Let's consider the features of reflecting an advance invoice from a supplier in 1C and accepting VAT for deduction on it.
You will learn:
- what conditions must be met in order to exercise the right to deduct VAT on an advance invoice from a supplier;
- how to register an invoice for an advance payment from a supplier in 1C;
- what document formalizes the acceptance of VAT for deduction from advances issued;
- what transactions and movements in the VAT tax register are formed in the purchase book, what lines of the VAT declaration are filled out.
What is said in the Tax Code of the Russian Federation about the deduction of VAT on an advance invoice
Based on paragraphs.
1st and 12th Art. 171 of the Tax Code of the Russian Federation, the buyer has the right to deduct VAT calculated when paying an advance on account of future deliveries. As a general rule, the right to claim VAT for deduction is available within three years from the moment such an opportunity arises (clause 2 of Article 173 of the Tax Code of the Russian Federation). However, specifically in terms of deductions for advances, this rule is not applicable, and transfer of the deduction to later periods (quarters) is not allowed (letter of the Ministry of Finance of the Russian Federation dated 04/09/2015 No. 03-07-11/20290).
Find out more about the general procedure for deducting VAT on advances.
Obstacle #6 - prepayment in kind
According to the clarifications of the Ministry of Finance of the Russian Federation (Letter No. 03-07-15/39 dated 03/06/2009), if the advance payment is paid in cash or in non-monetary form, a deduction for “advance” VAT cannot be applied, since the taxpayer does not have availability of a payment order confirming the transfer of funds. The use of the unfortunate wording “transfer” in clause 9 of Article 172 of the Tax Code of the Russian Federation gives tax authorities the basis to tie the advance payment only to the payment order. In this case, the parties to the agreement have the right to choose any of the forms of payment (clause 1 of Article 862 of the Civil Code of the Russian Federation).
Consequently, based on the specified provisions of the Civil Code of the Russian Federation, payment is any form of payment provided for by the contract, carried out both before the fulfillment of the seller’s obligation to the buyer and after the fulfillment of this obligation.
SUPPORT FOR CONCLUSION OF AGREEMENT
As noted in the Resolution of the Constitutional Court of the Russian Federation dated February 20, 2001 No. 3-P “... the calculation of tax amounts subject to contribution to the budget does not depend on the form of settlement between the seller and the buyer, since it is based on the general rule for determining added value as the difference between the cost of sold goods (works, services) and the cost of material costs for their production and sale, not determined by any peculiarities of relations between economic entities.”
ACCOUNTING SERVICES
Clause 15 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated May 30, 2014 No. 33 states that payment for the purposes of calculating VAT can be not only cash, but also the fulfillment of an obligation to pay in non-monetary form, including the termination of a monetary obligation by offsetting counter similar requirements. At the same time, Chapter 21 of the Tax Code of the Russian Federation does not contain any indication that the right to accept VAT as part of tax deductions arises exclusively when paying for purchased goods (works, services), property rights in cash. Thus, the buyer cannot be deprived of the right to deduct “advance” VAT if the advance payment for goods (work, services), property rights was made by him in non-monetary form (clause 23 of Resolution No. 33).
But even after the release of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated May 30, 2014 No. 33, legal battles do not subside regarding the possibility of “advance” deduction of VAT for non-monetary forms of payment. Thus, in one of the cases under consideration (Decision of the Arbitration Court of the Kursk Region dated July 23, 2014 No. A35-10259/2012), the taxpayer did not agree with the conclusions of the tax authority, referring, in particular, to the fact that upon receipt of an invoice from the seller - invoices for the amount of the prepayment (advance payment), the buyer has the right to accept “input” VAT from this prepayment for deduction in accordance with clause 12 of Art. 171 Tax Code of the Russian Federation. In paragraph 9 of Art. 172 of the Tax Code of the Russian Federation there is no indication of the mandatory non-cash transfer of an advance; therefore, this norm does not contain a prohibition on making advance payment in ways other than by transferring funds in a non-cash manner. Settlements using bills of exchange comply with current legislation and acceptance certificates are documents confirming the fact of prepayment for goods. The Tax Code of the Russian Federation does not limit taxpayers’ ability to pay by bills of exchange and does not make the right to VAT refund dependent on the form or means of settlement between the parties to the transaction.
DRAFTING AN AGREEMENT PRICE
It should be noted that in the event of conflicts of opinion between senior judges and representatives of the financial department, the taxpayer must take into account the instructions of the Federal Tax Service of the Russian Federation that are beneficial to him. In the event that written explanations of the Ministry of Finance of the Russian Federation on the application of the legislation of the Russian Federation on taxes and fees are not consistent with the decisions, resolutions, information letters of the Supreme Arbitration Court of the Russian Federation, the tax authorities, when exercising their powers, must be guided by the specified acts and letters of the courts, starting from the date of publication in full the indicated acts and letters of courts on their official websites on the Internet or from the date of their official publication in the prescribed manner (Letter of the Federal Tax Service of the Russian Federation dated November 26, 2013 No. GD-4-3/21097).
COURT PRACTICE ON THE USE OF DATA FROM THE SOFTWARE COMPLEX "ASK NDS-2"
What does the Ministry of Finance say about deducting VAT from an advance payment if the invoice was received in a different period
Along with the conclusion that transferring the advance deduction to other periods is generally unacceptable, the Ministry of Finance also clarifies the situation when, at the time of closing the VAT period, there is no VAT invoice yet.
In a letter dated 04/16/2019 No. 03-07-09/27004, officials clarify that if preliminary (partial) payment is made by the buyer in one tax period, and the invoice is received by the buyer in the next tax period, the VAT deduction should be made when actually invoice received.
Basic data
In column 1 of the main table, you should indicate the name of the goods supplied (description of work, services), property rights (subparagraph “a”, paragraph 2 of the Rules for filling out invoices), for which an advance was received. Since this is a requirement of the legislator, you cannot write single phrases on the advance invoice, for example, “advance payment” or “advance for goods.”
You need to understand that accounting software developers can automatically insert common phrases into column 1 when preparing an advance invoice when printing. You should not trust this and succumb to the temptation to leave “everything as it is”; it is better to correct the information with the correct data manually.
The name of goods (works, services), property rights can be taken from the paragraph where the subject of the contract is described, as recommended by the Ministry of Finance of Russia in letters dated March 6, 2009 No. 03-07-15/39 and dated February 25, 2009 No. 03- 07-14/26. If the contract contains a reference to a specification with a large number of names, then it is not prohibited to write the general name of the group of goods. Additionally, in this column you can indicate the details of the contract. For example, prepayment (advance payment) for office supplies under agreement No. 15 dated January 25, 2021. The main thing is that you can clearly identify the purpose of the advance. Otherwise, there may be a risk that the buyer will not be able to claim VAT deduction on such a document.
When simultaneously issuing an advance invoice for the supply of goods and performance of work (provision of services, property rights), it is necessary to reflect both the name of the goods and a description of the work (services, property rights).
For example, prepayment (advance payment) for the supply of office furniture, delivery and assembly of furniture under agreement No. 20 dated January 18, 2019.
If the sale of goods (work, services, property rights) for which an advance was received is taxed at different VAT rates, then in the document they must be shown in separate lines, with each line indicating its own tax rate and amount. Please note that previously the Russian Ministry of Finance expressed an opinion according to which it allowed the advance payment to be indicated in one line, highlighting the maximum VAT rate of 20/120 and the tax amount (letter of the Russian Ministry of Finance dated March 6, 2009 No. 03-07-15/39).
It should also be noted that the words “advance” or “prepayment” themselves may not be indicated in column 1, since the invoice for an advance payment is easy to distinguish by the rate; it is always indicated by the calculation method.
In the advance invoice, columns 1a, 2, 2a, 3, 4, 5, 6 are not filled in, since the need for this is not mentioned in paragraph 5.1 of Article 169 of the Tax Code of the Russian Federation. You can safely put dashes in these points.
In column 7 you need to enter the estimated rate - 10/110 or 20/120 (clause 4 of article 164 of the Tax Code of the Russian Federation).
In column 8, indicate the amount of VAT on the advance payment. If several advance payments have been received, you can enter the total amount.
In column 9 you need to enter the full amount of the advance.
Advance invoices are signed by the same persons as during the shipment of goods (performance of work, provision of services, transfer of property rights).
We accept VAT deduction on an advance invoice: conditions for different periods
We summarize the explanations of the Ministry of Finance and practical experience in applying VAT deductions not during the period of actual transfer of the advance.
In order to easily deduct VAT on an advance invoice received in the period following the advance payment period, you need to have:
- an agreement with fixed terms of advance payment;
- confirmation of the payment itself (payment order, bank statement);
- invoice from the supplier;
- confirmation that the invoice was actually received in the next tax period.
Obstacle No. 4 – failure to indicate an advance payment in the payment order
Despite the fact that clause 9 of Article 172 of the Tax Code of the Russian Federation deals only with documents confirming the actual transfer of advance payment, failure to indicate the wording “advance payment” in the “purpose of payment” field may become an obstacle to the deduction of “advance” VAT.
When considering the inspectors’ argument that in the “Purpose of payment” column of the payment order, as well as in the text of the agreement, there are no words “advance” or “advance payment”, the courts take into account the provisions of Article 171 and Article 172 of the Tax Code of the Russian Federation, which do not provide for as a prerequisite for the application of tax deductions claimed on the amounts of advances paid, an indication in the payment order in the column “Purpose of payment” or in the text of the agreement “Payment of advance payment or advance payment”. As evidence, taxpayers cite letters sent to suppliers about changing the purpose of payment, contracts providing for conditions for advance payment (Resolutions of the Federal Antimonopoly Service of the Ural District dated April 4, 2014 No. F09-114/14, dated January 13, 2012 No. F09-7876/ eleven).
In order to confirm the legality of the application for tax deductions in the absence of the words “advance or prepayment” in the payment order and the text of the contract, the data contained in the primary documents can be compared: contract, payment order, invoice for prepayment, purchase book, sales book and tax returns for VAT" (Resolution of the North Caucasus District Administration of July 23, 2015 No. A63-13323/2013).
TAX DISPUTES REGARDING VAT
Obstacle No. 5 - the absence in the advance invoice of a reference to the details of the payment order The absence in the advance invoice of the details of the payment order (subject to the fulfillment of the conditions provided for in paragraph 9 of Article 172 of the Tax Code of the Russian Federation) is not an independent basis for refusal to deduct the “advance” VAT. The Resolution of the Fifteenth Arbitration Court of Appeal dated July 25, 2014 No. A32-19795/2013 states that errors associated with incorrect indication of the address of the seller, shipper or details of payment documents in invoices are not grounds for refusal to deduct tax, since the tax the body did not essentially challenge the buyer’s performance of real business transactions.
APPLICATION OF A FIVE PERCENT VAT BARRIER WHEN TRANSFERING SOUVENIR PRODUCTS
How to confirm the date of actual receipt of an advance invoice?
You need to confirm the receipt of the invoice with an additional document, if possible, “from a third party.” There are several options depending on the situation:
- You can agree with the supplier to send the document by postal or courier service, with a description of the shipment and delivery against signature. This path is suitable for situations where receipt of a document is delayed due to some circumstances on the part of the supplier. For example, the supplier technically does not have time to issue and send an invoice on time. Documents from the service that delivered it will serve as confirmation of the date of receipt of the invoice.
- You can keep a log of incoming documents and record there the date of actual receipt of the invoice. There is an old, but still valid letter from the Federal Tax Service in Moscow dated 08/03/2009 No. 16-15/79275, in which taxpayers are offered exactly this confirmation option. However, it should be remembered that such a journal will have to be created in advance and entries will be made in it for all incoming correspondence. Let us add that to register invoices (incoming and outgoing) there must be another journal. But the presentation of this journal as evidence is not considered by regulatory agencies.
- An invoice can be sent electronically through an EDI operator. Then confirmation of the date of actual receipt can be requested from the EDF operator.
Please note that since the procedure for confirming the date of receipt of an invoice is not established by law, the Ministry of Finance in its clarifications recommends fixing the selected option(s) for confirming the date in the accounting policy.
Check if everything is correct in the accounting policy - 2020 .
Results
If an advance is transferred to a supplier in one tax period, and an invoice for the advance is received in the next, you can deduct VAT on the advance in the period when the invoice is actually received. However, this will require fulfilling a number of conditions, the main of which is to confirm the date of actual receipt of the invoice.
Sources: Tax Code of the Russian Federation
You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.
Filling out advance invoices
The principle of filling out the document is similar to issuing a standard invoice for shipment. Article 169 of the Tax Code affects all required details, which are discussed in more detail in paragraph 5.1. In particular, the following must be completed:
Date of issue and serial number of the document. The last details are entered in compliance with the principle of chronology along with other documents that are issued upon shipment.
Buyer and seller tax numbers.
Date and number of the payment document. In this case, we mean the payment that served as the basis for receiving the advance payment. In case of non-monetary payment, a dash is placed in the described line.
Currency code (name) in which the advance payment is listed.
