Are marketing services subject to VAT? We will deal with this issue in more detail. Marketing costs are always of interest to tax officials. The taxpayer has to prove the validity of such expenses to the tax authorities, as well as confirm them with documents.
What is marketing?
Marketing (from the English "market", that is, "market") is an economic term that is not defined neither in tax, nor in civil, nor in accounting legislation. This means that for the legal regulation of this concept in each case, an analysis of the content invested in it is required.
Marketing in the classical sense is an entrepreneurial activity that controls the promotion of various services and goods to the consumer from the manufacturer.
Most often, this concept refers to activities aimed at studying the current state of the market, identifying its tendencies for further change, which allows us to develop the most optimal business strategy. Is it always necessary to pay VAT on marketing services?
Legal nature of the agreement
Relations based on a contract for the provision of marketing services are governed by the provisions of Chapter 39 of the Civil Code of the Russian Federation "Provision of services." Such an agreement is bilateral in nature. The parties to the contract are the customer and the contractor. Both individuals and legal entities are able to be parties to the contract in the event that another is not provided for at the legislative level or does not follow from the specifics of the service.
The contractor’s obligation under the contract of marketing services includes certain actions based on the technical task of the customer, and he, in turn, must pay for the results of the work performed.
When is a contract considered concluded?
The contract will be concluded upon listing in it specific actions that the contractor undertakes to perform, or a specific activity is indicated. The cost of marketing services will be discussed below.
When such services are provided, that is, certain actions are performed that are provided for by the contract, there is no materialized result.
But if civil legislation does not require fixing the result when rendering marketing services, since this is not part of the list of conditions of the service agreement (or it is necessary to conclude a work contract otherwise), from the point of view of tax legislation, a document is required that fixes them rendering. VAT marketing services are taxed.
Types of Marketing Services
The All-Russian Classifier of Types of Economic Activities does not contain such terms as “marketing research” and “rendering marketing services”. Instead, the concepts of “public opinion polling activity” and “market research” are used. Under market research, it is possible to carry out such procedures as:
- determination of the nature and size of the market;
- analysis of factors that influence market development;
- determination of the level of market saturation, etc .;
- calculation of potential and real market capacity;
- establishing the specifics of the analysis of the regional and product market;
- market segmentation and identification of consumer types according to their main characteristics, such as gender, age, profession, income level, social status, objective need for a particular product, place of residence, etc .;
- analysis of external incentives affecting market development;
- the presence of wholesale and retail trade enterprises, as well as the availability of auxiliary and warehouse retail premises, etc .;
- the study of the strength of the commodity-conducting (trade) network that serves this market.
It is worth noting that the term “marketing research” is used in the documents of the State Statistics Committee of Russia.
What is the amount of VAT for marketing services?
According to Art. 164 of the Tax Code of the Russian Federation, a VAT rate of 18% is established for services throughout the country. There are, however, exceptions to this rule. We will talk about them below.
Tax accounting
In accordance with Art. 252 p. 1 of the Tax Code of the Russian Federation, any documents that confirm expenses must be executed in accordance with the legislative norms of the Russian Federation (tax, accounting, civil, etc.).
It must be remembered that the recognition of transactions in accounting, depending on one of their economic content, may not necessarily coincide with the recognition of the same operations in tax accounting, since for the latter both the economic content and the legal form are equally important.
Thus, the legal form of a transaction in tax accounting is necessarily associated with its economic content, and only on the basis of an integrated assessment will a decision be made on the use of one or another option. In this regard, the tax consequences of agreements on the provision of marketing services are determined directly by how the transaction is executed.
In Art. 264 subparagraph 27 of the Tax Code of the Russian Federation provides that the costs of the current research (study) of the market conditions, the collection of various information that is directly related to the sale and production of goods, services, works, are recorded as other expenses associated with the sale and / or production, if the requirement is met Art. 252 p. 1 of this Code. IP marketing services also provides. They are payers of value added tax, but only on the basic basis.
The norm of the code mentioned above shows that such terms as “marketing research” and “marketing services” are not used in the Tax Code of the Russian Federation. Art. 11, paragraph 1 of the Tax Code of the Russian Federation also emphasizes that the terms, concepts and institutions of the family, civil and other legislative branches of the Russian Federation that are used in this code operate in the sense in which they are used in these sectors of the law, unless otherwise provided in the Tax Code .
What type of contract to choose?
In this regard, it is recommended to indicate in this case the type of contract not as an agreement on the provision of marketing services, but in the form of an agreement on the provision of services for the current research (study) of the market situation. In any case, VAT is charged on marketing services.
Such an agreement requires maximum detail of the subject of this agreement and its wording in such a way that the terminology that operates in the text corresponds verbatim to certain norms of the Tax Code of the Russian Federation. How are marketing services taxed?
In tax accounting, the recognition of expenses for the current market research, the collection of information directly related to the implementation and production of services, works and goods does not depend directly on the presence in the structure of the institution of the relevant services (marketing department) or officials who perform the corresponding functional duties.
However, it should be borne in mind that when duplicating the functions of their marketing department, as well as the activities of a third-party who works with this organization on the basis of an agreement, the principle of rationality is not respected. This means that if there is no job obligation for the employees of the marketing department (or another department), which implies market research, as well as the collection of necessary information directly related to the implementation and production of services, works and goods performed by a third-party organization, you can pay for its services with costs, included in the cost of sales for the purpose of calculating income tax.
So, the costs of the current research (study) of the market conditions, as well as the collection of information that are directly related to the sale and production of services, works and goods, if they are related to the current activities of the organization, reduce the taxable profit of this tax reporting period. They relate to expenses of an indirect nature, and they are written off in full to reduce the tax base in the tax reporting period in which they were located.
VAT on marketing services to non-residents
If a resident transfers money to a non-resident for the services rendered, and the place of sale of the rendered services is the territory of the Russian Federation, then the resident must pay VAT to the country's budget at the same time as payment.
The procedure for determining the place of sale of services is established by the Tax Code of the Russian Federation. Confirmation of the transaction is an agreement and an act certifying the fact of the provision of the service. And although the VAT payer is a foreign legal entity, the tax base is determined by the tax agent, which is considered the resident. That is, the Russian organization has an obligation to calculate, withhold and pay tax in an appropriate amount.
The amount of VAT must be transferred to the budget at the same time as payment to a foreign partner. The control over the payment of VAT should be carried out by the currency control of the bank. An order from a tax agent to transfer funds in favor of a non-resident for services under the contract will not be accepted if the tax agent is also not submitted to the bank by the tax agent. Are such services always subject to VAT?
However, Russia is not always the place where services are sold. It is in this case that the resident has no obligation to pay VAT to the budget of the Russian Federation, but at the same time he needs to provide an explanatory letter to the bank’s currency control.
Cost of marketing services
The cost of such services is calculated individually for each customer and consists of the corresponding list of services. Most often, the entire amount of work consists of a number of components, evaluated on the basis of the following factors:
- the cost of the consultant's time
- indicative prices and terms for certain types of work;
- the cost of the work of persons who are additionally employed if necessary.
Specific numbers
For example, a study of customers on a quantitative basis can be carried out for about two or two and a half months and have a cost in the range from 5000 to 15000 y. e., which is determined by the selected configuration - the volume of the questionnaire (from twenty to one hundred questions), the number of samples (from 30 to 1500 subjects), the complexity of processing, etc. An internal marketing audit can be carried out with less effort in one to two months and cost from two to five thousand. Of course, the final figures will depend on the volume and list of works.
