Litigation on the accrual of VAT on free-to-play games
At the end of last year, the Moscow Arbitration Court decided on the sensational case of Mail.ru Geyms against the IFTS.
Courts of three instances supported the position of the Inspectorate of Tax Inspection on VAT accrual for the revenue of Mail.ru Geyms from the use of free online games.
What risks this decision carries for the gaming industry and what conclusions can be made in this regard, see under the cat.
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For companies on USN not applicable.
1. The reviewed license agreements for games are mixed in nature and contain the provisions of both the license agreement and the provisions of the contract for the provision of paid services.
2. The license is provided free of charge for the game as a whole, including the code necessary to display the additional game functionality on users' monitors.
3. Representation of the possibility of using additional functionality of the game in order to facilitate the gameplay and more rapid development of the game character is in its essence a separate contract for the provision of paid services.
4. The applicant did not prove that the users, after depositing funds, receive other software to which they obtained access after installing the Client’s part of the game on a personal computer.
5. On the basis of paragraphs.26 of paragraph 2 of Article 149 of the Tax Code of the Russian Federation, the sale is exempt from VAT under a software license agreement . The cost of providing additional functionality is not exempted from VAT.
6. The decision of the IFTS is upheld.
1. Leave behind the brackets the statements on the installation of the “Client part” of the software on users' computers. Without this, a reference to entering into a licensing agreement would not have been justified at all.
We repeatedly wrote that a license agreement is concluded only in relation to the right to use a copy of software provided for actual use, which requires its physical transfer to the user, and not the provision of a service using it.
Therefore, in order to use the VAT exemption, we accept the software download condition as an absolute requirement for the content of the license agreement.
2. Payment must be charged for the provision of additional modules, software applications or a new version of the program, different from the version of the game for which the license was initially granted at no charge.
Otherwise, access to additional functionality of software provided for use earlier is considered as a separate service, since there is no separate licensing object.
Taking into account the new judicial practice, we have prepared for our clients license agreements for games that are subject to cameral tax audits. What and you want!
Courts of three instances supported the position of the Inspectorate of Tax Inspection on VAT accrual for the revenue of Mail.ru Geyms from the use of free online games.
What risks this decision carries for the gaming industry and what conclusions can be made in this regard, see under the cat.
')
The court's position on the taxation of revenue for the use of free-to-play games
For companies on USN not applicable.
1. The reviewed license agreements for games are mixed in nature and contain the provisions of both the license agreement and the provisions of the contract for the provision of paid services.
2. The license is provided free of charge for the game as a whole, including the code necessary to display the additional game functionality on users' monitors.
3. Representation of the possibility of using additional functionality of the game in order to facilitate the gameplay and more rapid development of the game character is in its essence a separate contract for the provision of paid services.
4. The applicant did not prove that the users, after depositing funds, receive other software to which they obtained access after installing the Client’s part of the game on a personal computer.
5. On the basis of paragraphs.26 of paragraph 2 of Article 149 of the Tax Code of the Russian Federation, the sale is exempt from VAT under a software license agreement . The cost of providing additional functionality is not exempted from VAT.
6. The decision of the IFTS is upheld.
Conclusions and recommendations for clarifying license agreements
1. Leave behind the brackets the statements on the installation of the “Client part” of the software on users' computers. Without this, a reference to entering into a licensing agreement would not have been justified at all.
We repeatedly wrote that a license agreement is concluded only in relation to the right to use a copy of software provided for actual use, which requires its physical transfer to the user, and not the provision of a service using it.
Therefore, in order to use the VAT exemption, we accept the software download condition as an absolute requirement for the content of the license agreement.
2. Payment must be charged for the provision of additional modules, software applications or a new version of the program, different from the version of the game for which the license was initially granted at no charge.
Otherwise, access to additional functionality of software provided for use earlier is considered as a separate service, since there is no separate licensing object.
Taking into account the new judicial practice, we have prepared for our clients license agreements for games that are subject to cameral tax audits. What and you want!
Source: https://habr.com/ru/post/294644/
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