be reasonably distributed between reporting periods in accordance with clause 19 of PBU 10/99.

Otherwise, the guarantor's remuneration is taken into account in the reporting period in which the expense was incurred.

In accounting, the guarantor's remuneration is reflected in the following entries:

• Debit account 91.2 “Other expenses” Credit account 76 “Settlements with various debtors and creditors” - reflects the amount (in whole or in part) of remuneration to the guarantor.

• Debit of account 76 “Settlements with various debtors and creditors” Credit of account 51 “Settlement accounts” - reflects the payment of remuneration to the guarantor.