Carrying out construction and installation work for own consumption and VAT from accrual to reimbursement

As you know, construction and installation work for one’s own consumption is subject to VAT. It would seem that calculating the tax on the cost of construction is not at all difficult. However, in practice this raises a lot of questions among accountants. And not least because changes are constantly being made to the regulatory documents that regulate the rules for paying VAT on construction and installation work. In this article, we tried to answer in detail all the questions that accountants have.

EXAMPLE No. 1

In one of the divisions of JSC “Lutik”, shelving for storing finished products was manufactured.

The following entries will be created in the accounting records of JSC Buttercup:

Contents of a business transaction	Debit	Credit	Amount, in rubles
Construction materials purchased for the manufacture of shelving have been accepted for accounting.	10-8	60	100 000
VAT is taken into account on the cost of building materials.	19-4	60	18 000
VAT is accepted for deduction.	68	19-4	18 000
The cost of written-off building materials is taken into account.	23	10-8	100 000
The department's costs associated with the manufacture of shelving are taken into account.	23	70,69,02	25 000
Reflected as part of capital investments are the costs associated with the manufacture of racks. Calculation: 100,000 rub. + 25,000 rub. = 125,000 rub.	08-3	23	125 000

Construction preparation costs

These costs need to be analyzed especially carefully. The fact is that among them there are many costs that do not relate to the costs of construction and installation work. And there is no need to charge VAT on such expenses.

Example 1

CJSC Progress Construction Corporation is constructing its new office building using economic means. For this purpose, in the first quarter of 2008, the company acquired a plot of land in the near Moscow region. The cost of the land plot was 25,000,000 rubles. (without VAT, since the sale of land plots is not subject to VAT (subclause 6, clause 2, article 146 of the Tax Code of the Russian Federation)).

The transfer of ownership of a land plot is subject to state registration (clause 1 of article 25 of the Land Code of the Russian Federation, clause 1 of article 4, clause 1 of article 12 of the Law of July 21, 1997 No. 122-FZ). For state registration of property rights, Progress Construction Corporation paid a state fee of 7,500 rubles. (Subclause 20, Clause 1, Article 333.33 of the Tax Code of the Russian Federation).

Please note: payment for land when purchasing a site for construction is included in other capital works and costs (clause 4.7.7 of the Instruction, approved by Resolution of the State Statistics Committee of Russia dated October 3, 1996 No. 123). Such expenses do not apply to construction and installation work, which means they are not included in the VAT tax base.

In accounting, the acquired land plot is included in the fixed assets of the company (clause 5 of PBU 6/01), but is not subject to depreciation (clause 17 of PBU 6/01).

After ownership of the acquired plot was registered, CJSC Progress Construction Corporation carried out the following work on it in the first quarter of 2008 to prepare the construction site:

– cutting down trees and uprooting stumps;

– drainage;

– planning of the construction area.

To carry out these works, the company purchased construction materials (sand, gravel, etc.) for a total amount of 118,000 rubles. (including VAT - 18,000 rubles). Thus, the cost of purchased materials without VAT is 100,000 rubles. (118,000 – 18,000). The materials were fully used in the preparation of the construction site. Other costs amounted to:

– wages for workers involved in the preparation of the construction site (including unified social tax and contributions for insurance against accidents and occupational diseases) – 98,000 rubles;

– depreciation of construction machinery and equipment – RUB 102,000.

Work on the development of sites, preparation and planning of construction areas, including land reclamation and associated demolition of buildings, deforestation, uprooting of stumps, drainage, vertical planning, etc., are regarded as construction work (clause 4.2.6 of the Instructions, approved by Resolution of the State Statistics Committee of Russia dated October 3, 1996 No. 123). This means that the cost of such work is included in the taxable base for VAT (subclause 3, clause 1, article 146 of the Tax Code of the Russian Federation).

Thus, the tax base for calculating VAT when performing construction and installation work using an economic method in this case will be:

100,000 rub. + 98,000 rub. + 102,000 rub. = 300,000 rub.

The amount of VAT accrued on the cost of work performed will be equal to: 300,000 rubles #18% = 54,000 rubles.

The accountant of Progress Construction Corporation CJSC made the following entries in the accounting.

During the first quarter of 2008 (as the company carries out relevant operations):

DEBIT 08 subaccount “Purchase of land” CREDIT 60

– 25,000,000 rub. – reflects the cost of the land plot;

DEBIT 60 CREDIT 51

– 25,000,000 rub. – money is transferred to the seller of the land plot;

DEBIT 08 subaccount “Purchase of land” CREDIT 68 subaccount “Calculations for state duty”

– 7500 rub. – reflects the amount of state duty payable for state registration of the transfer of ownership of a land plot;

DEBIT 68 subaccount “Calculations for state duties” CREDIT 51

– 7500 rub. – the fee for state registration of the transfer of ownership of the land plot has been paid;

DEBIT 01 CREDIT 08 subaccount “Purchase of land”

– 25,007,500 rub. (25,000,000 + 7500) – the land plot is included in the fixed assets of the company (based on state registration of the transfer of ownership);

DEBIT 10 CREDIT 60

– 100,000 rub. – materials necessary for carrying out work to prepare the construction site have been capitalized;

DEBIT 19 CREDIT 60

– 18,000 rub. – reflected “input” VAT on capitalized materials;

DEBIT 68 subaccount “VAT calculations” CREDIT 19

– 18,000 rub. – “input” VAT on capitalized materials is credited;

DEBIT 60 CREDIT 51

– 118,000 rub. – paid for materials;

DEBIT 08 subaccount “Construction of fixed assets” CREDIT 10

– 100,000 rub. – materials were used to prepare the construction site;

DEBIT 08 subaccount “Construction of fixed assets” CREDIT 70, 69

– 98,000 rub. – wages were accrued to workers involved in preparing the construction site (taking into account the unified social tax and contributions for insurance against accidents and occupational diseases);

DEBIT 08 subaccount “Construction of fixed assets” CREDIT 02

– 102,000 rub. – reflects the depreciation of construction machinery and equipment used in preparing the construction site.

March 31, 2008:

DEBIT 19 CREDIT 68 subaccount “VAT calculations”

– 54,000 rub. – VAT is charged on the cost of work to prepare the construction site.

EXAMPLE No. 2

A gear crushing machine has been installed in one of the divisions of Lyutik JSC. The installation of the machine was carried out by the organization's employees.

The costs of the department that installed the gear crushing machine include the following cost elements:

- workers' wages;

- deductions from payroll;

-electricity;

- other overhead costs of the workshop.

The above expenses in accounting increase the initial cost of the machine.

According to the All-Russian Classifier of Types of Economic Activities OK 029-2001, the above works do not relate to construction and installation works (installation of equipment has an OKVED code different from the construction and installation work code). As noted in the Resolution of the Federal Antimonopoly Service of the Moscow District dated March 28, 2012 No. A40-10464/11-129-46, “... the main feature that allows defining work as construction and installation work is the execution of construction, of which installation work is a part.”

Installation of equipment outside the scope of construction work does not fall under the definition of “construction and installation work for one’s own consumption.”

Thus, as in example No. 1, the organization does not have the obligation to calculate VAT on the cost of installation of the machine.

One of the criteria for classifying completed work as construction and installation work for one’s own consumption is the work being performed by the organization itself, i.e. employees who are in an employment relationship.

EXAMPLE No. 3

The organization carried out construction and installation works with the involvement of individuals on the basis of civil contracts. Work on repairing the premises, installing a cage line, and repairing the vessel was carried out by individuals under civil contracts, who were not engaged in the taxpayer’s main activity, and no employment contracts were concluded with them.

When conducting an on-site inspection, the tax authority assessed these works as construction and installation work for its own consumption with the corresponding VAT charge.

However, as the judges noted (Decision of the Arbitration Court of the Republic of Karelia dated July 31, 2014 No. A26-1492/2014), in order for construction and installation works to be considered carried out on their own - in an economic way, all the requirements of the State Statistics Committee must be collectively met: work performed for the needs of the organization; the work is carried out by non-construction organizations on their own; for work, the organization allocates workers for the construction of the main activity, that is, those who have concluded employment contracts with this organization; the above-mentioned employees of the organization are paid wages according to construction orders.

It is impossible to equate individuals who performed work under concluded civil contracts with their own employees, and the work performed by them with work performed by the organization on its own, which is subject to VAT taxation.

Thus, in this situation, the tax inspectorate had no legal grounds for including these costs in the cost of construction and installation work for its own consumption as an object of VAT taxation.

Determination of construction and installation works for own consumption

The Tax Code does not contain a definition of construction and installation work for own consumption, therefore, taking into account the norms of paragraph 1 of Art. 11 of the Tax Code of the Russian Federation, it should be sought in other branches of the legislation of the Russian Federation.

Let us turn to the Instructions for filling out the federal statistical observation form No. 1-enterprise “Basic information about the activities of the organization,” approved by Rosstat order No. 691 dated December 9, 2014. Paragraph 18 of the Instructions says the following.

Construction and installation work (including installation and adjustment of equipment necessary for the operation of buildings, for example, installation and installation of equipment for heating, ventilation, elevators, electrical, gas and water supply systems), performed in an economic way, includes:

work carried out for its own needs by the organizations’ own resources, including work for which the company allocates workers for the construction of its main activities and pays them wages according to construction orders;
work performed by construction organizations on their own construction (not within the framework of construction contracts, but, for example, during the reconstruction of their own administrative building, the construction of their own production base, etc.).

If, during construction using an economic method, individual works are performed by contractors, then the cost of these works is not included in the construction and installation work for their own consumption. Also not reflected here is the cost of repair work on own or leased buildings, structures, and equipment performed by the company itself, the costs of which in accounting are taken into account in production cost accounts.

Thus, we have decided what construction and installation work for our own consumption is.

Let's now figure out what impact construction and installation work for own consumption has on the formation of the tax base for VAT and income tax for a company subject to the general taxation system.

Composition of construction and installation costs included in the VAT tax base

When performing construction and installation work for one's own consumption, the tax base is determined as the cost of work performed, calculated on the basis of all actual expenses of the taxpayer for their implementation (clause 2 of Article 159 of the Tax Code of the Russian Federation).

What is included in the taxpayer's actual expenses? The tax base takes into account only expenses incurred by the taxpayer himself, incl. and costs for the development of design estimates (Letter of the Ministry of Finance of the Russian Federation dated March 22, 2011 No. 03-07-10/07).

The cost of construction and installation works performed by contractors is not included in the amount of accrued “construction and installation” VAT (Letter of the Ministry of Finance of the Russian Federation dated 09.09.2010 No. 03-07-10/12, Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 02.09.2008 No. 4445/08 , Decision of the Supreme Arbitration Court of the Russian Federation dated 03/06/2007 No. 15182/06, clause 19 of the Order of the Rosstat of the Russian Federation dated 10/28/2013 No. 428) both with a mixed method of performing work, and entirely by the contractor. If an organization transfers customer-supplied materials to the contractor, then the tax base in terms of construction and installation work for its own consumption also does not arise (Letter of the Ministry of Finance of the Russian Federation dated March 17, 2011 No. 03-07-10/05).

However, in a number of cases, even in the absence of actual costs for construction and installation work, tax authorities try to charge additional VAT using the calculation method for determining the cost of construction and installation work performed.

Deduction of accrued tax

The amount of VAT accrued on the cost of construction and installation work performed on one’s own can be deducted. But keep in mind that for this to happen three conditions must be met:

– VAT accrued on the cost of construction and installation work has been paid to the budget (and accordingly reflected in the VAT return for this tax period);

– the facility under construction is intended to carry out operations subject to VAT;

– the cost of the constructed facility will be included in expenses when taxing profits (including through depreciation deductions) (clause 6 of Article 171 and clause 5 of Article 172 of the Tax Code of the Russian Federation).

In practice, accountants often have the following question: is it necessary to prepare invoices for the completed volume of construction and installation works for their own consumption? And if so, how to correctly register them in the Purchase Book and Sales Book?

Yes, invoices are required. Draw up an invoice for the cost of construction and installation work on the last day of each quarter in which the company carried out this work, in two copies. Register one copy of the document in the Sales Book and store it in the journal of issued invoices (clauses 1, 2 and 25 of the Rules approved by Decree of the Government of the Russian Federation of December 2, 2000 No. 914). Keep the second copy of the invoice in the journal of received invoices.

In the next quarter, the company will have the right to deduct (after the cost of work performed is reflected in the VAT return as part of taxable transactions, and the accrued VAT is paid to the budget). And the same invoice can be registered in the Purchase Book. This procedure is provided for in paragraph 12 of the Rules, approved by Decree of the Government of the Russian Federation of December 2, 2000 No. 914.

The following question is often asked: how to correctly fill out lines 4 “Consignee and his address” and 6 “Buyer” of the invoice for the completed volume of construction and installation work for one’s own consumption?

The issue has not been officially clarified. However, in our opinion, based on the requirements of the tax inspectors, the same data must be indicated in these lines of the invoice as in lines 3 “Consignor and his address” and 2 “Seller” of the invoice. That is, it turns out that the company issued an invoice to itself.

EXAMPLE No. 4

The taxpayer carried out construction and installation work on its own for its own needs for the construction of a capital construction project - a store building.

The work was carried out by the taxpayer’s family without hiring workers or paying them wages. Based on this, the taxpayer did not have actual expenses for construction and installation work and, accordingly, the tax base for calculating and paying VAT on operations to perform these works did not arise.

However, during the audit, the tax authority assessed additional VAT on the cost of construction and installation work performed using the calculation method, guided by paragraphs. 7 clause 1 art. 31 of the Tax Code of the Russian Federation, due to the taxpayer’s lack of documents confirming the amount of expenses incurred. The basis for determining the cost of work was information on specific indicators of the cost of a unit of measurement of construction volume, established in the collection No. 26 “UPVS of buildings and structures on state farms, collective farms, intercollective farms and other agricultural enterprises and organizations.”

That is, when calculating the cost of construction and installation work carried out economically, the tax authority calculated the estimated cost of a capital construction project, including both the costs of carrying out the work and the costs of purchasing materials.

At the same time, as noted in the Resolution of the Fifth Arbitration Court of Appeal dated April 3, 2014 No. A51-21000/2013, the cost of a fixed asset is not identical to the concept of the cost of construction and installation work, and therefore the VAT tax base established by the inspection does not correspond to either by size, nor by right of the taxpayer’s obligation to pay VAT.

Accounting press and publications

“Current issues of accounting and taxation”, 2006, N 4

CONSTRUCTION AND INSTALLATION WORKS FOR OWN CONSUMPTION

Often, construction, reconstruction, modernization and technical re-equipment, especially of small buildings and structures, simple objects, are carried out by enterprises and organizations of various industries (the so-called construction and installation work for their own consumption).

How to correctly document these business transactions in accounting and what points should you pay attention to when taxing them? What changes in the accounting of these transactions have occurred since January 1, 2006 in connection with the entry into force of Federal Law No. 119-FZ of July 22, 2005? How to calculate the tax base for these transactions during the transition period?

Readers will find answers to these and other questions in this article.

Determination of construction and installation work performed

for own consumption

Before we begin to consider issues of taxation of construction and installation works for our own consumption, let us define what this concept includes. Tax legislation does not provide a clear definition of this type of work, which is why in practice the accountant faces numerous questions. For example, is the assembly and installation of purchased equipment by employees of the enterprise considered work for their own consumption, on the cost of which VAT must be paid?

Subclause 3 of clause 1 of Art. 146 of the Tax Code of the Russian Federation establishes that the implementation of construction and installation works for one’s own consumption is subject to VAT. The tax base for VAT by virtue of clause 2 of Art. 159 of the Tax Code of the Russian Federation is defined as the cost of work performed, calculated on the basis of all actual expenses of the taxpayer for their implementation (wages of workers carrying out construction, taxes and fees paid on this salary, depreciation of fixed assets, cost of materials used in carrying out construction and installation works in a self-employed manner) .

From these definitions it follows that construction and installation work for one’s own consumption should be understood as the construction of capital construction projects that will be used exclusively in the activities of the organization itself

The Ministry of Finance is also of the opinion that construction and installation works are works of a capital nature (Letter of the Ministry of Finance of Russia dated November 5, 2003 N 04-03-11/91).

However, in paragraph 3.2 of the previously existing Methodological Recommendations for Ch. 21 “VAT” a slightly different definition was given: construction and installation work performed for own consumption includes construction and installation work performed in an economic way from January 1, 2001 directly by taxpayers for their own needs.

———————————————————————————————— Methodological recommendations for the application of Chapter 21 “VAT” of the Tax Code of the Russian Federation, approved by the Order of the Ministry of Taxes of Russia dated 20.12 .2000 N BG-3-03/447. On January 1, 2006, they were canceled by Order of the Federal Tax Service of Russia dated December 12, 2005 N SAE-3-03/665.

There is no definition of an economic method in tax legislation, therefore, according to paragraph 1 of Art. 11 of the Tax Code of the Russian Federation it is used in the meaning in which it is used in other branches of legislation.

Thus, in accordance with clause 11.14 of the Resolution of the Goskomstat of Russia N 123, construction and installation work performed in an economic way includes work carried out not by construction organizations, but by its own forces, including work for which the organization allocates workers for the construction of the main activity with payment their wages on construction orders. Work carried out by shops of the main activity under contracts and agreements with OKS of the same organization, when payments for work are made in the manner established for contractors, as well as work performed by contractors for their own construction (see . also Letter of the Ministry of Taxes of Russia dated March 24, 2004 N 03-1-08/819/16 “On the procedure for determining the tax base for VAT”).

———————————————————————————————— Resolution of the State Statistics Committee of Russia dated October 3, 1996 N 123 “On approval of the Instructions for filling out federal government forms statistical observation on capital construction".

Thus, the concept of “construction and installation work for own consumption” is equivalent to the concept of “construction and installation work performed in an economic way.” At the same time, in Ch. 21 of the Tax Code of the Russian Federation, the concepts of construction and installation work and simple installation work are separated (clause 1, clause 1, article 148 of the Tax Code of the Russian Federation).

Let's return to the question asked: is the installation of equipment considered a volume of work performed on a household basis?

Taking into account the above and taking into account paragraph 2 of Art. 159 of the Tax Code of the Russian Federation, according to which the payment of VAT on the cost of construction and installation works for one’s own consumption depends on actual expenses, one can answer as follows. If the organization’s activities are not related to construction and installation work, then the installation of equipment performed by its employees for their own consumption will not be subject to VAT (the organization does not bear actual expenses for calculating VAT on construction and installation work). In addition, the object of VAT taxation under paragraphs. 3 p. 1 art. 146 of the Tax Code of the Russian Federation recognizes the performance of construction and installation work for its own consumption; in this case, the organization carries out only installation work.

Construction and installation works carried out in-house

What else does an accountant need to know about construction and installation works carried out on an economical basis?

When carrying out construction and installation work for its own consumption, the enterprise actually begins to engage in a new type of activity (construction), which requires organizational measures and resources in the same volume as those of specialized construction enterprises. For these purposes, a construction and installation division (usually OKS) is created in the organizational structure of the developer - an operating enterprise, which carries out construction.

This method is most often used during the reconstruction or expansion of existing enterprises, as well as during the construction of small auxiliary facilities on the territory of an existing enterprise.

When carrying out construction and installation work for your own consumption, you must obtain permission from the authorities to carry it out. In accordance with clause 2 of the Model Regulations on the procedure for issuing permits to carry out construction and installation work, a permit to carry out construction and installation work on production and non-production facilities is issued to the customer on the basis of a decision of the territorial executive authorities on the construction of the facility. Permission is provided by the State Architectural and Construction Supervision bodies of Russia, and in cities and areas where they do not exist - by the architecture and urban planning bodies.

———————————————————————————————— Approximate regulations on the procedure for issuing permits for construction and installation work, approved by the Order of the Ministry of Architecture, construction and housing and communal services of the Russian Federation dated 06/03/1992 N 131.

Construction activity is licensed, therefore, in order to carry out construction and installation works in an economic way, it is necessary to obtain a license for licensed types of work. In Art. 17 of Federal Law N 128-FZ defines all licensed types of activities. Among them is the construction of buildings and structures, with the exception of structures for seasonal or auxiliary purposes (clause 102, clause 1, article 17 of Federal Law N 128-FZ).

———————————————————————————————— Federal Law of 08.08.2001 N 128-FZ “On licensing of certain types of activities”.

The procedure for obtaining a license is defined in the Regulations on licensing activities for the construction of buildings and structures of I and II levels of responsibility in accordance with the state standard approved by Decree of the Government of the Russian Federation N 174. The need to obtain it depends on the level of construction responsibility. According to GOST 27751-88, there are three levels of construction responsibility: I - increased, II - normal, III - reduced. A license must be issued when working with levels I and II. The lower level includes the construction of structures for seasonal or auxiliary purposes (summer pavilions, small warehouses, hangars). No licensing is required for the construction of such facilities.

———————————————————————————————— Resolution of the Government of the Russian Federation of March 21, 2002 N 174 “On licensing activities in the field of design and construction "

In order to begin carrying out construction and installation works in an economic way, it is necessary to have design and estimate documentation. As a rule, the development of such documentation is carried out by a specialized (design) organization that sends qualified specialists to carry out this work. To do this, the enterprise carrying out construction using an economic method must submit a design assignment to these specialists. The data provided in it must be detailed and comprehensive; industry specifics and construction volumes must also be taken into account.

Taxation

VAT taking into account the changes made

Federal laws NN 118-FZ and 119-FZ

VAT accrual. As already noted, the performance of work for one’s own consumption is subject to VAT (clause 3, clause 1, article 146 of the Tax Code of the Russian Federation). The procedure for determining the tax base is established in clause 2 of Art. 159 of the Tax Code of the Russian Federation, according to which, when performing construction and installation work for one’s own consumption, the tax base is determined as the cost of the work performed, calculated on the basis of all actual expenses of the taxpayer for their implementation.

Please note: this paragraph has been supplemented by Federal Law No. 118-FZ of July 22, 2005; now the taxpayer’s expenses also include expenses of reorganized (reorganized) organizations.

When determining the tax base for the purpose of calculating VAT on construction and installation work performed for one’s own consumption, the cost of contract work presented to the customer by contractors is not taken into account (Letters of the Federal Tax Service of Russia for Moscow dated 02.25.2005 N 19-11/11713, Ministry of Taxes of Russia dated 03.24.2004 N 03-1-08/819/16) .

———————————————————————————————— Please note: in the Letter of the Ministry of Finance of Russia dated January 16, 2006 N 03-04-15/ 01 “On the procedure for determining after January 1, 2006 the tax base for value added tax when performing construction and installation work for own consumption and deductions of this tax for goods (work, services) purchased in 2005 to perform these works after January 1, 2006 of the Year" (the document was published in the journal "Acts and Comments for Accountants", No. 4, 2006) a different point of view was expressed. In particular, it states that the tax base is determined based on the full cost of construction work performed, including work performed by the taxpayer itself and work performed by contractors. What does it mean? What is the new rule in calculating the tax base for construction and installation works? We will wait for official clarification on this matter. In our opinion, the amendments introduced by Federal Law No. 119-FZ did not contain such instructions, therefore the tax base for construction and installation works must be calculated in the same manner - without taking into account the cost of work performed by contractors.

Tax deduction. According to paragraph 5 of Art. 172 of the Tax Code of the Russian Federation, the amount of VAT paid on purchased materials, work and services of third-party organizations used in carrying out construction and installation work, as well as the amount of tax calculated from the actual expenses of the taxpayer on construction and installation work performed for one’s own consumption, are subject to deduction.

Amendments introduced by Federal Law No. 119-FZ of July 22, 2005 in Ch. 21 “VAT” and entered into force on January 1, 2006, otherwise established the moment of determining the tax base when performing construction and installation work for one’s own consumption, as well as the procedure for applying tax deductions compared to the previous procedure. The table shows the main changes made to the procedure for calculating VAT when performing construction and installation work by the above Law.

Let us take a closer look at the latest changes and transitional provisions in the calculation of VAT when performing construction and installation work.

The moment of determining the tax base for VAT when performing construction and installation work for one’s own consumption has changed. According to the new edition of paragraph 10 of Art. 167 of the Tax Code of the Russian Federation, it is defined as the last day of the month of each tax period. In the previous version, it was considered the day of registration of the corresponding object completed by capital construction. This means that from January 1, 2006, in each tax period (month, quarter) in which construction and installation work is carried out for one’s own consumption, tax must be accrued for payment to the budget based on the amount of actual expenses for these works and the current tax rate in this tax office. period.

The monthly (quarterly) determination of the tax base for construction and installation work leads to the fact that it will be possible to deduct monthly (quarterly) the amount of VAT accrued and paid to the budget, as well as the amount of VAT presented by counterparties when purchasing goods (works, services) used to perform Construction and installation work in the corresponding tax period (clause 5 of Article 172 of the Tax Code of the Russian Federation).

———————————————————————————————— Let us recall the necessary conditions for applying the deduction: the cost of the created object must be included in expenses (including through depreciation charges), taken into account when calculating income tax (clause 6 of article 171 of the Tax Code of the Russian Federation, clause 5 of article 172 of the Tax Code of the Russian Federation); the object must be used in a VAT-taxable activity.

Please note: with this procedure for determining the tax base, the taxpayer does not need to recover VAT when transferring goods (raw materials, materials) for construction, the deduction for which was made upon their acquisition, since the amount of tax on such goods (raw materials, materials) used in construction , are subject to deduction at the end of each month.

An exception is made for goods (materials) that, as of the end of the tax period, were transferred for construction, but have not yet been used for these purposes. The tax deduction will be deferred until they are applied in construction.

Example 1. Aurora LLC in January 2006 began construction of a warehouse for finished products. For the month, total expenses on capital investments were:

— for wages with deductions — 150,000 rubles;

— for materials — 236,000 rubles. (including VAT - 36,000 rubles);

— for depreciation of fixed assets — 15,000 rubles.

Construction of the facility was completed in March 2006. The warehouse was put into operation in the same month.

In the accounting records of Aurora LLC, you need to reflect business transactions as follows:

——————————————————————————————————————————T——————— T——————T———————¬ | Contents of the operation | Debit |Credit| Amount,| | | | | rub. | +——————————————————————————————————————————+——————— +——————+———————+ | In January 2006 | +—————————————————————————————————————————T——————— T——————T———————+ |Construction materials purchased | 10 | 60 |200,000| | to carry out construction and installation works in an economical way | | | | +——————————————————————————————————————————+——————— +——————+———————+ |VAT on construction materials reflected | 19 | 60 | 36,000| +——————————————————————————————————————————+——————— +——————+———————+ |Materials used in construction | 08—3 | 10 |200,000| +——————————————————————————————————————————+——————— +——————+———————+ |Salaries accrued with deductions| 08—3 |70, 69|150,000| +—————————————————————————————————————————+——————— +——————+———————+ |Depreciation reflected | 08—3 | 02 | 15,000| +—————————————————————————————————————————+——————— +——————+———————+ |VAT accrued for construction and installation works | 19 | 68 | 65 700| |(200,000 + 150,000 + 15,000) rub. x 18% | | | | +—————————————————————————————————————————+——————— +——————+———————+ |Accepted for deduction of VAT on materials | 68 | 19 | 36,000| L—————————————————————————————————————————+——————— +——————+————————

In February, the accountant will make similar entries. Calculations with the VAT budget for January should be reflected as follows:

—————————————————————————————————————————T———————T ——————T————————¬ | Contents of the operation | Debit |Credit| Amount, | | | | | rub. | +————————————————————————————————————————+——————+ ——————+————————+ |Transferred to the VAT budget for January | 68 | 51 | 29,700 | |2006 | | | | |(65,700 - 36,000) rub. | | | | +————————————————————————————————————————+——————+ ——————+————————+ |Accepted for deduction of VAT on construction and installation work for January | 68 | 19 | 65,700 | |2006 | | | | L————————————————————————————————————————+——————+ ——————+—————————

In March, the accountant will reflect the commissioning of the finished goods warehouse by posting Debit 01 Credit 08-3.

Transitional provisions for VAT calculation

when performing construction and installation work for your own consumption

Transitional provisions for calculating VAT when performing construction and installation works for own consumption (Article 3 of Federal Law N 119-FZ) must be applied to those organizations that have ongoing construction projects (transitioning to 2006).

In order to correctly determine the tax base for VAT, all capital investments in construction work carried out for one’s own needs must be divided into two groups:

— produced before January 1, 2005;

- produced during 2005 (from 01.01.2005 to 31.12.2005).

For each of the groups, it is necessary to determine the cost of construction work and goods (raw materials, supplies), works and services purchased for these purposes.

For construction and installation works carried out on an economic basis before January 1, 2005 (that is, reflected before this date in accounting on account 08), in 2006 the previous procedure for assessing VAT remains the same. That is, the tax must be calculated in the month following the month in which the corresponding completed capital construction project (fixed assets) was registered (clause 4, article 3 of Law No. 119-FZ). Tax can be deducted only if it is paid to the budget (Clause 5, Article 3 of Law No. 119-FZ).

Amounts of VAT on goods (works, services) purchased to carry out construction and installation works for own consumption, which were not accepted for deduction before January 1, 2005, are deducted as the corresponding capital construction projects are registered (provided that they are used for the implementation of transactions subject to VAT) (clause 3 of article 3 of Law No. 119-FZ).

If the costs of carrying out construction and installation works for one’s own consumption were incurred during the period from January 1 to December 31, 2005 and tax was not charged on them, then VAT should be accrued based on actual expenses incurred up to December 31 inclusive. In this case, the moment of determining the tax base should be considered December 31, 2005. Accept the accrued tax for deduction in accordance with clause 6 of Art. 3 of Law N 119-FZ is also possible only after its payment to the budget, that is, in January 2006.

For goods, works and services used in construction during 2005, a deduction could be obtained at the end of 2005 - when forming the tax base for construction work in 2005, but only on the condition that such goods (works, services) were paid to the supplier as of December 31, 2005.

As for the deductions of VAT paid on goods (work, services) purchased by the taxpayer in 2005 to carry out construction and installation work after January 1, 2006, then since Art. 3 of Law N 119-FZ does not establish a special procedure for applying tax deductions for such goods (work, services), the specified tax amounts are subject to deductions in the manner established by clause 5 of Art. 172 ch. 21 “Value Added Tax” of the Code before the entry into force of the Law, that is, as the relevant objects completed by capital construction are registered, or upon the sale of an object of unfinished capital construction, on the basis of invoices and documents confirming the actual payment of tax amounts ( Letter of the Ministry of Finance of Russia dated January 16, 2006 N 03-04-15/01).

Example 2. Startstroy LLC began construction of an industrial building in October 2004. Total expenses on capital investments for 2004 amounted to 1,000,000 rubles. VAT on materials used during construction in 2004, and not accepted for deduction, is equal to 150,000 rubles.

In 2005, construction costs amounted to 10,000,000 rubles, the “input” VAT on materials paid to suppliers was 800,000 rubles.

Construction of the facility was completed in February 2006. In March, documents for state registration were submitted, and in the same month the facility was put into operation. The sum of all costs associated with the construction of the facility amounted to 12,000,000 rubles.

In December 2005, the accountant of Startstroy LLC will reflect the accounting transactions as follows:

———————————————————————————————————————T———————T— —————T—————————¬ | Contents of the operation | Debit |Credit| Amount, | | | | | rub. | +———————————————————————————————————————+———————+— —————+—————————+ |VAT is charged on work performed with | 19 | 68 |1,800,000| |01.01.2005 to 31.12.2005 | | | | |(RUB 10,000,000 x 18%) | | | | +———————————————————————————————————————+———————+— —————+—————————+ |Accepted for deduction of VAT on paid | 68 | 19 | 800,000| |materials | | | | L———————————————————————————————————————+———————+— —————+——————————

The deduction of tax amounts calculated by Startstroy LLC is made after payment of the tax to the budget in accordance with Art. 173 Tax Code of the Russian Federation. As part of the example under consideration, in January 2006, the organization transferred the amount of VAT to the budget and deducted the tax on work performed from 01/01/2005 to 12/31/2005: Debit 68 Credit 19 - 1,800,000 rubles.

In the future, the accountant of Startstroy LLC will make the following entries:

————————————————————————————————————T———————T———— ————T——————————¬ | Contents of the operation | Debit | Credit | Amount, | | | | | rub. | +————————————————————————————————————+———————+———— ————+——————————+ | In February 2006 | +———————————————————————————————————T———————T———— ————T——————————+ |Commissioning of the facility is reflected | 01 | 08—3 |12 000 000| +————————————————————————————————————+———————+———— ————+——————————+ | In March 2006 | +———————————————————————————————————T———————T———— ————T——————————+ |Depreciation accrued for the object | 20 | 02 | 30,000| +————————————————————————————————————+———————+———— ————+——————————+ |VAT accrued on completed before | | | | |01.01.2005 works | 19 | 68 | 180,000| |(RUB 1,000,000 x 18%) | | | | +————————————————————————————————————+———————+———— ————+——————————+ |Accepted for deduction of VAT on materials, | 68 | 19 | 150,000| |used before 01/01/2005 | | | | L————————————————————————————————————+———————+———— ————+———————————

The following month, the organization transferred the tax to the budget and accepted for deduction VAT on work completed before January 1, 2005.

The new edition of the Tax Code of the Russian Federation has retained the procedure according to which, if the use of a constructed facility is not associated with the implementation of operations subject to VAT, the cost of which is included in expenses (including through depreciation deductions) when calculating corporate income tax, then the amount of tax, accrued on the cost of construction and installation works for own consumption is included in the cost of the constructed facility. Tax deduction of VAT amounts on materials, works and services of third-party organizations used in this case when performing construction and installation work for their own consumption is subject to general application.

If the completed construction project is intended

for use in activities not subject to VAT

The innovation is that in paragraph 6 of Art. 171 of the Tax Code of the Russian Federation establishes a procedure for the restoration of VAT amounts accrued on the cost of construction and installation work performed for one’s own consumption and used for tax deduction if the completed construction object is intended for use in activities not subject to VAT. In this case, the tax amounts are restored upon submission of a tax return for each last month of the calendar year for 10 years, starting from the year of transfer of the completed object for use in activities not subject to VAT, based on one tenth of the tax amount accepted for deduction as a share of non-taxable revenue in total revenue for the calendar year. This procedure does not apply to situations where fully depreciated fixed assets are transferred for use in the above activities, or if more than 15 years have passed since the facility was put into operation.

If a reorganization occurs

In case of reorganization according to paragraph. 2 clause 6 art. 171 of the Tax Code of the Russian Federation, deductions from the legal successor are subject to VAT amounts presented to the reorganized (reorganized) organization for goods (work, services) acquired by it to perform construction and installation work for its own consumption, accepted for deduction, but not accepted by the reorganized (reorganized) organization for deduction at the time of completion of the reorganization.

VAT amounts calculated when performing construction and installation work for the reorganized (reorganized) organization’s own consumption are also subject to deductions, in accordance with paragraph. 3 paragraph 6 art. 171 Tax Code of the Russian Federation.

The specified amounts of VAT are subject to deduction from the successor after the completion of the reorganization only if for such goods they could be taken for deduction, but at the time of completion of the reorganization this did not happen. In this case, these goods must be purchased to carry out transactions subject to VAT in accordance with Chapter. 21 of the Tax Code of the Russian Federation, and their cost should be taken into account in expenses when calculating corporate income tax.

Income tax

According to paragraph 1 of Art. 257 of the Tax Code of the Russian Federation, for the purpose of calculating income tax, the initial cost of a fixed asset is defined as the amount of expenses for its acquisition, construction, production, delivery and bringing it to a state in which it is suitable for use, with the exception of amounts of taxes subject to deduction or taken into account as expenses in accordance with the Tax Code of the Russian Federation.

When performing construction and installation work for your own consumption, the initial cost of the constructed fixed asset object, in the author’s opinion, should be determined based on all expenses - both direct and indirect (despite the fact that the cost of finished products in tax accounting is determined in the amount of direct expenses, that is, without accounting for indirect ones, as stated in paragraph 2 of Article 319 of the Tax Code of the Russian Federation). The fact is that the rule enshrined in paragraph 1 of Art. 257 of the Tax Code of the Russian Federation, applies only to finished products that the organization begins to use as fixed assets. In our opinion, this norm does not apply to objects built on an economic basis.

However, this issue is quite controversial. Many experts argue that the initial cost of any fixed assets of own production will include only direct costs. Indirect expenses refer to the expenses of the current reporting (tax) period. This does not contradict the conditions for recognizing expenses enshrined in Art. 252 of the Tax Code of the Russian Federation.

Arbitration practice related to construction and installation works,

produced for own consumption

Arbitration practice related to construction and installation work for own consumption developed before the changes made by Federal Law N 119-FZ, that is, it dates back to the period before 01/01/2005 and partially to 2005. In addition, the decisions of arbitration courts are not legal normative acts of tax legislation and, in order to make the right decision when calculating tax amounts, should be considered by the taxpayer only in conjunction with other documents, as well as other sources of information.

1. If a VAT tax deduction has been made on a product, and it is subsequently used when performing construction and installation work for one’s own consumption, then there is no need to restore the VAT amount in this case. This conclusion follows from the Resolution of the Supreme Arbitration Court of the Supreme Higher Military District dated July 29, 2004 N A43-12403/2003-16-574, which states that the tax authority’s requirement to restore the VAT previously legally accepted for deduction in the case of using purchased goods for self-employed construction is unfounded.

2. The taxpayer has the opportunity to recover VAT by tax deduction from the accrued amounts of tax on the cost of construction and installation works when submitting a tax return for the same tax period when the tax amounts were accrued on actual expenses when performing construction and installation work for one’s own consumption. In accordance with the Resolution of the Federal Antimonopoly Service NWZ dated 09/06/2004 N A56-39987/03, the tax base for the calculation and payment of value added tax on construction and installation work for their own consumption arises for organizations from the moment the construction project is registered. Organizations have the right to claim tax deductions related to the performance of these works in the same tax period.

3. The taxpayer’s right to deduct tax amounts charged to him for goods (work, services) purchased by him to perform construction and installation work arises from a specific date - the first day of the month following the month in which the object was put into operation, and does not depend on the actual depreciation charge. This conclusion can be drawn from the Resolution of the Federal Antimonopoly Service dated 05.08.2004 N A57-5600/03-5.

4. According to the Resolution of the Federal Antimonopoly Service of the Federal Antimonopoly Service dated May 14, 2004 N F03-A51/04-2/850, a taxpayer, having an overpayment in his personal account in the amount of funds in an amount that covers the amount of tax payable to the budget in terms of the amount of VAT on construction installation work calculated according to Art. 173 of the Tax Code of the Russian Federation, has the right to apply a tax deduction in accordance with paragraph. 2 clause 6 art. 171 of the Tax Code of the Russian Federation in the manner established by paragraph. 2 clause 5 art. 172 of the Tax Code of the Russian Federation.

5. The right to apply a deduction for value added tax in relation to real estate arises from the first day of the month following the month in which this property was put into operation, and not from the moment of its state registration. The Resolution of the Federal Antimonopoly Service ZSO dated 03.10.2005 N F04-5883/2005(14659-A03-25) states that only the actual date of commissioning of the completed construction object is important, and not the date of submission of documents to the registering authority for registration of ownership of the object real estate.

V.V.Kulikov

Journal expert

"Current issues of accounting

accounting and taxation"

Signed for seal

09.02.2006
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