Is there any provision for reimbursement of travel expenses for persons providing services under a GPC agreement?

Practice shows that, in addition to paying for the work itself, contractors often require the customer to reimburse them for expenses incurred during the execution of the contract. As a rule, we are talking about the travel and accommodation costs of the contractor’s or performer’s employees who work on the customer’s premises. This is not prohibited by law, but in order to eliminate the negative consequences of such actions for both parties, it is important to correctly draw up an agreement and determine its price. Otherwise, both the customer and the contractor may “suffer” from taxation.

Basic provisions

In many cases, the reimbursable expenses that the contractor insists on are expenses associated with the travel of its employees.
In this regard, the question arises: can the customer compensate for the travel expenses of the contractor organization without prejudice to himself? Let us answer right away that the obligation for such compensation in accordance with the Labor Code of the Russian Federation (hereinafter referred to as the Labor Code of the Russian Federation) does not arise, since labor legislation provides for compensation for travel and accommodation expenses only for “our” employees sent on a business trip (Articles 166, 168 Labor Code of the Russian Federation). Therefore, if an organization, as the receiving party, compensates for travel and accommodation of “foreign” employees, including foreign organizations, then this compensation is the right of this organization, and not an obligation.

According to Art. 247 of the Tax Code of the Russian Federation, the object of taxation for corporate income tax is the profit received by the taxpayer. At the same time, for the purposes of applying Chapter 25 of the Tax Code of the Russian Federation, income received, reduced by the amount of expenses incurred, is recognized as profit for Russian organizations that are not members of a consolidated group of taxpayers.

In accordance with paragraph 1 of Art. 252 of the Tax Code of the Russian Federation, the taxpayer reduces the income received by the amount of expenses incurred (except for the expenses specified in Article 270 of the Tax Code of the Russian Federation).

Expenses are recognized as justified and documented expenses (and in cases provided for in Article 265 of the Tax Code of the Russian Federation, losses) incurred (incurred) by the taxpayer.

Justified expenses mean economically justified expenses, the assessment of which is expressed in monetary form.

Documented costs are those supported by documents:

issued in accordance with the legislation of the Russian Federation; executed in accordance with business customs applied in the foreign country in whose territory the relevant expenses were incurred; indirectly confirming the expenses incurred (including a customs declaration, business trip order, travel documents, report on work performed in accordance with the contract).

Any expenses are recognized as expenses, provided that they are incurred to carry out activities aimed at generating income.

Thus, when including certain costs as expenses in order to determine the tax base for corporate income tax, their economic justification, direct relationship with activities aimed at generating profit, and their documentary evidence are of decisive importance.

In accordance with Art. 91 of the Labor Code, a business trip is recognized as a trip by an employee, by order of the employer, for a certain period of time to another location to perform a task outside the place of his permanent work.

In accordance with Art. 95 of the Labor Code, during a business trip, the employee retains his place of work (position) and salary for working days of the week according to the schedule of his permanent place of work, and is also subject to other guarantees provided for by the Labor Code.

In accordance with Art. 6 of the Labor Code does not apply to persons working in an organization under a contract. The relationship between citizens and organizations in this case is regulated by the norms of civil law. Therefore, individuals working under a contract are not allowed to be sent on business trips, even if this trip is caused by the production needs of the organization.

In administrative documents for business trips, individuals working under a contract are not indicated and they are not issued a travel certificate.

For reference: The contract must be concluded only in writing, for failure to comply with the written form of civil contracts for the performance of work, provision of services, the absence in these contracts of the conditions established by law in accordance with Art. 9.25 of the Administrative Code, administrative liability in the form of a fine is applied to the organization.

What to do in such a situation? When concluding a civil contract, in addition to the essential conditions provided for in Decree No. 314, it is necessary to include a condition on the possibility of travel to perform certain work or provide services. It is still advisable to discuss this point at the stage of concluding the contract. Since the absence of this condition in the future may lead to the legal refusal of an individual to travel.

For reference:

In accordance with Decree No. 314, the essential terms of the contract are:

— the procedure for calculating the parties and the amounts to be paid;

— the customer’s obligation to pay for persons performing work under a contract, mandatory insurance contributions to the Social Security Fund, as well as to pay insurance premiums for compulsory insurance against industrial accidents and occupational diseases, if such work is carried out in places provided by the customer;

— obligations of the parties to ensure safe working conditions and liability for non-compliance;

— grounds for early termination of the contract;

— liability for failure by the customer to fulfill payment obligations in the form of a penalty in the amount of at least 0.15% of the unpaid amount for each day of delay.

Example

In the contract for the provision of interpreter services with the individual Ivanov P.T. the place where the work will be performed is indicated: Minsk, st. Kozlova 4 of. X. In this case, the citizen’s refusal to travel not only outside the city of Minsk, but also in the city of Minsk will be legal.

In accordance with Art. 663 of the Civil Code, the cost in a work contract is considered fixed unless it states that it is approximate. If a citizen is expected to travel, then it is possible to indicate the approximate cost in the contract, while disclosing the procedure for compensation for the trip (it can be established either as a percentage of the contract amount, or in a fixed amount, or in another way). If the customer, for example, decides to reimburse travel expenses to and from the destination and for accommodation on the basis of supporting documents, then this is the condition that should be included in the contract. In cases of loss of documents, the customer has the right to reasonably not reimburse the cost of these expenses.

The provision for reimbursement of travel expenses may, according to the contract, not be included in the total amount of remuneration, but be compensated in excess of the amount of remuneration. In this case, this must be reflected in the contract.

All payments to an individual under a contract will be subject to income tax calculation. As a tax agent, the organization must remember to withhold income tax from the amount of the advance payment.

The procedure for calculating contributions to the Social Security Fund and Belgosstrakh for payments under a contract will depend, in contrast to income tax, on the option of reimbursement of travel expenses for an individual, whether they will be reimbursed in the amount of remuneration or whether it will be a separate compensation for expenses in excess of the amount of remuneration.

Thus, if travel expenses are compensated in excess of the stipulated remuneration amount in accordance with the contract and they are documented, then contributions to the Social Security Fund and Belgosstrakh will be accrued only on the remuneration amount paid, which is more preferable for enterprises in order to save money on insurance premiums.

At the same time, in the act of completed work, the amount must be indicated in accordance with the contract; if reimbursement of travel expenses is separately allocated, then it should also be shown in the act as a separate line and amount.

Thus, a business trip is an element of labor relations, and for civil law relations, in particular. for a work contract, this is part of the task under the contract, but not a business trip, although it is often called that in everyday life. And this should be taken into account when concluding a contract.

Decree of the President of the Republic of Belarus dated July 6, 2005 N 314 “On some measures to protect the rights of citizens performing work under civil and labor contracts” (Decree No. 314)

Resolution of the Council of Ministers of the Republic of Belarus dated October 10, 2003 N 1297 “On approval of the Regulations on the procedure for paying insurance premiums to the insurer for compulsory insurance against industrial accidents and occupational diseases” (clause 2)

Law of the Republic of Belarus dated February 29, 1996 N 138-XIII “On compulsory insurance contributions to the budget of the state extra-budgetary fund for social protection of the population of the Republic of Belarus” (Article 2)

Code of the Republic of Belarus dated April 21, 2003 N 194-Z “Code of the Republic of Belarus on Administrative Offences”

Best regards, Consulting

03.02.2020

Expenses for business trips of one’s own and “other people’s” employees

Based on clauses
12 clause 1 art. 264 of the Tax Code of the Russian Federation, other expenses associated with production and sales include expenses for business trips, in particular: for the employee’s travel to the place of business trip and back to the place of permanent work; for the rental of residential premises, while the employee’s expenses for paying for additional services provided in hotels are also subject to reimbursement (with the exception of expenses for service in bars and restaurants, in the room, expenses for the use of recreational and health facilities); daily allowance or field allowance; registration and issuance of visas, passports, vouchers, invitations and other similar documents; consular, airfield fees, fees for the right of entry, passage, transit of automobile and other transport, for the use of sea canals, other similar structures and other similar payments and fees.

We note that according to Art. 166 of the Labor Code of the Russian Federation, a business trip is a trip by an employee by order of the employer for a certain period of time to carry out an official assignment outside the place of permanent work. Business trips of employees whose permanent work is carried out on the road or has a traveling nature are not recognized as business trips.

According to Art. 16 of the Labor Code of the Russian Federation, labor relations arise between an employee and an employer on the basis of an employment contract concluded by them in accordance with the Labor Code of the Russian Federation.

Article 56 of the Labor Code of the Russian Federation establishes that an employment contract is an agreement between an employer and an employee, according to which the employer undertakes to provide the employee with work for a specified labor function, to provide working conditions provided for by labor legislation and other regulatory legal acts containing labor law norms, a collective agreement , agreements, local regulations and this agreement, pay the employee wages in a timely manner and in full, and the employee undertakes to personally perform the labor function determined by this agreement in the interests, under the management and control of the employer, to comply with the internal labor regulations in force for this employer.

Thus, only employees of an organization who have an employment relationship with it can go on a business trip. This is also confirmed by the norm of clause 2 of the Regulations on the specifics of sending workers on business trips, approved by Decree of the Government of the Russian Federation of October 13, 2008 No. 749.

Consequently, an organization does not have the right to take into account the costs of paying compensation for travel and accommodation expenses of “foreign” employees as expenses when calculating corporate income tax as travel expenses. A similar conclusion is contained in the letter of the Ministry of Finance of Russia dated October 16, 2007 No. 03-03-06/1/723, which explains that in accordance with the provisions of Art. 166–168 Labor Code of the Russian Federation and Art. 255 of the Tax Code of the Russian Federation, a Russian organization has the right to reimburse business trip expenses only in relation to full-time employees with whom the organization has entered into employment contracts.

This conclusion is also supported by the Federal Tax Service of Russia for the city of Moscow in letter dated December 29, 2008 No. 19–12/121858, which also states that if the employees of the parent foreign organization are not employees of the Russian organization, and the costs of their business trips to the Russian The Federation is not directly related to the activities of a Russian organization aimed at generating income, then such expenses are not taken into account when forming taxable profit.

The fact that such costs cannot be taken into account as travel expenses is also indicated by the courts, in particular, in decisions of the Federal Antimonopoly Service of the Ural District dated January 19, 2009 No. Ф09-10311/08-С3, and the Federal Antimonopoly Service of the Northwestern District dated October 1. 07 No. A05-5368/2006–26, etc. The first of them notes that the taxpayer’s expenses associated with travel and accommodation of auditors - employees of the counterparty meet the criteria established in paragraphs. 17, 49 clause 1 art. 264 Tax Code of the Russian Federation. The second explains that if an agreement is concluded between organizations for the provision of consulting services on the customer’s territory, the agreement stipulates that the customer is obliged to compensate the counterparty for business trip expenses (travel, accommodation, daily allowance), and these expenses are actually incurred, documented and economically justified , then they are taken into account by the customer when determining the tax base for income tax on the basis of paragraphs. 15 and 49 clause 1 art. 264 Tax Code of the Russian Federation.

The foregoing allows us to conclude that travel and accommodation expenses for persons who are not employees of the organization are considered justified if such expenses are provided for in the contract and are related to activities aimed at generating income. In this case, it is necessary to take into account other criteria established in paragraph 1 of Art. 252 of the Tax Code of the Russian Federation - economic feasibility and documentary evidence. In addition, these expenses should be considered not as business travel expenses, but as other expenses associated with production and (or) sales (clause 49, paragraph 1, article 264 of the Tax Code of the Russian Federation), related to other expenses.

How to defend profitable tax accounting under contracts with a provision for reimbursement of expenses

In practice, there are often contracts in which the price is divided into two parts: the actual payment to the supplier, contractor, performer, agent (for brevity, let's call them performers) and compensation for his costs for fulfilling the contract. Such actions serve several purposes. Firstly, the customer or buyer gets the opportunity to control the procedure for setting prices. Secondly, the contractor is guaranteed income in excess of his costs. Thirdly, it is beneficial from a tax point of view. This is why local inspectors are showing increased interest in such agreements.

What is the tax benefit of a cost-reimbursable agreement?

Reimbursement of costs is carried out by the customer or buyer on the basis of documents submitted by the other party. Such a condition may relate to compensation for the costs of delivering the goods, the intermediary’s costs for executing the order, the landlord’s costs for paying utility bills, the contractor’s travel expenses, etc.

The amount of compensation is not included in the performer’s revenue. After all, subparagraph 9 of paragraph 1 of Article 251 of the Tax Code of the Russian Federation states that when calculating taxable profit, “income in the form of <...> reimbursement of costs incurred by <...> another attorney at the expense of <...> another principal is not taken into account, if such costs are not shall be included in the expenses of <…> the attorney.” Accordingly, the amounts of reimbursed expenses are reflected in the accounting records of the person who compensated them.

As for VAT, the refund amount is not subject to this tax (although sometimes tax authorities try to challenge this). Only the basic price of the transaction is included in the taxable base of the performer. Accordingly, in comparison with the single price, the total amount of VAT payable (and deductible) under the contract is reduced.

Thus, contracts with cost compensation are beneficial primarily for the contractor. The other party, on the contrary, may lose on taxes if the contractor does not re-invoice the input VAT on the reimbursed costs.

The Tax Code of the Russian Federation does not define who can claim input VAT on reimbursable expenses for deduction

The Tax Code of the Russian Federation does not contain instructions on how the contractor should take into account input VAT on expenses that are compensated to him. In practice, there have been two approaches to this matter.

The first approach is similar to intermediary agreements - only the party that compensates for the costs has the right to deduct. That is, input VAT must be re-invoiced to the customer along with other documents confirming expenses. Considering that this method is not directly stated in the Tax Code of the Russian Federation, sometimes tax authorities refuse to deduct the recipient of such overcharged VAT.

However, the courts do not see any contradictions in this analogy with agency transactions. Thus, in resolution dated May 25, 2009 No. Ф09-3324/09-С3, the Federal Arbitration Court of the Ural District recognized the reissue of invoices by the supplier to the buyer for transport services as lawful. According to the court, the buyer has the right to apply a deduction on such invoices. Similar conclusions are contained in the decisions of the federal arbitration courts of the North Caucasus dated 05/19/09 No. A53-10110/2008-С5-46, Central districts dated 07/01/09 No. A54-3828/2008С8 and dated 04/29/09 No. A54-3250/2008С4 districts.

The second approach, which is more risky, is based on the fact that all the requirements for obtaining a deduction are met only by the executor of the contract, but not by the customer. Indeed, it is the contractor who pays for goods, works, services and acquires them into his own ownership, albeit for the purpose of fulfilling an agreement with a third party. And this is presented to him by the counterparties of the invoice with the allocated amount of VAT. At the same time, the specifics of calculating this tax (Article 156 of the Tax Code of the Russian Federation) are provided only for intermediary agreements. If the agreement with the condition of compensation of costs is not such, then the specified rules are not applicable to it. Therefore, formally, nothing prevents the contractor from deducting input VAT.

It is difficult to say how feasible this option is in practice, since we were not able to find a single court decision in its favor.

Why can tax authorities charge additional VAT on the compensation amount?

Depending on the type of agreement, officials may state that the amount of compensation is subject to VAT for the contractor. The main argument in favor of this position is that cost recovery is associated with payment for goods, works or services sold. And such amounts, according to subparagraph 2 of Article 162 of the Tax Code of the Russian Federation, increase the VAT base.

A similar opinion on contracts for paid services was expressed by the Ministry of Finance of Russia in letters dated 03/02/10 No. 03-07-11/37 and dated 10/14/09 No. 03-07-11/253. Regarding the work, there is also a similar explanation, although quite old - letter of the Ministry of Finance of Russia dated September 19, 2003 No. 04-03-11/75.

There is something to object to this. When compensating costs, there is no transfer of ownership of goods, results of work performed or services provided. In addition, there are explanations from the same officials in favor of this advantageous position. For example, in relation to reimbursement of the lessor's expenses, if such an amount is not a variable part of the rent (letter of the Federal Tax Service of Russia dated 02/04/10 No. ShS-22-3/86 @, Ministry of Finance of Russia dated 05/14/08 No. 03-03-06/2/ 51, dated March 24, 2007 No. 03-07-15/39). There are long-standing letters from the Russian Ministry of Finance, where it does not object to the absence of tax when compensating for transport services in expedition agreements (letter dated 03/30/05 No. 03-04-11/69) and supply contracts (letter dated 09/03/03 No. 24-11/48103 ).

The courts are more consistent on this issue. Most often, they side with the taxpayer, excluding the amount of compensated expenses from the VAT taxable base for any agreement. According to the courts, compensation for the costs of a person providing services under a fee-based service agreement is aimed at repaying documented expenses. Accordingly, it cannot be considered as payment for goods, work or services.

Moreover, the inclusion of the amount of compensation in the taxable base for VAT contradicts subparagraph 1 of paragraph 1 of Article 146 of the Tax Code of the Russian Federation, since reimbursement of the expenses in question does not create added value.

Similar conclusions are contained in the decisions of the Presidium of the Supreme Arbitration Court of the Russian Federation dated August 18, 2005 No. 1443/05, as well as the Federal Arbitration Courts of the Northwestern Federal Arbitration Court dated April 30, 2009 No. A56-31234/2008, dated August 25, 2008 No. A42-7064/2007, Volgo-Vyatsky from 02/19/07 No. A17-1843/5-2006, East Siberian from 03/10/06 No. A33-20073/04-S6-F02-876/05-S1, Volga from 10/03/06 No. A72-5959/05-6 /450 districts.

Reimbursement of expenses is not subject to VAT, even if it is incorrectly stated as including tax

Tax authorities pay special attention to intermediary agreements with a provision for reimbursement of expenses, requiring that reimbursement of expenses be included in the amount of the intermediaries’ remuneration. Apparently, the reason for this is the frequent use of such agreements in tax planning schemes.

But such claims are not supported by the court. Thus, in its resolution dated February 26, 2007 No. A56-19948/2006, the Federal Arbitration Court of the North-Western District indicated that additional expenses were incurred by the intermediary to service property owned by the principal, and not in his own interests. Therefore, compensation for these expenses cannot be considered as remuneration. Similar conclusions are contained in the resolution of the federal arbitration courts of the Moscow district, dated November 19, 2007, No. KA-A40/11709-07, and the Northwestern district, dated November 15, 2005, No. A56-8757/2005.

Moreover, this conclusion is valid even if the invoice mistakenly calculates VAT on all amounts due to the commission agent - both remuneration and compensation. In particular, the Federal Arbitration Court of the Volga-Vyatka District, in its resolution dated March 19, 2007 No. A31-384/2006-15, declared the inspectorate’s demand to pay tax in the amount indicated in the invoice to be unlawful. The company proved that it should have calculated VAT only on its remuneration, and the expenses reimbursed to it by the principal should not be subject to this tax.

The intermediary may not confirm the amount of reimbursable costs

Since compensation does not increase the intermediary’s taxable profit, but is included in the principal’s expenses, tax authorities strictly control their size and documentation during the audit. However, by resolution No. 17795/09 dated May 18, 2010, the Presidium of the Supreme Arbitration Court of the Russian Federation recognized the possibility of not confirming with primary documents the amount of reimbursable expenses indicated in the report.

In the case considered by the court, the parties agreed to understand the agent’s actual expenses as the share of the expenses incurred by him during the month and reflected in the report for that month. The principal undertook to compensate these amounts without examining the supporting documents. However, during the audit, the tax authorities considered the amount of such compensation to be unconfirmed and refused to allow the principal to account for expenses.

The Presidium of the Supreme Arbitration Court of the Russian Federation indicated that the Tax Code does not contain any special requirements for the preparation of documents confirming the costs of paying for the services of an agent, commission agent or intermediary. Unless otherwise specified in the agreement, the necessary evidence of expenses incurred by the agent at the expense of the principal must be attached to the agent’s report (Article 1008 of the Civil Code of the Russian Federation). But the analyzed agreement between the parties established a list of documents that the agent must attach to his report. At the same time, the primary documents confirming the agent’s expenses for fulfilling obligations are not named in this list.

In this regard, the Presidium of the Supreme Arbitration Court of the Russian Federation decided that the principal’s expenses for compensation of the agent’s expenses are justified and documented, despite the absence of a primary source. But in fairness, it is worth mentioning that in this case the parties subjected the compensation amounts to VAT, and the agent took them into account in his income. Perhaps that is why the court sided with the taxpayer.

Tax authorities may recognize compensation as an unreasonable expense for the customer or buyer

Tax authorities can also make claims against the customer or buyer, stating that the reimbursement amounts do not reduce taxable profit. Thus, tax authorities consider compensation for travel expenses of employees of the performing company as labor costs. They refer to the provisions of Articles 166–168 of the Labor Code, 255 and 264 of the Tax Code. It follows from them that the organization has the right to reimburse travel expenses only for full-time employees with whom the organization has entered into employment contracts or collective agreements. On this basis, officials conclude that the current legislation does not provide for compensation for travel expenses of specialists on the staff of another organization (letters of the Ministry of Finance of Russia dated October 16, 2007 No. 03-03-06/1/723, dated December 19, 2006 No. 03-03 -04/1/844, Federal Tax Service of Russia for Moscow dated December 29, 2008 No. 19-12/121858).

But the courts indicate the possibility of accounting for such expenses on other grounds. For example, as part of other expenses associated with production and sales (subparagraph 49, paragraph 1, article 264 of the Tax Code of the Russian Federation, resolution of the Federal Arbitration Court of the North-Western District dated October 1, 2007 No. A05-5368/2006-26). The federal arbitration courts of Uralsky dated April 30, 2009 No. Ф09-2594/09-С3, Moscow federal arbitration courts dated September 21, 2009 No. KA-A40/9252-09, and Volga Federal Arbitration Courts dated November 15, 2007 No. A55-632/2007 districts.

In addition, according to the inspectors, personal income tax must be withheld from compensation for travel expenses of the contractor’s employees (letter of the Ministry of Finance of Russia dated December 31, 2008 No. 03-04-06-01/396).

However, the courts do not agree with such conclusions, noting that the customer did not make these expenses in the interests of the workers (decrees of the federal arbitration courts of the Ural of 01.09.09 No. Ф09-6417/09-С3 and the Federal Arbitration Court of the North Caucasus of 07.08.08 No. Ф08-4549/ 2008 counties).

Work agreement

As mentioned, the ability to take compensation amounts into account for tax purposes depends on the contractual relationship.
Let us remind you that in accordance with Art. 709 of the Civil Code of the Russian Federation, the price in the contract includes compensation for the contractor’s costs (for example, travel expenses of the contractor organization associated with the performance of work), as well as the remuneration due to him. In this case, the parties must take into account that the contract price can be: fixed, which takes into account all the contractor’s expenses, including planned expenses for sending workers; floating, which consists of two parts: remuneration for payment of the cost of work and the compensation amount of expenses, determined in fact and confirmed by documents.

In the first option, the amount received by the contractor from the customer represents the proceeds from the work, while the VAT payer contractor is obliged to present the VAT amount to the customer by issuing him the appropriate invoice. For a customer who has paid for the contractor’s work, the entire amount under the contract is included in the costs, and VAT is deductible in full.

The disadvantage of this option is that the planned amount of travel expenses included in the established contract price may be significantly less than the actual one, and accordingly the contractor will receive less income than expected.

The second option is more profitable, as it allows the contractor to take into account his expenses in the amount of actual costs. Since compensation payments qualify as a component of the contract price, both the contractor and the customer do not incur financial losses in terms of either profit or VAT.

For the contractor, both amounts received are income, on which he pays VAT in the general manner, and the customer takes these amounts into account as expenses, and he receives a VAT deduction in full.

Is it possible to go on a business trip under a contract?

A civil law agreement (CLA) has been concluded with an individual. Under this agreement, the citizen provides the organization with a service such as processing of primary accounting documentation (acts, tax registration form, tax registration form). At the same time, the organization is located in Minsk, and the individual plans to provide services while being in Molodechno. Let's see if it is possible to send him on a business trip to Minsk.

What is a business trip

A business trip is a trip by an employee, by order of the employer, for a certain period of time to another location to perform a task outside the place of his permanent work <*>. During a business trip, the employee retains <*>:

- Place of work, position);

- salary for working days of the week according to the schedule of the permanent place of work.

Note: Employees on a business trip are subject to the working hours and rest periods established in the receiving organization <*>.

In addition, the employer is obliged to issue an advance to the posted worker and reimburse expenses <*>:

1) on travel to the place of business trip and back;

2) for renting residential premises;

3) for living outside the place of permanent residence (hereinafter referred to as daily allowance);

4) other expenses, provided that they have been agreed upon with the tenant (for example, for carrying luggage in excess of the free baggage allowance, travel by vehicles on toll roads, paid parking, communication services).

Can trips under the GPA be considered business trips?

Labor legislation does not apply to persons working in an organization under the GPA <*>. Relations between such citizens and organizations are regulated by civil law.

Note! GPAs are concluded in writing. At the same time, they must include the following essential conditions <*>: - the procedure for calculating the parties (customer/performer (contractor, author) (hereinafter referred to as the performer)) and the amounts to be paid; — the customer’s obligation to pay for persons performing work under the GPD, mandatory insurance contributions to the Federal Social Security Fund, as well as to pay insurance premiums for compulsory insurance against industrial accidents and occupational diseases, if such work is carried out in places provided by the customer; — obligations of the parties to ensure safe working conditions and liability for non-compliance; — grounds for early termination of the contract; — liability for failure by the customer to fulfill payment obligations in the form of a penalty in the amount of at least 0.15% of the unpaid amount for each day of delay.

Please note that GPAs with individuals include: - for the manufacture or processing (processing) of a thing or for performing other work with the transfer of its result to the customer (contract) <*>; - performing certain actions or carrying out certain activities (paid services) <*>; — creation of a work, invention or other result of intellectual activity (creation of intellectual property objects) <*>.

Accordingly, persons who have entered into a civil contract (for the performance of work, provision of services, creation of intellectual property) are not subject to guarantees and compensation provided for by labor legislation. It is impossible to send such persons on a business trip, as well as issue travel certificates for them, issue travel orders, reimburse travel expenses according to labor law standards and pay daily allowances.

Is it possible to send me on a trip under the GPA?

Sometimes, in order to perform work or provide a service (hereinafter referred to as the provision of a service), an individual needs to travel to different localities. However, in practice, the GPD often indicates only one place where the service is provided; travel is not provided for.

Accordingly, in such cases, the customer does not have the right to require an individual to travel. Services must be provided exactly at the location specified in the contract.

Note: If a place of work is provided by the customer, he is obliged to ensure compliance with labor protection rules and safety requirements <*>.

If the customer wants the individual to make trips, a condition about them must be included in the GPA. In this case, it is possible to provide for trips both within the Republic of Belarus and outside its borders <*>.

In practice, a situation may arise when the customer has a need for the contractor to make a trip, but the contract does not provide for such a condition. In this case, an additional agreement can be concluded to the contract.

Note! When agreeing on the terms of the GAP, the term “business trip” cannot be used. This is due to the fact that it is used in labor relations and its use can lead to the recognition of legal relations under the GPD as labor relations.

If the contract does not contain the contractor’s obligation to travel, the customer will not have the right to demand this.

What about paying for trips under the GPA?

One of the mandatory conditions of the GPA is the amount that the customer is obliged to pay to the contractor. As a rule, this is a fixed amount.

Let us note that the price of the GPA is considered fixed if the contract does not indicate that it is approximate <*>. Accordingly, the customer should not pay the contractor travel expenses in excess of the contract price agreed with the contractor in the absence of such conditions in the contract.

Please note: Services are provided at the contractor's risk, unless otherwise provided by the contract <*>. The contractor has no right to demand an increase in the fixed price, and the customer has no right to demand a decrease. This rule also applies to those cases where, at the time of concluding the contract, it was impossible to provide for the full scope of work or the expenses necessary for this <*>.

Is it possible to reimburse travel expenses under the GPA?

In practice, a situation is possible when the customer agrees to reimburse the contractor for his travel expenses. To do this, it is necessary to provide an appropriate condition in the GPA <*>. It is advisable to clearly state which expenses are eligible for reimbursement. Typically these include accommodation and travel expenses.

Such payments are made by the Customer to the Contractor on the basis of supporting documents.”

Note! The customer is obliged to pay insurance premiums to the Federal Social Security Fund and Belgosstrakh for the entire amount specified in the GPA <*>. However, these contributions are not paid on amounts that the customer compensates to the contractor on the basis of supporting documents in excess of the cost of services agreed upon in the GAP.

Please note that payment for the cost of services under the GPA is usually carried out upon their provision. However, if necessary, the parties may provide for the payment of an advance <*>. The amount of the advance can be agreed upon by the parties:

1) in a fixed amount;

2) as a percentage of the contract amount.

Thus, labor law norms do not apply to persons who have entered into a civil contract. Accordingly, the customer does not have the right to send such persons on business trips.

However, the parties may agree in the GPA on the execution of trips by the contractor. Moreover, if the price of this contract is fixed and reimbursement of travel costs is not provided, the contractor does not have the right to demand additional payment for them.

If the contractor is a foreign organization

If an organization cooperates with a foreign contractor, then it makes sense to pay attention to the letter of the Ministry of Finance of Russia dated May 2, 2012 No. 03-07-08/125, which states that in accordance with the provisions of Art.
161 of the Tax Code of the Russian Federation, when a foreign person who is not registered with the Russian tax authorities sells work, the place of sale of which is the territory of the Russian Federation, VAT is calculated and paid to the Russian budget by the tax agent purchasing these works from the foreign person. In this case, the tax base for value added tax is determined by the tax agent as the amount of income from the sale of work, taking into account value added tax. Taking into account the fact that a Russian organization pays a foreign organization the cost of work, taking into account the costs associated with travel and accommodation of employees of a foreign organization, the Russian organization - tax agent should include in the VAT tax base all amounts of money transferred to the foreign organization.

In other words, the Russian organization as the customer must withhold VAT from the amount of compensation to the foreign organization - contractor.

If the contract contains a condition that the customer compensates the contractor for the costs of sending workers in excess of the contract price, then this is associated with increased risks for both parties, because according to Art. 41 of the Tax Code of the Russian Federation, this amount cannot be considered the contractor’s income; therefore, only the amount of remuneration under the contract will be taken into account as part of his revenue.

In addition, Chapter 21 of the Tax Code of the Russian Federation does not answer the question of whether the contractor should charge VAT on the amount of compensation received.

At the same time, according to the regulatory authorities, the funds received by the contractor as compensation for their travel expenses, on the basis of paragraphs. 2 p. 1 art. 162 of the Tax Code of the Russian Federation are subject to VAT, and the tax is calculated based on its calculated rate (letters of the Ministry of Finance of Russia dated 08/15/12 No. 03-07-11/300, dated 04/22/15 No. 03-07-11/22989).

If the contractor calculates VAT on the amount of compensation received, then he has the right to take advantage of a deduction for travel expenses.

Despite the fact that the customer can take into account the entire amount paid under the contract as part of the expenses, he “loses” VAT on the transferred amount of compensation, since upon receipt of this amount the contractor issues an invoice in one copy. Consequently, the customer has no basis for receiving a deduction.

Compensation payments to individuals

When travel expenses are reimbursed not to an organization, but to an individual, the amount of compensation cannot be taken into account in the customer’s expenses. In addition, it is unclear whether the customer will be a tax agent for personal income tax. Note that the Supreme Court of the Russian Federation takes the position that payment by an organization for goods, work, services (for example, rental housing) for an individual does not in itself mean that it must withhold tax. If an organization makes such a payment in its own interests, then the individual does not have personal income subject to taxation in accordance with paragraphs. 1–2 p. 2 tbsp. 211 of the Tax Code of the Russian Federation. This point of view is set out in the Review of the practice of courts considering cases related to the application of Chapter 23 of the Tax Code of the Russian Federation, approved by the Presidium of the Supreme Court of the Russian Federation on October 21, 2015. The Federal Tax Service of Russia agreed with this position (letter dated November 3, 2015 No. SA-4-7 / [email protected] ).
The Ministry of Finance of Russia in a letter dated September 15, 2014 No. 03-04-06/46030, No. 03-04-06/46035 expressed the opinion that when an organization pays for individuals invited to participate in various events, the cost of travel to the place of their conduct and residence in this place, if such payment is made in the interests of these persons, the latter receive income in kind, taxable. The organization in this case is a tax agent.

However, later, in a letter dated November 19, 2015 No. 03-04-06/67038, the Russian Ministry of Finance expressed a different point of view, according to which, regardless of whether payment was made for an individual in his interests or not, the cost of travel to the venue of the events and residence in this place is his income received in kind, from which the organization must withhold personal income tax.

Based on the foregoing, we can conclude that the most profitable and safest option from a taxation point of view is when the price in the contract is formed from two components: the remuneration itself and the compensation payment, determined on the basis of actual expenses on the basis of relevant documents. In addition, the contract must provide for the procedure for determining the final price, otherwise claims from the tax authorities cannot be ruled out.

How to arrange business trips under the GPC agreement

“Business trip” in a GPC agreement can be separated into a separate cost item, that is, the agreement states that an individual will travel for work purposes and expenses for them will be reimbursed separately from payments for work/services. To pay compensation in this case, the customer will need documentary evidence of the validity of the costs - tickets, boarding passes, hotel receipts, etc.

Another option is when business trips are not separately stipulated in the GPC agreement, and the amount of remuneration is fixed, and it is calculated to pay not only for the work of the performer, but also to pay off related costs (including during the trip).

Another option for organizing a business trip under a GPC agreement is that tickets are purchased by the employer without the participation of the performer of work/services. The employer can also pay for, for example, hotel accommodation.

When the costs of work trips are included in a separate group of costs, their amount must be reflected in the account on expense accounts in correspondence with account 76. When paying compensation for expenses to the contractor, account 76 is debited with a simultaneous decrease in the balance on cash accounts (50 or 51).

If travel costs are included in the total amount of the contract, they are not shown separately in the accounting registers.

In the latter case, when the employer independently pays for transport tickets and accommodation bills for an individual working under a GPC agreement, postings are generated using account 60.