Penalties are subject to VAT. VAT fines are not assessed. Penalties for late payment for goods received by the supplier from the buyer are not included in the VAT tax base.

Are penalties for late payment of the VAT base increased or not? This is one of the questions the seller faces. Having received the corresponding penalties from the buyer, it is important for the seller to promptly understand the need to calculate VAT on such amounts. Read more about this in our article.

Late fees and VAT: legal basis

Payments related to the sale of goods must be included in the VAT tax base, including payment for goods sold through the provision of financial assistance, making contributions to replenish special-purpose funds or to increase income (subclause 2, clause 1, article 162 of the Tax Code RF). Moreover, if the debtor violates contractual obligations, then he is obliged to pay penalties to the creditor - in accordance with current legislation or specified in the contract (Article 330 of the Civil Code of the Russian Federation).

In this regard, the question arises: are penalties subject to VAT? If yes, then in what cases?

Read more about penalties on our website:

“Forfeit under a work contract - procedure for calculation and collection”;
“Reducing contractual penalties”;
“Penalty for late fulfillment of obligations under the contract.”

Cases when penalties are not subject to VAT

If penalties are received as part of the debtor’s failure to fulfill obligations, they do not form the tax base for VAT, since they do not relate to the price of the goods and are not related to its payment. Therefore, based on Art. 162 of the Tax Code of the Russian Federation, such penalties are not subject to VAT (Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated February 5, 2008 No. 11144/07). The regulatory authorities recommend that the seller be guided by this resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation regarding penalties as a measure of liability for late payment for goods (letters of the Ministry of Finance of Russia dated October 5, 2016 No. 03-07-11/57924, dated October 30, 2014 No. 03-03-06/1/ 54946, 03/04/2013 No. 03-07-15/6333, sent by the Federal Tax Service of Russia for information to lower tax authorities by letter dated 04/03/2013 No. ED-4-3/5875@).

See also material “Penalty - a measure of liability is not subject to VAT” .

In addition, penalties for late fulfillment of a monetary obligation, if it is not related to payment for goods, are also not included in the tax base. The rationale for this is as follows: in this case, payment occurs unilaterally and does not require response actions on the part of the creditor (Resolution of the Federal Antimonopoly Service of the Moscow District dated July 28, 2009 No. KG-A40/6668-09 in case No. A40-84761/08-7-816) .

This rule applies only to cases where penalties are used as penalties. If, in fact, the payment of a penalty relates to the price of the goods or is an element of pricing, then it is taken into account when calculating VAT on the basis of subparagraph. 2 p. 1 art. 162 of the Tax Code of the Russian Federation (letters of the Ministry of Finance of Russia dated November 30, 2015 No. 03-07-14/69341, dated October 30, 2014 No. 03-03-06/1/54946, dated March 4, 2013 No. 03-07-15/6333, resolutions of the Presidium Supreme Arbitration Court of the Russian Federation dated 02/05/2008 No. 11144/07 in case No. A55-3867/2006-22, FAS Moscow District dated 03/11/2009 No. KA-A40/1255-09 in case No. A40-32554/08-129-101, FAS North Caucasus District dated 07/07/2011 in case No. A32-40880/2009).

Results

Penalties under the contract may or may not be subject to VAT. It all depends on their legal nature: whether they are part of the price or a measure of liability.

: Are fines received by an organization from the buyer of goods for violating the terms of payment under the contract subject to VAT??

The amounts of penalties (fines, penalties) as liability for late fulfillment of obligations received by the taxpayer from the counterparty under the contract are not related to payment for the goods, and therefore are not subject to value added tax.

Legal basis:

Chapter 21 of the Tax Code of the Russian Federation (hereinafter referred to as the Tax Code, Tax Code of the Russian Federation), which regulates the imposition of value added tax, does not say a word about sanctions for violation of the obligations assumed by the parties to the transaction. This gap in legal regulation has to be filled by the competent authorities (Ministry of Finance, Tax Service) and the courts. For a long time, their opinions were fundamentally different.

The reason for this is the unclear wording of paragraphs. 2 p. 1 art. 162 of the Tax Code of the Russian Federation, by virtue of which the tax base is increased by amounts received for goods (work, services) sold in the form of financial assistance, to replenish special-purpose funds, to increase income, or otherwise related to payment for goods (work, services) sold. It is unclear what exactly is meant by amounts otherwise associated with payment.

The situation when a buyer delays payment for goods is one of the most common and at the same time, from a tax point of view, the most ambiguous.

According to the previously prevailing opinion of specialists from the Ministry of Finance and the Federal Tax Service of Russia, the penalty is directly related to payment, which is the basis for including the amount of sanctions in the VAT tax base (Letters of the Ministry of Finance of Russia dated January 11, 2011 N 03-07-11/01, dated August 16, 2010 N 03 -07-11/356, dated 05/20/2010 N 03-07-11/189, etc.).

Officials believed that it did not matter whether the counterparty paid the penalty voluntarily or by court order. Amounts of sanctions received for late payment are subject to inclusion in the VAT tax base in the tax period in which they were actually received.

Judicial practice, interpreting the same norm (clause 2, clause 1, article 162 of the Tax Code of the Russian Federation), came to the exact opposite conclusion: the collection of sanctions is in no way connected with payment for goods (work, services). Penalty (fine, penalty), within the meaning of Art. 330 of the Civil Code of the Russian Federation (hereinafter referred to as the Civil Code, Civil Code of the Russian Federation), is a measure of responsibility and is accrued regardless of the form in which the obligation must be fulfilled - in cash or in kind. Based on this, there is no need to include the amounts of sanctions in the tax base (for example, Resolutions of the Federal Antimonopoly Service of the Moscow District dated April 25, 2012 in case No. A40-71490/11-107-305, dated December 1, 2011 in case No. A40-33299/11-140 -146; FAS of the North Caucasus District dated 07/07/2011 in case No. A32-40880/2009; FAS of the Ural District dated 02/16/2009 N F09-464/09-S3 in case No. A76-5994/2008-46-131, etc. .)

The Presidium of the Supreme Arbitration Court of the Russian Federation also formed its legal position on this issue. The Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 02/05/2008 N 11144/07 states that the amounts of penalties as liability for late fulfillment of obligations are not related to payment for goods, therefore they are not subject to VAT.

Finally, justice triumphed, and the Ministry of Finance submitted to the legal position developed by judicial practice.

By letter N 03-07-15/6333 dated 03/04/2013, the Russian Ministry of Finance explained that tax authorities, when deciding on the legality of application (non-application) by taxpayers of the controversial norm of the Tax Code of the Russian Federation, are obliged to be guided by the previously mentioned Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 05.02. 2008 N 11144/07.

Further, the letter from the Ministry of Finance cites the legal position of the Plenum of the Supreme Arbitration Court: “the amount of the penalty as liability for late fulfillment of obligations received by the company from the counterparty under the contract is not related to payment for the goods in the sense of the mentioned provision of Art. 162 of the Tax Code, therefore they are not subject to value added tax.”

At the same time, the letter contains a reservation - if the amounts received by sellers from buyers, stipulated by the terms of the contracts in the form of a penalty (fine, penalty), are not essentially a penalty (fine, penalty) ensuring the fulfillment of obligations, but in fact relate to an element of pricing that provides payment for goods (work, services), then such amounts are included in the tax base for value added tax on the basis of the above-mentioned norm of Art. 162 of the Code.

In what case can sanctions be considered an element of pricing, the regulatory authorities do not explain. It can be assumed that the attention of the inspectors will be drawn to those sanctions (forfeits, penalties, fines), the amounts of which will be higher than usual or the basis for the accrual of which will differ from those generally accepted in business.

Fines are subject to VAT if they are received from the buyer for late payment for goods or services, officials previously insisted on this point of view. Currently, the position of officials has changed. The article examines what arguments justify these two points of view and provides the relevant judicial practice.

Imposition of VAT fines: a controversial situation

In sub. 2 p. 1 art. 162 of the Tax Code of the Russian Federation states that the taxpayer increases the VAT tax base by amounts received as payment for goods or services sold, in the form of financial assistance, as a means to replenish special-purpose funds, to increase income, or otherwise related to payment for goods sold.

In case of non-fulfillment or improper fulfillment of its obligations, for example, in case of delay, the debtor organization is obliged to pay the creditor a penalty (penalty, fine) determined by law or contractual terms (Article 330 of the Civil Code of the Russian Federation).

According to paragraph 1 of Art. 395 of the Civil Code of the Russian Federation, unlawful withholding or evasion of the return of funds, other delay in payment, as well as unjustified receipt or savings at the expense of another person entail the payment of interest for the use of someone else’s money.

A controversial situation arises: does the supplier (contractor, performer) include in the tax base the amount of imposed sanctions (fines, penalties, interest for using someone else’s money) received from the buyer or customer for late payment for goods (work, services)?

There is no single answer to this question. Therefore, we will consider in detail two points of view.

The current point of view of officials: fines are not subject to VAT

Officials recommend that the amounts of penalties (fines and penalties) received from the buyer be regarded as a measure of responsibility for late payment for goods and services and that the provisions of the Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation of 02/05/2008 No. 11144/07 be applied to them. In accordance with this resolution, the amount of the penalty received by the seller from the buyer is considered a measure of liability for failure to comply with the terms of contractual obligations and therefore is not related to payment for goods sold under Art. 162 of the Tax Code of the Russian Federation. Therefore, such a penalty is not subject to VAT. The position of the Ministry of Finance of the Russian Federation on the non-inclusion of the amount of fines in the VAT tax base is given in letters dated July 27, 2016 No. 03-07-11/43854, dated October 7, 2015 No. 03-07-07/57255.

At the same time, the Ministry of Finance of Russia emphasizes that if the amounts of penalties and fines determined by the contractual terms are not such in essence and are in fact an element of pricing that provides for payment for goods (work, services) sold, then these amounts are subject to VAT (letters from the Ministry of Finance Russia dated 05.10.2016 No. 03-07-11/57924, dated 09.11.2015 No. 03-07-11/64436, dated 04.03.2013 No. 03-07-15/6333 [the latter was sent by the Federal Tax Service of Russia for information to lower tax authorities by letter dated 04/03/2013 No. ED-4-3/5875@], as well as the resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 02/05/2008 No. 11144/07 in case No. A55-3867/2006-22, FAS Moscow District dated 03/11/2009 No. KA- A40/1255-09 in case No. A40-32554/08-129-101 and FAS North Caucasus District dated 07.07.2011 in case No. A32-40880/2009).

There are also numerous court decisions that share the opinion that received fines are not subject to VAT. For example, the Arbitration Court of the North Caucasus District, in resolution dated January 20, 2016 No. F08-9883/2015 in case No. A01-25/2015, came to the conclusion that the amounts of penalties received from buyers are not subject to VAT, since the payment of the penalty is related to violation of the terms of the contract, and the amount of the penalty is paid in excess of the price of goods (work, services) and does not increase their value.

FAS Moscow District dated February 24, 2014 No. F05-17712/13 in case No. A40-82044/2013 indicated that the amounts of the penalty received by the taxpayer from the counterparty under the contract are not related to payment for goods sold (works and services), and therefore are not subject to VAT taxation according to sub. 2 p. 1 art. 162 of the Tax Code of the Russian Federation. Similar conclusions are given in the decision of the Arbitration Court of the Volga District dated December 12, 2014 No. F06-18029/13 in case No. A72-278/2014.

FAS Moscow District confirmed that, in accordance with paragraph 2 of Art. 395 of the Civil Code of the Russian Federation, paragraph 6 of the resolution of the Plenum of the Supreme Court of the Russian Federation No. 13, the Plenum of the Supreme Arbitration Court of the Russian Federation dated October 8, 1998 No. 14, payment of interest for the use of other people's funds is considered a measure of liability for non-compliance with contractual terms, which means it does not apply to payment for goods under within the meaning of paragraph 2 of Art. 153, sub. 2 p. 1 art. 162 of the Tax Code of the Russian Federation and is not subject to VAT (resolution of the Federal Antimonopoly Service of the Moscow District dated November 13, 2008 No. KA-A40/10586-08 in case No. A41-3502/08).

Similar conclusions are set out in the decisions of the FAS of the Volga-Vyatka District dated May 10, 2007 in case No. A29-7483/2006a (by the decision of the Supreme Arbitration Court of the Russian Federation dated September 10, 2007 No. 10714/07, the transfer of this case to the Presidium of the Supreme Arbitration Court of the Russian Federation was refused), the FAS of the North-Western District dated December 11, 2006 in case No. A05-7544/2006-34 (by decision of the Supreme Arbitration Court of the Russian Federation dated March 29, 2007 No. 3432/07, the transfer of this case to the Presidium of the Supreme Arbitration Court of the Russian Federation was refused) and the Federal Antimonopoly Service of the Central District dated September 16, 2008 in case No. A54-3386 /2006-С21.

FAS Moscow District also noted that the penalty has its own legal nature, not related to the object of VAT taxation. Therefore, funds received as a penalty for untimely fulfillment of contractual obligations are not subject to VAT (Resolution of the Federal Antimonopoly Service of the Moscow District dated July 28, 2009 No. KG-A40/6668-09 in case No. A40-84761/08-7-816). The same conclusion is contained in the ruling of the Supreme Court of the Russian Federation dated 09/02/2015 No. 305-ES15-7719 in case No. A40-20035/2014, the resolution of the Arbitration Court of the Volga District dated 12/03/2015 No. F06-3084/2015 in case No. A12-2805/2015 , FAS Moscow District dated April 25, 2012 in case No. A40-71490/11-107-305.

In the resolution of the Federal Antimonopoly Service of the Ural District dated February 16, 2009 No. Ф09-464/09-С3 in case No. А76-5994/2008-46-131, the arbitrators indicated that a penalty is considered one of the ways to ensure the fulfillment of contractual obligations and is associated with non-fulfillment of the terms of the payment agreement , compensates for probable or incurred losses of the parties to the contract and is paid in excess of the cost of the goods. Consequently, receiving a penalty (penalty, fine) does not apply to transactions subject to VAT and does not fall under subclause. 2 p. 1 art. 162 of the Tax Code of the Russian Federation. The same conclusion is contained in the resolution of the Federal Antimonopoly Service of the Moscow District dated February 24, 2014 No. F05-17712/2013 in case No. A40-82044/13-45-133.

The Federal Antimonopoly Service of the Central District determined that penalties paid by the buyer to the supplier for non-compliance with the terms of the contract for payment for goods are not subject to VAT, since at the time of receiving the penalty the transfer of ownership of the goods does not take place. In Art. 146 of the Tax Code of the Russian Federation does not indicate that sanctions are subject to VAT. Amounts included in the base and specified in Art. 154-158 of the Tax Code of the Russian Federation, also do not have in their list the amounts of sanctions for compliance with the terms of contractual obligations. Only amounts that increase the cost of the goods sold are subject to VAT (resolution of the Federal Antimonopoly Service of the Central District dated April 23, 2008 in case No. A08-4124/07-22).

For more information, see the material “Are business fines subject to VAT?”.

Previous point of view of officials: fines are subject to VAT

Previously, officials were convinced that fines were included in the VAT tax base.

The Russian Ministry of Finance insisted that fines and penalties received by the seller from the buyer for late payment for services provided are related to their payment. Accordingly, guided by sub. 2 p. 1 art. 162 of the Tax Code of the Russian Federation, fines received must be subject to VAT (letters of the Ministry of Finance of Russia dated August 17, 2012 No. 03-07-11/311, May 18, 2012 No. 03-07-11/1 and 09.11.2009 No. 03-07-11/222) .

It was possible to find only two court decisions that share this point of view. The Ninth Arbitration Court of Appeal, in its decision dated December 25, 2017 No. 09AP-55686/2017 in case No. A40-92184/17, indicated that penalties received by the supplier from the buyer for violations of payment obligations are subject to VAT. At the same time, the court explained that suppliers, sellers, lessors, lessors, carriers, etc. must calculate VAT on the penalties received. A similar decision was given in the resolution of the Ninth Arbitration Court of Appeal dated September 18, 2017 No. 09AP-24018/2017-GK, 09AP-38553/2017-GK in case No. A40-255045/16 (by resolution of the Arbitration Court of the Moscow District dated January 11, 2018 No. F05-19797/2017, this resolution was left unchanged).

Results

From the latest explanations from officials it follows that received fines and penalties are not subject to VAT if they are not essentially an element of pricing - a hidden form of payment. Arbitrators generally share this view.

At what point should fines awarded by the court be taken into account for the purposes of calculating income tax, read the article

The Ministry of Finance of Russia and the Federal Tax Service of Russia (letter of the Ministry of Finance of Russia dated 04.03.2013 No. 03-07-15/6333 (letter of the Federal Tax Service of Russia dated 03.04.2013 No. ED-4-3/5875@ was communicated to the tax inspectorates)) have finally accepted the point of view courts regarding the application of VAT to the amounts of penalties received by the seller for delay in fulfilling obligations under supply contracts: these amounts do not need to be included in the tax base for value added tax.

Until recently, the issue of imposing value added tax on penalties received by the seller of goods (works, services) for violating the terms of contracts remained controversial. Officials in their letters (letters of the Ministry of Finance of Russia dated August 17, 2012 No. 03-07-11/311, dated July 23, 2012 No. 03-07-08/204, dated May 18, 2012 No. 03-07-11/146, dated February 14. 2012 No. 03-07-11/41, dated 08/09/2011 No. 03-07-11/214, dated 05/20/2010 No. 03-07-11/189, dated 09/11/2009 No. 03-07-11/222, dated 06.03.2009 No. 03-07-11/54, Federal Tax Service of Russia dated 09.08.2011 No. AS-4-3/12914@) indicated that sellers should include the amounts of penalties in the VAT tax base, since the latter are associated with calculations for payment of sold goods (works, services). They justified their position by the fact that the received amounts of penalties (fines, penalties) fall under subclause 2 of clause 1 of Article 162 of the Tax Code. Let us remind you that, according to this norm, the VAT tax base increases by amounts “... received for goods sold (work, services) in the form of financial assistance, to replenish special-purpose funds, to increase income, or otherwise related to payment for goods sold ( works, services)".

However, the courts (Regulation of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 02/05/2008 No. 11144/07, FAS MO dated 04/25/2012 No. A40-71490/11-107-305, FAS North Caucasus Region dated 07/07/2011 No. A32-40880/2009) were of the opposite opinion . Their position is based on the fact that penalties are a measure of civil liability applied for violation of contractual obligations and are not related to payment for goods. The provision of the Code (subclause 2 of clause 1 of Article 162 of the Tax Code of the Russian Federation), to which the Ministry of Finance of Russia and the Federal Tax Service of Russia referred in their explanations, states that VAT is subject to only amounts that increase the cost of goods (work, services). And the penalty is paid in excess of the price of goods (work, services). Thus, it is not subject to VAT.

But, despite the positive judicial practice, the regulatory authorities did not change their position on this issue. Therefore, companies that included in contracts provisions on liability for non-fulfillment or improper fulfillment of obligations in the form of a penalty, after collecting such sanctions from the company that violated the terms of the contract, a logical question arose: is it necessary to tax the resulting amount of the penalty with VAT?

And recently, officials took into account judicial practice and agreed that the amounts of penalties are not related to payment for goods in the sense of the mentioned provision of Article 162 of the Code, issuing the appropriate clarifications, which we mentioned above.

Under the agreement dated January 13, 2013, Aktiv LLC (supplier) undertakes, within ten working days from the receipt of 100% prepayment, to supply Passive OJSC (buyer) with tables in the amount of 118,000 rubles. (including VAT - 18,000 rubles) The buyer, in turn, undertakes to pay 100% of the cost of the goods within three working days from the date the supplier issues an invoice. The supplier must issue an invoice to the buyer within five days of signing the contract. For each day of delay in delivery of goods, he is obliged to pay the buyer a penalty in the amount of 0.7% of the cost of the goods under the contract.

Aktiv LLC issued an invoice on January 15, 2013, and Passive OJSC paid it on January 16, 2013. The goods were delivered on 02/08/2013 (instead of 01/30/2013). Thus, Aktiv LLC fulfilled its obligation under the contract improperly, delaying the delivery of tables by nine days.

The amount of the penalty that the supplier is obliged to pay to the buyer will be:

(RUB 118,000 - RUB 18,000) × 0.7% × 9 days. = 6300 rub.

The penalty was paid on February 15. It is not subject to VAT, since it is not directly related to payment for goods.

Note that if the buyer receives penalties, then he does not take such amounts into account when calculating VAT. This is due to the fact that the amounts of penalties received by him are not related to settlements for payment for goods (work, services) sold (clause 2 of Article 153, subclause 2 of clause 1 of Article 162 of the Tax Code of the Russian Federation). Representatives of the financial and tax departments adhere to the same position (letters of the Ministry of Finance of Russia dated October 7, 2008 No. 03-03-06/4/67, Federal Tax Service of Russia dated August 9, 2011 No. AS-4-3/12914@, Federal Tax Service of Russia for the city of Moscow dated 02/07/2008 No. 19-11/11309).

If the amounts are not actually a penalty

The Civil Code (Article 330 of the Civil Code of the Russian Federation) recognizes as a penalty the amount of money determined by law or contract, which the debtor is obliged to pay to the creditor in the event of non-fulfillment or improper fulfillment of an obligation, in particular in the case of delay in fulfillment. The agreement on liquidated damages must be concluded in writing, otherwise it is considered invalid.

According to the opinion of the Ministry of Finance of Russia, expressed in the commentary letter, if the penalty received by the seller is not essentially a penalty that ensures the fulfillment of obligations under the contract, but in fact relates to an element of pricing, then it is subject to VAT on the basis of the above-mentioned norm of Article 162 of the Code.

Under the agreement dated March 31, 2013, Aktiv LLC (supplier) undertakes to supply OJSC Passiv (buyer) with stationery in the amount of 500,000 rubles within three working days from the date of signing the agreement. (including VAT - 76,271 rubles. 19 kopecks). The buyer, in turn, undertakes to pay 100% of the cost of the goods within five working days from the date of receipt. If the buyer is late in paying for the goods, the original price is increased by 0.4% of the value of the goods under the contract.

Aktiv LLC delivered the goods on 04/01/2013. The buyer paid for the goods 10 days later than the deadline established by the contract.

In this case, the amount of the penalty will be:

(RUB 500,000 - RUB 76,271.19) × 0.4% = RUB 1,694.92

VAT on the amount of the penalty received is calculated at the calculated rate of 18/118, since the sale of stationery is taxed at the rate of 18%.

The amount of tax due for payment to the budget will be:

1694.92 rub. × 18/118 = 258.55 rub.

In the accounting of Aktiv LLC, the accountant must make the following entries:

DEBIT 51 CREDIT 76

1694.92 rub. — the amount of the penalty has been credited to the current account;

DEBIT 76 CREDIT 91.1

1694.92 rub. — reflects the amount of the penalty due to be received;

DEBIT 91-2 CREDIT 68

RUR 258.55 — VAT payable to the budget has been accrued.

In order to avoid claims from tax authorities, it is necessary to correctly formulate the clause on payment of penalties in the contract. For example, if the text of the contract states that if payment is late, the buyer must pay a fine to the seller, then there is no need to subject it to VAT. If the contract contains, say, a condition that in case of delay the original price increases by 20 percent, then you will have to pay VAT, since the penalty changes the price.

Taking into account the new letter from the Russian Ministry of Finance, companies may be tempted to replace, say, the terms of an agreement on the payment of interest on a commercial loan with a condition on a contractual penalty. However, it should be remembered that this entails tax risks, since, unlike a penalty, the supplier must include the received amount of interest in the VAT tax base. Otherwise, based on the results of the tax audit, the seller will have to pay to the budget not only VAT, but also fines and penalties.

Opinion

Vladimir Voinov, leading lawyer at the Pepeliaev Group law firm

VAT: controversial issues of qualification of penalties

Recently, on the official website of the Federal Tax Service of Russia, in the section “Explanations of the Federal Tax Service, mandatory for application by tax authorities,” a letter from the Ministry of Finance of Russia dated March 4, 2013 No. 03-07-15/6333 was posted. In this letter, officials agree with the position of the Supreme Arbitration Court of the Russian Federation (post. of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 02/05/2008 No. 11144/07) regarding the non-application of Article 162 of the Tax Code to the amount of the penalty received by the taxpayer-seller from the counterparty for late fulfillment of obligations. At the same time, the letter from the Russian Ministry of Finance contains a clause that if the amounts received by the seller from buyers are not essentially a penalty, but in fact relate to an element of pricing, then such amounts increase the VAT base on the basis of subparagraph 2 of paragraph 1 of this article. This approach raises serious doubts about its validity for the following reasons.

First of all, this letter does not indicate the objective criteria that should be used to determine the nature of the payment received. This means that the question of whether the received payment is “essentially” a penalty or whether it “actually relates to an element of pricing” will be decided at the discretion of the tax inspector, that is, arbitrarily. At the same time, it is not clear what should be followed, for example, in order to determine whether the fine established by agreement of the parties to the purchase and sale agreement for late payment of the cost of goods within the agreed period does not actually cover the actual increase in the cost of this unpaid goods after the agreed period . Similarly, there are no guarantees against arbitrary reclassification of penalties established as a percentage for each day of delay in fulfilling a monetary obligation into the amount of interest on a commercial loan. Thus, there is a risk that any penalties that are not subject to VAT due to the legal position of the Supreme Arbitration Court of the Russian Federation will receive a different qualification from the tax authorities in order to include the corresponding amounts in the VAT tax base.

Qualifying a penalty as a “pricing element” may also mean that the parties to the transaction indicated in the contract a reduced price for the goods (work, service) being sold, and the rest of the price is paid under the guise of a penalty. However, the procedure for determining prices for tax purposes is regulated by special rules (Article 40 of the Tax Code of the Russian Federation in tax periods before 2012 and Section V.I of the Tax Code of the Russian Federation, starting from 2012). At the same time, these norms allow for the implementation of price control only for specially specified situations, stipulating that in other cases the prices applied by the parties to the transaction correspond to market prices. Accordingly, tax authorities ignoring these special rules will also cast doubt on the validity of reclassifying the penalty as a “pricing element.”

Penalties for late payment of the VAT base can sometimes be increased. However, there is no need to calculate the tax on penalties in absolutely all cases - you just need to correctly determine what the received penalties actually are. Let's talk about this in our publication.

Violation of the terms of the contract by the counterparty - we receive a penalty

All receipts associated with payments for the supply of products, works or services from the seller must be subject to VAT.

NOTE! This rule applies even in situations where payment is made in the form of financial assistance, contributions to special funds, or to increase future income.

In cases where one of the parties to the contract does not fulfill its obligations, he is required to pay a penalty in accordance with the law in the amount specified in the contract. The recipient of penalties often has a question: “Are penalties subject to VAT or not?”

Circumstances in which contractual sanctions are not subject to VAT

Both buyers and sellers can violate the terms of the contract.

As for buyers, penalties received from the counterparty do not increase their tax base. This point of view is shared by both officials (letter of the Ministry of Finance of Russia dated 04/12/2013 No. 03-07-11/12363, letter of the Federal Tax Service of Russia dated 08/09/2011 No. AS-4-3/12914@), and judges (resolution of the Federal Antimonopoly Service of the Ural District dated 07.11 .2007 No. Ф09-9025/07-С2). This is due to the fact that it is impossible to apply the norms of clause 2 of Art. 153, sub. 2 p. 1 art. 162 of the Tax Code of the Russian Federation.

Now let's talk about penalties received by sellers. In a number of situations, penalties received from buyers for violation of contractual obligations are not included in the base for calculating VAT for sellers. However, this is only fair if such a penalty is punitive in nature and has nothing to do with an increase in the price of the goods supplied (resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 02/05/2008 No. 11144/07, resolution of the Federal Antimonopoly Service of the Moscow Region dated 04/25/2012 No. F05-3330/12 in the case No. A40-71490/2011).

When is VAT obligatory calculated on the amount of penalties?

Until recently, representatives of the tax and financial departments spoke unequivocally about penalties received by the seller for violating contractual terms. That is, if sanctions were accrued under a contract for the supply of goods, then the penalties received from sellers were required to be included in the VAT tax base.

However, later officials changed their position and, based on the Resolution of the Presidium of the Supreme Arbitration Court No. 11144/07, already indicated by us, they concluded: sellers received late fees are subject to VAT if they represent a hidden element of pricing (letter of the Ministry of Finance of Russia dated August 19, 2013 No. 03- 07-11/33756).

Until the recent past, and sometimes even now, many issues regarding the taxation of penalties with value added tax are the subject of litigation. The courts have often supported and continue to support taxpayers in disputes with tax authorities.

Having received penalties from a counterparty for violating the terms of the contract, you must first understand what they are: a measure of liability or an element of pricing - there are many situations, and for each you must make your own decision. And based on the decision made, taxpayers need to determine the amount of VAT to be paid.