VAT on advances received: transactions, examples

When transferring amounts for future deliveries, the seller must invoice. The buyer can deduct the tax without waiting for the sale. This amendment to the Code was created to reduce the tax burden. How is VAT deducted from advances received in practice?

Interconnection

Upon receipt of prepayment in full or in part for future deliveries, the business entity is required to calculate VAT and issue an invoice. This tax amount is then deductible based on the respective shipments. Next, it will be examined in detail how VAT is offset from advances received from the client.

Billing is limited to five days. Exceptions are cases when the shipment was made during the specified period. But what about the buyer who transfers the funds at the end of the current period, if the seller does not invoice? According to the interpretation of the arbitration court, “payment in advance” may be a payment received in the same period in which the sale of the goods took place . In addition, for failure to fulfill an obligation (billing), according to Art. 120 NK, a company may be held liable:

• 5 thousand rubles if the violation was within one period;
• 15 thousand rubles - in several periods;
• 10% of the amount (minimum 15 thousand rubles), if the tax base was underestimated.

In the case of long-term deliveries (oil, gas, etc.), invoices can be drawn up at least once a month. The document must be executed in the same period in which the prepayment was made.

Billing

The document must indicate:

• name, address, TIN of the parties to the transaction;
• number and date;
• name of goods;
• prepayment amount;
• tax rate;
• amount of VAT.

In case of prepayment, the tax rate should be indicated in the invoice as a percentage of the base. According to these data , VAT is then recorded from advances received. As for the name, then in the invoice it is possible to indicate the name of the product groups without detailed decoding.

Decor

1. Prepayment is made by agreement, the buyer wants to take into account VAT on advances received.

In this case, you need to monitor the status of mutual settlements, clearly determine whether a particular payment belongs to the delivery. It is also worth asking the buyer to indicate the amount of prepayment in the comments on the receipt. Such control is required since:

• The invoice is independently generated by the client in 1C, issued and printed in 2 copies.
• The amount of the advance payment is calculated on the basis of the data of the document “Debt repayment”. If the calculation method is set to “Automatic”, the difference will be calculated based on the balances 62.01. After closing all debts, the balance will be carried forward to 62.02. This amount will be displayed in the invoice. Therefore, before registering a document, you need to make sure the relevance of the information presented in the database.

2. The invoice was issued in only one copy.

The document “Registration of invoices for advance payment” is created, which automatically generates balances for all not closed prepayments. This method has its limitations. Before registering a document, you need to make sure that:

• the sequence of calculations is relevant;
• There are no duplicate contractors and contracts;
• balances of debts are displayed on account 62.01;
• balance on advances - at 62.02;
• no closed balances on account 62.02 ;
• in case of changes in mutual settlements, you must overwrite the document.
  

VAT calculation

The process algorithm has not changed. The base is determined either on the day of shipment, or at the time of payment. The seller must pay tax on the transferred amounts, and the buyer - VAT on advances received.

Example. An advance payment in the amount of 118 thousand rubles was received on the account of LLC 05.15. (including tax - 18%). The organization shipped 25.05 in the amount of 85 thousand rubles. In the accounting of the enterprise, this operation will be reflected as follows:

05/15:

• DT 51 KT 62 - reflected prepayment (118 thousand rubles);
• DT 76 KT 68 - 18 thousand rubles - VAT on advances received. Postings are formed on the basis of the account from 05.15.

If it takes a long time between the payment of funds and the presentation of VAT, then the transaction can be completed with the following transaction:

DT 19 KT TS (Technical account of accounting for settlements with contractors) - 18 thousand rubles.

DT 68 KT 19 (presentation of VAT deductible) - 18 thousand rubles.

In reporting, the debt of the supplier is reflected in full. VAT appears in tax accounts.

05/25:

• DT 90 KT 41 - the cost of goods sold (85,000);
• DT 62 KT 90 - income from sales (118 000);
• DT 90 KT 68 - accounting for tax on revenue (18 000);
• DT 68 KT 76 - VAT deduction from advances received (18 000);
• DT 62 “Prepayments” KT 62 “Settlements with customers” - prepayment (118 000).

Here's how the calculation of VAT on advances received.

Buyer tax

At the client who transferred the prepayment to the account of deliveries, the tax amounts presented by the seller on the basis of the following documents are deductible:

• bills
• payment cards confirming the transfer of funds;
• contract.

Let's consider them in more detail. The Ministry of Finance does not provide for a special form of invoices used in relation to prepayment. Therefore, you can apply a standard sample document. If there is a condition on the transfer of money in the contract without indicating the exact amount, then the tax calculated on the basis of the figures indicated in the invoice issued by the seller is deductible. If such a clause is absent at all, then tax cannot be compensated.

VAT deduction from advances received

The Tax Code provides for the right of a taxpayer to compensate for the amounts paid. If the company uses it in relation to deductions for capitalized goods, the tax amount will not be underestimated.

VAT recovery from advances received occurs in the case of transfer of funds by the buyer against future deliveries. You can compensate for the tax in one of these periods:

• when the amount of tax on acquired work is deductible;
• if the conditions have changed, the contract was terminated or the prepayment amount was refunded.

VAT on advances received will be restored to the amount in which it was previously accepted. Here it is worth paying attention to such a moment. The refund of the received VAT advance, which was accepted at 100% prepayment for deliveries made by individual parties, occurs in the amount corresponding to the amount of tax indicated in the invoices. In the invoices themselves, the prepayment amount should not be allocated as a separate item.

Example

We take the conditions from the previous problem. May 15, the buyer transferred an advance payment in the amount of 118,000 rubles to the seller’s account. May 25, the seller shipped the goods on account of funds received in the amount of 100 thousand rubles. The process of generating VAT from advances received, transaction processing postings are presented below.

05/15:

• DT 60 CT 51 - transfer of advance payment (118 000);
• DT 68 KT 76 - reflection of the amount of tax (18 000).

05/25:

• DT 41 (19) KT 60 - the goods were capitalized (100,000) and the tax amount (18,000) was reflected;
• DT 68 KT 19 - accepted for deduction of VAT (18 000);
• DT 76 KT 68 - the tax is restored (18,000);
• DT 60 "Settlements with suppliers" KT 60 "Prepayments" - 118 000 - the advance is set off.

It is very important to correctly calculate the amount of taxes payable to the budget. Based on these data, a VAT return is generated. Advances received, transferred and accrued on them of the amount of tax directly depend on the accuracy of the calculation of receivables (DZ) and accounts payable (KZ) debt.

Description of the subject matter

Accounts receivable for the amounts paid for the purchase of goods are reflected in the balance sheet in the amount of actually transferred funds. Prior to tax deduction, these figures are shown as a current asset. Such debt shows the right of the enterprise to receive the intended objects in the appropriate quantity, quality and the necessary configuration. Refunds can only be made if the contract is terminated prematurely, the supplier is unable to fulfill obligations and other similar circumstances. But in a worse situation, an enterprise may receive not only previously paid amounts, but also compensation. Therefore, in the BU, the assessment of the remote sensing should not reflect the amount of costs, but the cost of the purchased equipment when it is capitalized. This figure corresponds to the amount of prepayment without VAT on advances received.

Tasks

Consider a few more examples of tax calculation.

1. Supply of goods in the amount of 118,000, including VAT.

• DT 08 (19) CT 60 - materials received (100,000) and the account of the supplier (18,000) was taken into account;
• DT TS (technical account for mutual settlements with counterparties) KT 68 - VAT restored (18,000);
• DT 68 KT 19 - the tax is accepted for deduction (18 000).

2. Reflection of an advance issued without accepting the right to deduct VAT.

From the side of the buyer:

• DT 60 CT 51 - advance payment paid (118,000);
• 19 - accepted for VAT (18 000).

From the seller:

• DT 08 (19) CT 60 - equipment received (100,000) and the seller’s account (18,000) was received;
• 19 - tax amount has been restored (18 000);
• DT 68 KT 19 - tax deducted (18,000).

Another option for processing operations.

At the seller:

• DT 51 CT 62 - prepayment received - 118,000;
• 68 - tax is charged - 18,000.

At the buyer:

• DT 62 KT 90 - sales of products (if 62 is used as a technical account, the record is formed in the amount of one hundred thousand rubles) - 118,000.
• DT 90 KT 68 - reflects the amount of tax on products sold (posting is not created if 62 accounts appear) - 18,000;
• 68 - tax amount is restored (no posting is created if 62 accounts appear) - 18,000.

Reconciliation

Acts may indicate amounts both with and without tax. It is better to indicate both numbers. Actual debt is non-monetary, that is, it does not include taxes. But when offsetting an advance or having complex settlements under contracts, the VAT figures can be used in calculating the total debt.

Exceptions

The legislation provides for cases when the calculation and payment of VAT on advances received is not provided:

• for goods that were sold outside of Russia;
• for work taxed at a rate of 0%;
• for services for which tax is not charged at all;
• if the company does not pay VAT at all;
• if the duration of the production cycle exceeds six months (the list of such goods is approved by Decree No. 468).

In order not to charge pre-tax for works with a long production cycle, you need to submit, together with the declaration, a tax copy of the contract with the buyer, a document confirming the features of the process.

The company can take advantage of the privilege if the accountant keeps separate records of operations with a long production cycle, the amount of VAT on the materials that are involved in this process. These requirements are established by the Tax Code.

If these conditions are not met, advance tax is charged on a common basis. Deferment is not granted. If the seller accrued VAT in one quarter, and provided documents for the exemption in another, he cannot reduce the tax base, change the bill or submit a “clarification”. The procedure for conducting complex accounting is not legally prescribed. Therefore, it is governed by the internal policies of the organization.

The disadvantage of this scheme is as follows: the amount of VAT on goods purchased for long-term production, the organization can take into account only on the day of sales. If the company received an advance without paying tax, then it will not work to refund VAT from the budget until the products are sold. Therefore, before using the benefit, you need to evaluate the economic benefits of the operation.

Conclusion

Upon receipt of prepayment for future deliveries, the buyer must invoice and charge VAT. According to the results of shipments, these amounts are deductible. The correct calculation of the amounts depends on the correct assessment of receivables and payables. The main rule is that in the balance sheet the amounts paid for the goods must be displayed separately from the tax. In addition, the deduction of VAT on advances received is the buyer's right and not an obligation. Amounts are calculated based on bills. And if the seller provides the invoice late, he will be fined in the amount of 5 to 15 thousand rubles. This is prescribed in the Tax Code of the Russian Federation.