Tax gopher - 2. "Tax on Google" and agency VAT for Russian entrepreneurs and organizations
This article note will be of interest to Russian individual entrepreneurs and organizations purchasing any services in electronic form from foreign companies that do not have a permanent representative office in the Russian Federation. In particular:
- Developers selling their games and applications through the trading platforms Steam, AppStore, Google Play and similar ones.
- Freelancers who use various exchanges and similar platforms to find customers.
- Purchasing advertising services, including services for the provision of advertising space or time for advertising.
- Buyers of services for placing information on sites such as "bulletin board", "catalog", "auction".
- Buyers of intermediary services designed to organize the possibility of concluding transactions between the buyer and the seller, including services for receiving payments.
- Hosting services, domains, resources "in the cloud."
- Search services and statistics on sites.
- ... And many other types of services.
All suitable under such description - I ask under kat.
')
I think almost everyone already knows that from January 1, 2017 in the Russian Federation, amendments to the Tax Code, approved by the Federal Law of 03.07.2016 N 244-, came into force. The changes received the popular name “tax on Google” and are most often considered in the context of the rise in price of electronic services and content for ordinary consumers - individuals. However, the consequences of its adoption are somewhat broader and unpleasant to surprise some individual entrepreneurs, as well as people doing business in the form of a commercial organization.
Since the changes have already entered into force, but the “hour X” has not yet struck, now is the time to once again draw attention to them and specify the potential threat so that those affected by the new edition of the Tax Code could recognize themselves and take appropriate actions. I will try to present further briefly and to the point.
On July 3, 2016, the Federal Law dated July 3, 2016 N 244- was adopted, which introduced significant changes to the Tax Code, which entered into force on January 1, 2017. Much has been written about this in the media, so I will not repeat.
The law made changes to Article 148 of the Tax Code of the Russian Federation, which establishes a method for determining the place of sale of works and services. In particular, the following addition was made to subparagraph 4 of paragraph 1 of Article 148 as a new paragraph:
- the provision of services specified in paragraph 1 of Article 174.2 of this Code.
Also, by law 244-FZ, a new article was added to the Tax Code, which received the number 174.2 and was mentioned in Article 148. The new article of the Tax Code is called “ Article 174.2. Features of the calculation and payment of tax when providing services by foreign organizations in electronic form ” and introduces the concept of services in electronic form provided via the Internet. In addition, definitions of types of services related to services in electronic form are given. The list is large and interesting, so I recommend reading this article.
For individuals, VAT from electronic services provided for by “Google tax” must be paid, in fact, by Google or another foreign company.
However, a different procedure applies to Russian individual entrepreneurs and organizations — if a Russian entrepreneur or organization purchases work, services or property rights, referred to in subsection 1.4 of clause 1 of Article 148 of the Tax Code , from a foreign organization that does not have a permanent representative office in the Russian Federation, then it’s Russian Entrepreneurs or organizations are recognized as tax agents for VAT and are liable for its calculation and payment.
Separately, I note that this does not depend on the tax system used, so even those using the simplified tax system and the VAT payer “for themselves” may not be tax agents for VAT.
Article 174.2, added to the Tax Code, provides many definitions of services in electronic form that previously existed in a certain “gray zone” relative to the Code and were not specified. Now everything is different, and a huge reservoir of services rendered and acquired via the Internet has received separate formulations that make it possible to attribute these or other services to services rendered in electronic form.
The new paragraph in sub-clause 1.4 of clause 1 of Article 148, in turn, made it so that all these “services in electronic form” described in Article 174.2 are now considered rendered in the Russian Federation if the buyer of these services is an entrepreneur or an organization registered in Russia.
To put it simply: if before there were doubts about the country in which such services were rendered when they were purchased from a foreign company, and whether you need to pay VAT on them, now there is almost no room for such doubts.
If you are a Russian developer who sells his games or applications through sites like Steam , AppStore , Google Play or similar ones, then from January 1, 2017 you are a tax agent of these organizations, therefore you are responsible for calculating and paying VAT in terms of the remuneration of these foreign organizations. In other words, if the site keeps your commission for your services, then you will have to pay VAT on the amount of this commission.
If you are a Russian freelancer and are an individual entrepreneur, and also use the services of a freelance exchange or a platform similar to it, which keeps you a certain commission for your services in finding customers and organizing settlements with them, then you also become taxable with a high degree of probability agent in remuneration of this site.
If you buy advertising services from a foreign company that does not have a permanent representative office in Russia, then you become a tax agent of this company and must pay VAT on the entire amount transferred to it as a reward.
If you buy a domain or hosting from a foreign company, then you are a tax agent and should.
In general, the bottom line is that if you purchase from a foreign company any service that by definition fits the services described in Article 174.2 in electronic form, then you are a tax agent and expect VAT from you. And, of course, we should not forget about subparagraph 1.4 of clause 1 of Article 148, which, as before, establishes certain criteria for attributing works and services to those considered to be realized in the territory of the Russian Federation.
Be aware and prepare. I can recommend to closely examine the updated Article 148 and the new Article 174.2 of the Tax Code. In addition, it is worth looking for and reading materials on the topic published on the Internet, as well as asking questions to your acquaintances, tax consultants and lawyers specializing in tax practice. You can also try to contact your FTS directly for clarification on your type of activity.
The reporting period for VAT, including for tax agents - a quarter, so there is little time. Even if you are subject to the "agency" VAT, you have not yet broken anything and you can deal with the situation relatively calmly.
I hope this material will be useful to you. Thanks for attention!
Related Links:
→ Article 148. Place of sale of works (services)
→ Article 174.2. Features of the calculation and payment of tax in the provision of services by foreign organizations in electronic form
- Developers selling their games and applications through the trading platforms Steam, AppStore, Google Play and similar ones.
- Freelancers who use various exchanges and similar platforms to find customers.
- Purchasing advertising services, including services for the provision of advertising space or time for advertising.
- Buyers of services for placing information on sites such as "bulletin board", "catalog", "auction".
- Buyers of intermediary services designed to organize the possibility of concluding transactions between the buyer and the seller, including services for receiving payments.
- Hosting services, domains, resources "in the cloud."
- Search services and statistics on sites.
- ... And many other types of services.
All suitable under such description - I ask under kat.
')
I think almost everyone already knows that from January 1, 2017 in the Russian Federation, amendments to the Tax Code, approved by the Federal Law of 03.07.2016 N 244-, came into force. The changes received the popular name “tax on Google” and are most often considered in the context of the rise in price of electronic services and content for ordinary consumers - individuals. However, the consequences of its adoption are somewhat broader and unpleasant to surprise some individual entrepreneurs, as well as people doing business in the form of a commercial organization.
Since the changes have already entered into force, but the “hour X” has not yet struck, now is the time to once again draw attention to them and specify the potential threat so that those affected by the new edition of the Tax Code could recognize themselves and take appropriate actions. I will try to present further briefly and to the point.
What happened
On July 3, 2016, the Federal Law dated July 3, 2016 N 244- was adopted, which introduced significant changes to the Tax Code, which entered into force on January 1, 2017. Much has been written about this in the media, so I will not repeat.
More specifically please
The law made changes to Article 148 of the Tax Code of the Russian Federation, which establishes a method for determining the place of sale of works and services. In particular, the following addition was made to subparagraph 4 of paragraph 1 of Article 148 as a new paragraph:
- the provision of services specified in paragraph 1 of Article 174.2 of this Code.
Also, by law 244-FZ, a new article was added to the Tax Code, which received the number 174.2 and was mentioned in Article 148. The new article of the Tax Code is called “ Article 174.2. Features of the calculation and payment of tax when providing services by foreign organizations in electronic form ” and introduces the concept of services in electronic form provided via the Internet. In addition, definitions of types of services related to services in electronic form are given. The list is large and interesting, so I recommend reading this article.
Why is it important
For individuals, VAT from electronic services provided for by “Google tax” must be paid, in fact, by Google or another foreign company.
However, a different procedure applies to Russian individual entrepreneurs and organizations — if a Russian entrepreneur or organization purchases work, services or property rights, referred to in subsection 1.4 of clause 1 of Article 148 of the Tax Code , from a foreign organization that does not have a permanent representative office in the Russian Federation, then it’s Russian Entrepreneurs or organizations are recognized as tax agents for VAT and are liable for its calculation and payment.
Separately, I note that this does not depend on the tax system used, so even those using the simplified tax system and the VAT payer “for themselves” may not be tax agents for VAT.
What does it change
Article 174.2, added to the Tax Code, provides many definitions of services in electronic form that previously existed in a certain “gray zone” relative to the Code and were not specified. Now everything is different, and a huge reservoir of services rendered and acquired via the Internet has received separate formulations that make it possible to attribute these or other services to services rendered in electronic form.
The new paragraph in sub-clause 1.4 of clause 1 of Article 148, in turn, made it so that all these “services in electronic form” described in Article 174.2 are now considered rendered in the Russian Federation if the buyer of these services is an entrepreneur or an organization registered in Russia.
To put it simply: if before there were doubts about the country in which such services were rendered when they were purchased from a foreign company, and whether you need to pay VAT on them, now there is almost no room for such doubts.
What does it threaten in practice
If you are a Russian developer who sells his games or applications through sites like Steam , AppStore , Google Play or similar ones, then from January 1, 2017 you are a tax agent of these organizations, therefore you are responsible for calculating and paying VAT in terms of the remuneration of these foreign organizations. In other words, if the site keeps your commission for your services, then you will have to pay VAT on the amount of this commission.
If you are a Russian freelancer and are an individual entrepreneur, and also use the services of a freelance exchange or a platform similar to it, which keeps you a certain commission for your services in finding customers and organizing settlements with them, then you also become taxable with a high degree of probability agent in remuneration of this site.
If you buy advertising services from a foreign company that does not have a permanent representative office in Russia, then you become a tax agent of this company and must pay VAT on the entire amount transferred to it as a reward.
If you buy a domain or hosting from a foreign company, then you are a tax agent and should.
In general, the bottom line is that if you purchase from a foreign company any service that by definition fits the services described in Article 174.2 in electronic form, then you are a tax agent and expect VAT from you. And, of course, we should not forget about subparagraph 1.4 of clause 1 of Article 148, which, as before, establishes certain criteria for attributing works and services to those considered to be realized in the territory of the Russian Federation.
What to do
Be aware and prepare. I can recommend to closely examine the updated Article 148 and the new Article 174.2 of the Tax Code. In addition, it is worth looking for and reading materials on the topic published on the Internet, as well as asking questions to your acquaintances, tax consultants and lawyers specializing in tax practice. You can also try to contact your FTS directly for clarification on your type of activity.
The reporting period for VAT, including for tax agents - a quarter, so there is little time. Even if you are subject to the "agency" VAT, you have not yet broken anything and you can deal with the situation relatively calmly.
I hope this material will be useful to you. Thanks for attention!
Related Links:
→ Article 148. Place of sale of works (services)
→ Article 174.2. Features of the calculation and payment of tax in the provision of services by foreign organizations in electronic form
Source: https://habr.com/ru/post/319566/
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