In the current economic conditions, a bank guarantee remains one of the most popular services of financial organizations. It is used as an instrument of insurance of risks that are possible in the event of a counterparty's refusal to fulfill its obligations. In practice, there are often difficulties with tax and accounting of bank guarantees. The article will deal with the nuances of information reflection.
General information
A bank guarantee agreement can be concluded by an insurance (credit) organization for any required amount and for almost any period, not only with a legal entity, but also with an individual entrepreneur. As established in paragraph 1 of Art. 369 of the Tax Code, it ensures the fulfillment by the principal of an obligation to the beneficiary. Simply put, a bank guarantee is a guarantee to the creditor. The Bank guarantees that the company applying for the guarantee will fulfill the obligation.
Financial organization, in accordance with the provisions of Art. 368 of the Tax Code, acting as a guarantor, at the request of the principal (client) issues a written obligation to pay the beneficiary (creditor) the amount of money agreed in the contract if the latter submits the corresponding written request.
As established by paragraph 2 of Art. 369 of the Tax Code, the principal undertakes to pay a guarantee to the guarantor.
In some cases, a guarantee of a financial institution is mandatory:
- for the conclusion of state contracts;
- in the execution of government orders;
- to participate in tenders, contests, tenders, etc.
the issuance of guarantees is one of the banking operations on the basis of clause 8, part 1, article 5 Federal Law No. 395-1.
VAT
Based on the provisions of sub. 3 p. 3 Art. 149 of the Tax Code, transactions with:
- issue and cancellation of a guarantee;
- confirmation and change of its conditions;
- making a guarantee payment;
- paperwork and verification of documents.
Consequently, VAT on the amount of commission (remuneration) by the guaranteeing bank is not presented to the principal.
The issue of guarantees provided by insurance companies is differently addressed. In this case, the fee is subject to VAT. The principal is entitled to deduct the “incoming” tax from the commission to the guarantor when fulfilling the conditions enshrined in Clause 1, Article 172 Tax Code.
How is the bank guarantee reflected in the accounting of the principal?
The first financial transaction is the payment of a fee to the guarantor. To show the commission for a bank guarantee, the following entries are made in accounting:
- Dt 76 Kt 51 - payment of the commission of a financial organization.
- Dt 91 Kt 76 - the remuneration is charged to expenses.
Reflection of a bank guarantee in accounting is carried out in accordance with its intended purpose. In most cases, it provides repayment of principal debt arising from the acquisition of any assets (fixed assets, for example).
In this situation, when accounting for a bank guarantee in accounting, the principal draws up a posting that reflects the fact of the purchase of the object for which it is provided, and at the same time the inclusion of remuneration in the cost of:
Dt 08 (01, 10, 41, 07, etc.) Kt 76.
The receipt of the object is reflected in the entry:
Dt 08 (10, 41, etc.) Kt 60 - in an amount equal to the cost.
When placed on the balance, account 01 is debited. The initial amount reflects the value of the object and the size of the commission.
If the principal himself does not pay the beneficiary, the bank does it for him and sets a claim for compensation of costs. To reflect the acceptance of this requirement, a posting is made:
Dt 60 Ct 76.
Repayment of debt to the bank is recorded as:
Dt 76 Ct 51.
How to reflect a bank guarantee in the accounting of the beneficiary?
The creditor, as a rule, is neither authorized nor obligated participant in legal relations with the principal. The fact is that the calculations that can be made between them are regulated by a separate agreement. At the same time, the creditor acts as a beneficiary under an independent guarantee, since the bank has an obligation to it until the end of all settlements. These features make it necessary to partially apply off-balance sheet accounting. How to take into account bank guarantees on off-balance accounts? Let's get it right.
If a guarantee is applied, the following transactions are made:
- Dt. 008 - the amount is reflected in the amount of the principal’s obligation secured by the bank (upon receipt of an independent guarantee, the original of which is provided to the beneficiary);
- Dt. 62 ctch 90 - shows the principal debt amount;
- Dt. 90 ctch 41 - write off from the balance sheet of the asset transferred to the principal.
If the customer does not pay for the delivery of the asset, a bank guarantee is applied. In accounting, the amount received is reflected as follows:
- Dt. 76 ctch 62 - the obligation to pay in favor of the beneficiary is transferred to the bank;
- Dt. 51 ctch 76 - receipt of payment from the bank;
- Ct 008 - The use of the warranty is completed.
How to reflect information in case of cancellation of warranty?
Consider a situation where the guarantee of a banking organization is not applied in practice, i.e., is written off. In this case, the beneficiary will post:
- Dt. 62 ctch 90 - income from sales of products (in an amount equal to the selling price);
- Dt. 90 ctch 41 - reflects the cost of goods sold;
- Dt. 008 - receipt of a guarantee;
- Dt. 51 ctch 62 - receipt of payment from the principal (in the amount of the selling price of the product);
- Ct 008 - cancellation of a guarantee in connection with the principal's fulfillment of his obligations under the contract.
With the accounting of a bank guarantee, the principal and the beneficiary are more or less clear. What records will the guarantor form? About it below.
Bank Postings
There are a number of features that need to be taken into account when considering bank guarantees. Special accounts are provided for in accounting (approved by the regulation of the Central Bank No. 579-P of 2017). The following transactions are considered the most typical:
- Dt. 99998 Ct 91315 - issuance of a guarantee by a bank (in the amount of a secured obligation);
- Dt. 47423 Ct 70601 - receipt of remuneration from the principal (in the amount of the commission);
- Dt. 70606 Ct 47425 - reserves are created for payment to the beneficiary, if necessary (in the amount of the secured obligation).
Nuances
If a guarantee in the form of a deposit is a condition for providing a guarantee, when accounting for a bank guarantee in accounting, the corresponding principal account is debited and the passive account is credited, summarizing data on income from customers (for example, 43001).
When a guarantee is written off due to legislation, the following is formed:
Dt. 91315 Ct 99998.
At the same time, the size of the reserve decreases:
Dt. 47425 Ct 70601.
If the principal does not repay the debt to the beneficiary, a financial institution does this for him. This is how a bank guarantee appears in accounting. Accounting is carried out by forming the following transactions:
Dt. 60315 CT account of the beneficiary;
Dt. 91315 Ct 99998 - write-off of payment.
In a similar way, the provision is reduced by using the correspondence of the accounts. At the same time, a new reserve is created to cover possible losses in the amount of the upcoming recovery from the principal:
Dt. 70606 Ct 60324.
Additionally
In addition to the above postings, when accounting for a bank guarantee in accounting, the following entries are generated:
- Dt 99998 Kt 91312 - reimbursement of expenses of a financial institution from a previously credited deposit.
- Dt 60324 Kt 70601 - reduction in the size of the reserve in connection with a partial reimbursement of bank costs.
- Dt account principal CT 60315 - reimbursement of the balance of the costs of the bank principal.
- Dt 60324 Kt 70601 - reduction in the size of the reserve.
The nuances of taxation
The tax and accounting of a bank guarantee has significant differences. We have already said above that VAT on operations related to the use of bank collateral is not charged. Of course, this rule does not apply to the calculation of tax on goods supplied by the beneficiary, if this is established by law (under OSS, for example) or by contract.
The beneficiary relates the payment received to repay the obligation as income as if the payment for the assets would be made without bank guarantee, that is, as proceeds from the sale.
The principal may choose where to include the expenses arising from interaction with a banking organization. In this case, of course, he must take into account the characteristics of the asset being provided and the content of legal relations with the beneficiary, which have been established on the merits. The principal may include costs in other or non-operating expenses.
Please note that regardless of the option chosen, costs must be recognized evenly throughout the warranty period. The corresponding provision is enshrined in the letter of the Ministry of Finance from 01/11/2011.
Commission accounting for an even distribution of costs
With this approach, the following transactions are generated:
- Dt. 97 ctch 76 - the inclusion of the guarantor's remuneration in the expenses of the coming periods after the guarantee is issued;
- Dt. 76 ctch 51 - transfer of commission to the bank;
- Dt. 91.2 Ct 97 - write-off of part of the remuneration by agreement or on a schedule (calculated in proportion to the duration of the guarantee).
Important points
Please note that the procedure for the deduction of commission to the bank - in equal parts or in one payment - is fixed in the accounting policy. The corresponding requirement follows from the provisions of PBU 1/2008.
The key criterion for choosing an even distribution of costs is the dynamics of revenues associated with the corresponding costs. If income is distributed over several reporting periods, then expenses should be shown in the accounting synchronously.
When choosing an approach, you should focus on the characteristics of assets. If the supplies of materials and raw materials are carried out sequentially, then an even distribution of costs will be more justified.
Accounting by industry
It should be noted that a lot of things when choosing an approach to reflect expenses depend on the economic sector in which the principal works. So, as a sub-type of costs for the coming periods, there are costs for future work that construction companies can recognize. When applying the method of uniform distribution of costs described above, the following transactions are formed:
- Dt. 97 ctch 76 - accounting of the commission as part of deferred expenses;
- Dt. 20 ctw 97 - part of the remuneration established by the contract or payment schedule relates to the cost of the construction project.
When transferring a commission for a bank guarantee to expenses, debit entries may be different. It depends on the type of specific business transaction. For example, in the postings will apply. 23, if the asset is placed in auxiliary production.
Rental relationship
Separately, it is necessary to consider a situation where the principal first clearly and under the contract paid for all deliveries of the beneficiary, but then one day he suddenly stopped doing this (while the guarantee continued to work). Such cases are common when renting commercial real estate.
Payments when the object is transferred for on-going use, made on time, are recorded as Dt. 26 ctch 76 in accordance with the frequency of deductions (for example, once a month).
It is advisable to carry out the accounting of the commission in tax accounting:
- Until the violation of the terms of the rental payment - by simultaneously debiting the commission with payments (monthly, for example).
- After the suspension of payments (and the application of the guarantee as a result of this) - by writing off the balance of the commission to expenses.
In accounting, the same posting is used as for rent, and the commission is written off as a lump sum right after applying the guarantee.
Conclusion
Accounting of bank guarantees in budgetary institutions is carried out on off-balance accounts. This is due to the fact that the guarantee does not come to the customer’s account, but is held by the credit institution during the entire time the state contract is executed.
The transaction is reflected as indicated in the table below.
Operation | Account balance | Amount |
Obtaining a guarantee for securing obligations under the state contract | 10 | With a "+" sign |
Write off guarantee | 10 | With a "-" sign. |
The reason for the cancellation is the fact that the contractor complied with the contract, violation of the agreement or termination of the contract in the manner prescribed by law.
Please note: if secured in a pledge form, implemented within the framework of the provisions of Art. 96 44-, it is not allowed to reflect cash receipts on the off-balance sheet account. 10.