Payments by bills of exchange: accounting and VAT taxation

Receiving a bill of exchange from the buyer

When receiving a bill of exchange as payment for goods (work, services), when calculating VAT, please take into account:

the amount of debt paid by the bill;
interest or discount on the bill (if provided).

Determine the moment at which VAT must be charged on the cost of goods (work, services) paid for by bill of exchange.

VAT must be charged for payment to the budget in relation to all transactions recognized as an object of taxation, the moment of determining the tax base of which relates to the corresponding tax period (clause 4 of Article 166 of the Tax Code of the Russian Federation).

The moment of determining the tax base for the purpose of calculating VAT is the earliest of the following dates:

day of shipment (transfer) of goods (performance of work, provision of services);

day of payment, partial payment on account of upcoming deliveries of goods (performance of work, provision of services).

This is stated in paragraph 1 of Article 167 of the Tax Code of the Russian Federation.

Thus, VAT must be accrued for payment to the budget either on the day of shipment (transfer) of goods (performance of work, provision of services), or on the day of their payment - depending on which of these events occurred earlier.

If the goods were shipped (work performed, services provided) before the transfer of the bill of exchange, calculate VAT at the time of shipment (fulfillment, provision). At the same time, make the following entry in accounting:

Debit 90-3 (91-2) Credit 68 subaccount “VAT calculations”

– VAT is charged on sales proceeds.

For more information on how to calculate VAT on sales proceeds, see How to calculate VAT on the sale of goods (works, services).

If the bill of exchange was received before the goods were shipped (work performed, services provided), the procedure for calculating VAT will depend on which bill of exchange was received: the buyer’s (customer’s) own bill of exchange or a third party’s bill of exchange.

Buyer's own bill

The buyer’s (customer’s) own bill of exchange, received before the shipment of goods (performance of work, provision of services), is not considered receipt of payment (including advance payment (partial payment)). In this case, VAT will be charged only when one of the following events occurs:

actual payment has been received on your own bill of exchange;
own bill of exchange is transferred to a third party;
goods (work, services) have been shipped (performed, provided).

This procedure follows from paragraph 1 of Article 154 and paragraph 1 of Article 162 of the Tax Code of the Russian Federation. This is explained by the fact that your own bill only confirms the obligation to pay the resulting debt (Article 815 of the Civil Code of the Russian Federation) and (or) delays the date of payment (Article 823 of the Civil Code of the Russian Federation). Until the buyer's own note is paid (or transferred to a third party), the payment obligation is considered outstanding.

Attention: some courts recognize that, having received the buyer's own bill of exchange as an advance, the seller must charge VAT. Subsequently, if the contract is terminated and the seller returns the bill, he will have the right to deduct the VAT paid on the advance payment. Such conclusions are contained, in particular, in the resolution of the Federal Antimonopoly Service of the Moscow District dated May 30, 2013 No. A40-85003/12-20-462.

Bill of exchange for accounting purposes: what is it?

Transactions with bills of exchange have become widespread in business practice due to the fact that bills of exchange, in fact, are instruments of multifunctional use: both as a commodity and as a financial instrument. A bill of exchange, as an object of civil rights, can be used, for example:

As a means of formalizing loan (credit) relationships.
In practice, settlement schemes have become widespread in which the buyer issues his own bill of exchange as a way to secure a commercial loan (in the sense of Article 823 of the Civil Code of the Russian Federation).
As property, the subject of a civil transaction.
The fact is that, in accordance with the provisions of Art. 143 of the Civil Code of the Russian Federation, a bill of exchange is a type of security, and securities, in turn, are classified by civil law as property (Article 128 of the Civil Code of the Russian Federation). This property of a bill of exchange is used in transactions involving bills of exchange of third parties.

In fact, countless copies have been broken precisely on the use of a bill of exchange as the subject of a civil transaction, and here’s why: even before the introduction of the Tax Code, the tax authorities recognized the bill of exchange as an instrument for settlements.
In particular, the letter of the Ministry of Taxes of Russia dated February 25, 1999 No. 03–4–09/39 “On value added tax” contains the statement that “a bill simultaneously combines the properties of a security, a debt obligation and a means of payment.” The position of the highest judicial power is much more cautious, for example, in paragraph 35 of the resolution of the Plenum of the Supreme Court of the Russian Federation and the Plenum of the Supreme Arbitration Court of the Russian Federation dated December 4, 2000 No. 33/14, it is explained that “in cases where the agreement provides that one party transfers goods, produces work or provides services, and another issues (transfers) a bill of exchange or accepts a bill of exchange issued to it on agreed terms, then the obligations of the latter are considered fulfilled when these actions are performed...”

Due to the similarity of these statements, participants in economic transactions developed a strong belief that a bill of exchange is a possible settlement instrument. But this is not entirely true. In particular, the norms of the Civil Code of the Russian Federation (Chapter 46) define the types of settlements between participants in economic and financial relations. The Civil Code of the Russian Federation establishes that payments can be made in cash and non-cash (Article 861 of the Civil Code of the Russian Federation); in turn, cash payments are carried out using cash (Article 140 of the Civil Code of the Russian Federation), and non-cash payments are carried out using payment orders, letters of credit, collection (collection orders), checks. This completes the list of payment methods. Thus, the Civil Code of the Russian Federation does not recognize a bill of exchange as a payment instrument.

It would seem like a paradox: settlements with bills of exchange as payment instruments are widely used, but such a settlement is not in the code?
However, there is no contradiction here: what happens in everyday practice is either the issuance of bills of exchange to secure credit relations, or a civil law transaction to fulfill obligations with the alienation (acquisition) of property (security). It is this circumstance that is the main source of problems associated with the calculation of VAT.

Third party promissory note

When receiving a bill of exchange from a third party from the buyer before shipment of goods (performance of work, provision of services), accrue VAT at the time the bill of exchange is accepted for accounting (subclause 2, clause 1, article 167 of the Tax Code of the Russian Federation). This is due to the fact that a third party bill of exchange received from the buyer (customer) before the shipment of goods (performance of work, provision of services) is considered receipt of advance payment (advance payment (partial payment)). A third party’s bill of exchange is property – a financial investment in the form of a security (clauses 2–3 of PBU 19/02, clauses 1 and 2 of Article 38 of the Tax Code of the Russian Federation). Therefore (unlike its own bill of exchange) it extinguishes the obligations of the buyer (customer). A similar point of view is shared by the Russian Ministry of Finance in letter No. 03-04-08/77 dated April 10, 2006. Thus, upon receipt of a third party’s bill of exchange, the buyer’s (customer’s) obligation to pay for goods (work, services) is considered fulfilled. This follows from paragraph 2 of Article 153 and paragraph 1 of Article 154 of the Tax Code of the Russian Federation.

The accrual of VAT on an advance (partial payment) received in the form of a third party bill of exchange should be reflected as follows:

VAT on interest on a bill

As a rule, the buyer pays the seller with a bill of exchange, which provides additional income in the form of interest or a discount.

If the goods (work, services) for which the bill of exchange is received are subject to VAT, the interest (discount) on the bill of exchange increases the tax base (subclause 3 of clause 1 of Article 162 of the Tax Code of the Russian Federation). However, VAT does not need to be charged on the entire amount of interest (discount). But only from that part of it that exceeds the amount of interest calculated at the refinancing rates in force in the periods for which the calculation is made (subclause 3, clause 1, article 162 of the Tax Code of the Russian Federation).

Calculate the amount of VAT when receiving interest (discount) on a bill depending on the applicable tax rate as follows.

If the goods (work, services) in payment for which the bill of exchange was received and with which the receipt of interest (discount) on the bill of exchange is associated are subject to VAT at a rate of 18 percent, use the formula:

VAT

Amount of interest (discount) on the bill

–

Interest amount calculated based on the refinancing rate

18118

VAT

Amount of interest (discount) on the bill

–

Interest amount calculated based on the refinancing rate

10/110

Such rules are established in subparagraph 3 of paragraph 1 of Article 162 and paragraph 4 of Article 164 of the Tax Code of the Russian Federation.

In accounting, reflect the accrual of VAT on interest (discount) on bills of exchange of buyers (customers) by posting:

Debit 91-2 Credit 68 subaccount “VAT calculations”

– VAT is charged on interest (discount) on the bill.

This procedure is provided for in the Instructions for the chart of accounts.

If the goods (work, services) with which the receipt of interest (discount) is associated are not subject to VAT, do not charge the tax (clause 2 of Article 162 of the Tax Code of the Russian Federation).

An example of calculating and reflecting in accounting VAT from a discount on the buyer’s own bill of exchange received by the seller as payment for shipped goods

On January 9, Alfa CJSC (seller) shipped a consignment of goods to Torgovaya LLC (buyer) for a total amount of 118,000 rubles. (including VAT – 18,000 rubles). Cost of goods sold – 90,000 rubles.

In payment for the goods, the buyer issued the seller a simple promissory note dated January 5 of the year with a face value of 130,000 rubles. The maturity date of the bill is January 31. On this day, the bill was presented for redemption and the entire amount was transferred to the seller’s bank account.

The discount amount on the bill is 12,000 rubles. (RUB 130,000 – RUB 118,000). The refinancing rate in January is 8.25 percent (conditionally).

For accounting purposes, Alpha's accounting policy does not provide for uniform attribution of the discount to financial results during the circulation period of the bill.

Alpha's accountant calculated the amount of the discount on which the selling organization needs to charge VAT. First, he determined the amount of interest based on the refinancing rate: 118,000 rubles. × 8.25%: 365 days. × 22 days = 587 rub.

The amount of VAT payable to the budget on the amount of the discount received on the bill is equal to: (12,000 rubles – 587 rubles) × 18/118 = 1,741 rubles.

In accounting, to reflect settlements with bills of exchange, the Alpha accountant opened a subaccount “Settlements on bills received” to account 62 “Settlements with buyers and customers”.

The following entries were made in accounting.

January 9:

Debit 62 Credit 90-1 – 118,000 rub. – revenue from the sale of goods is reflected;

Debit 90-2 Credit 41 – 90,000 rub. – the cost of goods sold is written off;

Debit 90-3 Credit 68 subaccount “VAT calculations” – 18,000 rubles. – VAT is charged for payment to the budget on proceeds from the sale of goods;

Debit 62 subaccount “Settlements on bills received” Credit 62 – 118,000 rubles. – the buyer’s own bill of exchange has been received.

January 31:

Debit 51 Credit 62 subaccount “Settlements on bills received” – 118,000 rubles. – money received from the repayment of the bill (in terms of debt under the purchase and sale agreement);

Debit 62 subaccount “Settlements on bills received” Credit 91-1 – 12,000 rubles. – income is recognized in the form of a discount on the bill;

Debit 51 Credit 62 subaccount “Settlements on bills received” – 12,000 rubles. – received a discount on the bill;

Debit 91-2 Credit 68 subaccount “VAT calculations” – 1741 rubles. – VAT is charged on the discount on the bill.

An example of calculating and reflecting in accounting VAT on interest on a personal bill received from the buyer as payment for shipped goods

On January 9, Alfa CJSC (seller) shipped a consignment of goods to Torgovaya LLC (buyer) for a total amount of 236,000 rubles. (including VAT – 36,000 rubles). Cost of goods sold – 180,000 rubles.

In payment for the goods, the buyer issued the seller a promissory note with a nominal value of 236,000 rubles. The repayment period is “at sight”. The bill provides for the accrual of interest from the day following the day of its preparation until the debt on the bill is repaid at the rate of 15 percent per annum.

The refinancing rate in January is 8.25 percent (conditionally). On January 31, the bill was presented for redemption and the entire amount was transferred to the seller’s bank account, including interest.

The interest rate, calculated on the basis of 15 percent per annum, is: 236,000 rubles. × 15%: 365 days. × 22 days = 2133 rub.

The amount of interest calculated based on the refinancing rate is: RUB 236,000. × 8.25%: 365 days. × 22 days = 1174 rub.

The amount of VAT payable to the budget on the amount of interest received on the bill is equal to: (2133 rubles – 1174 rubles) × 18/118 = 146 rubles.

In accounting, to reflect settlements with bills of exchange, the Alpha accountant opened a subaccount “Settlements on bills received” to account 62 “Settlements with buyers and customers”.

The following entries were made in accounting.

January 9:

Debit 62 Credit 90-1 – 236,000 rubles. – revenue from the sale of goods is reflected;

Debit 90-2 Credit 41 – 180,000 rub. – the cost of goods sold is written off;

Debit 90-3 Credit 68 subaccount “Calculations for VAT” – 36,000 rubles. – VAT is charged on proceeds from the sale of goods;

Debit 62 subaccount “Settlements on bills received” Credit 62 – 236,000 rubles. – the buyer’s own bill of exchange has been received.

January 31:

Debit 51 Credit 62 subaccount “Settlements on bills received” – 236,000 rubles. – money received from the repayment of the bill (in terms of debt under the purchase and sale agreement);

Debit 62 subaccount “Settlements on bills received” Credit 91-1 – 2133 rubles. – interest accrued on the bill;

Debit 51 Credit 62 subaccount “Settlements on bills received” – 2133 rubles. – interest on the bill is received;

Debit 91-2 Credit 68 subaccount “VAT calculations” – 146 rubles. – VAT is charged for payment to the budget on interest on the bill.

An example of calculating and reflecting in accounting VAT on a discount on a third party bill of exchange received by the seller as payment for shipped goods

On January 9, Alfa CJSC (seller) shipped a consignment of goods to Torgovaya LLC (buyer) for a total amount of 118,000 rubles. (including VAT – 18,000 rubles). Cost of goods sold – 90,000 rubles.

In payment for the goods, the buyer issued the seller a third party bill of exchange with a nominal value of 130,000 rubles. The maturity date of the bill is January 31. On this day, the bill was presented for redemption and the entire amount was transferred to the seller’s bank account. According to the accounting policy of the organization, the difference between the nominal and original value of debt securities for which the current market value is not determined is written off at the time of redemption (disposal) of the security.

The discount amount on the bill was 12,000 rubles. (RUB 130,000 – RUB 118,000). The refinancing rate in January is 8.25 percent (conditionally).

The organization's accounting policy for accounting purposes does not provide for uniform attribution of the discount to financial results during the circulation period of the bill.

Alpha's accountant calculated the amount of the discount on which the selling organization needs to charge VAT. First, he determined the discount amount within the percentage calculated based on the refinancing rate: 118,000 rubles. × 8.25%: 365 days. × 22 days = 587 rub.

VAT on the amount of the discount received on the bill will be: (12,000 rubles – 587 rubles) × 18/118 = 1,741 rubles.

Alpha's accountant made the following entries in the accounting.

January 9:

Debit 62 Credit 90-1 – 118,000 rub. – revenue from the sale of goods is reflected;

Debit 90-2 Credit 41 – 90,000 rub. – the cost of goods sold is written off;

Debit 90-3 Credit 68 subaccount “VAT calculations” – 18,000 rubles. – VAT is charged for payment to the budget on proceeds from the sale of goods;

Debit 58-2 Credit 62 – 118,000 rub. – a third party’s bill of exchange was received in payment for goods sold.

January 31:

Debit 76 Credit 91-1 – 130,000 rub. – a bill of exchange is presented for redemption;

Debit 51 Credit 76 – 130,000 rub. – money is received from the drawer (the bill is repaid in full);

Debit 91-2 Credit 58-2 – 118,000 rubles. – the value of the bill presented for redemption is written off;

Debit 91-2 Credit 68 subaccount “VAT calculations” – 1741 rubles. – VAT is charged on the discount on the repaid bill.

Situation: when should the amount of interest (discount) on your own bill of exchange or a bill of exchange of a third party received by the seller for goods (work, services) be included in the VAT tax base - upon payment (actual receipt of money) or at the time of accrual?

Include interest on a bill of exchange in VAT calculations in the period in which they were actually received.

Amounts in the form of interest (discount) on bills received as payment for goods sold (work, services), in part exceeding the amount of interest at refinancing rates, are subject to VAT in the manner specified in Article 162 of the Tax Code of the Russian Federation. From the literal interpretation of the provisions of Article 162 of the Tax Code of the Russian Federation, it follows that amounts associated with settlements for payment for goods (work, services) are included in the tax base at the moment when they are received by the organization.

Bill catch

Material provided by the magazine "Raschet"

Natalia MARTYNYUK

By paying the supplier with someone else's bill of exchange, the company loses part of the VAT deduction for general business expenses. The tax authorities insist on this. However, the entire deduction or a significant part of it can be saved by playing on the unclear wording of the Tax Code.

The Federal Tax Service is convinced that by paying a supplier with a third party bill of exchange, the company transfers ownership of it, and on a reimbursable basis. That is, she sells a bill, which is a security. Sales of securities are not subject to VAT (subclause 12, clause 2, article 149 of the Tax Code). This means that, in addition to VAT-taxable turnover, the company also has non-taxable turnover.

And if so, then input VAT on expenses attributable to the sale of bills of exchange cannot be deducted and must be taken into account separately (clause 4 of Article 170 of the Tax Code). Most likely, it will not be possible to deduct only part of the VAT on general business expenses (payments for electricity, water, heat, rent, and the like), since companies usually do not have direct costs for the sale of bills. This part of the tax is determined by calculation - based on the share of non-VAT-taxable transactions in their total volume.

All this, of course, is correct, but only if we consider the transfer of a bill of exchange in payment for goods to be the sale of a security. However, firms that do not specialize in transactions with bills and do not make a profit from them actually use them in a different capacity - as a means of payment. Then, obviously, one cannot talk about the sale of the bill - just as one cannot talk about the sale of money.

And in contracts, wordings like “pay with a bill of exchange” or “transfer a bill of exchange as payment” have already taken root. And many are accustomed to perceive a bill of exchange as a kind of money substitute. Perhaps that is why, until recently, few people thought of keeping separate records of “input” VAT when paying with bills of exchange.

However, the fact that a bill of exchange can act as a means of payment follows not only from business customs. This fact is confirmed by Government Decree No. 1094 of September 26, 1994. The bill of exchange used to pay the supplier was recognized as a payment document by the Supreme Court (Resolution of the Presidium of January 17, 2001). Following him, the Federal Arbitration Court of the North-Western District did this, clarifying that a bill of exchange is “a payment document used for non-cash payments” (resolution of November 20, 2003 No. A56-12457/03). The transfer of bills of exchange was considered one of the forms of settlement by the federal arbitrators of the West Siberian District (resolution dated November 26, 2001 No. F04/3618-1226/A45-2001) and the Central District (resolution dated March 23, 2001 No. 182/10).

And the tax department itself, being still a ministry, agreed with this - in a letter dated February 25, 1999 No. 03-4-09/39.

Ignoring it is costly

However, now the Federal Tax Service considers a bill of exchange exclusively as a security. This follows from the only document in which the tax authorities stated their demands - letter from the Ministry of Taxes and Taxes dated June 21, 2004 No. 02-5-11/111(a). True, it was published on behalf of the department (now management) of income taxation. And for some reason the Federal Tax Service, which is responsible for VAT, has never officially admitted its beliefs. But be that as it may, the essence of the position of the Federal Tax Service is set out in the letter. Therefore, there is little hope that inspectors will agree to recognize the bill as a means of payment.

And although the tax authorities’ requirement can be challenged, ignoring it altogether is too costly. After all, having discovered the absence of separate accounting for VAT when paying with bills of exchange, inspectors will not simply remove the deduction of the tax attributable to them. With reference to paragraph 4 of Article 170, they will restore in general all VAT accepted for deduction for the period. It will not even be possible to reduce taxable profit using it (the tax authorities especially emphasized this in the mentioned letter).

The tax authorities will undoubtedly write off the amount of the restored VAT and penalties on it from the company’s bank accounts. And even if you later prove in court that the inspectors are wrong, the company will still be left without this money for some time. Therefore, it is better to keep separate accounting for that part of the input VAT that falls on the sale of bills. But whether to deduct this VAT or not depends on whether you are ready to prove in court that you used the bills not as securities, but as a means of payment.

The outcome of such a dispute is unpredictable. Although in the aforementioned decisions the judges called the transfer of a bill of exchange a method of payment, it must be taken into account that they considered completely different issues. And the requirement to divide VAT on general business expenses when paying with bills of exchange has so far been the subject of litigation only twice. The Federal Arbitration Court of the West Siberian District did not support the tax authorities (resolution dated March 3, 2004 No. F04/1066-81/A67-2004). And the federal arbitrators of the Central District made a decision in their favor (resolution dated July 29, 2004 No. A23-357/04A-14-33).

However, there is another way to save the deduction. After all, paragraph 4 of Article 170, on which the tax authorities base their requirements, is not at all adapted to cases of settlements with bills of exchange.

Play at 5 percent

Even those who have VAT-free transactions can safely avoid separate accounting and deduct all input VAT under one condition. It is formulated in the same paragraph 4 of Article 170: the share of “total production costs” of goods, the sale of which is not subject to VAT, does not exceed 5 percent of “total production costs.”

But what could be the costs of “producing” a bill of exchange, especially for a company that did not “produce” it, but bought it or received it from the buyer for its products? Obviously none. Therefore, it can be argued that the share of such expenses is zero, which is clearly less than 5 percent. This means that all input VAT can be deducted.

Tax officials are unlikely to agree with this. The Department of Indirect Taxes of the Federal Tax Service told us that the words “production of bills” cannot be understood in their full sense. They are convinced that the costs of such “production” will be equal to the amount for which the company purchased the bill. And if she received it for her goods, then its contractual value. That is, in any case, you need to take into account the share of the purchase price of the bill.

However, the word “production” not only can, but also must be understood in its full sense. The fact is that initially the “5 percent rule” in paragraph 4 of Article 170 sounded slightly different. It said that to calculate the share, you need to take the costs of “production and (or) sale” of goods not subject to VAT. However, Law No. 57-FZ of May 29, 2002 excluded any mention of implementation. So its absence is not a mistake of the legislator at all, but a deliberate step. Therefore, it is impossible to assume that production here should be understood as something broader than production itself as such.

However, only those companies that produce at least something during the period of bill settlement can afford such logic. Otherwise, it turns out that they have no production costs, which means that the 5% exception to the rules is not for them at all. That is, you need to keep separate records and part with part of the VAT deduction for general business expenses in any case.

The rest can only refer to paragraph 43 of the VAT guidelines (Order of the Ministry of Taxes of December 20, 2000 No. BG-3-03/447). There, tax officials indicated that the 5 percent limit can also be calculated in trade. But then for the calculation you will have to take the purchase price of the bill.

How much does a “shipped” bill cost?

Those who do not risk keeping the entire VAT deduction for general business expenses for themselves can at least reduce the amount they part with. This can be done by another wording of paragraph 4 of Article 170, which is not very suitable for bills of exchange.

It determines how to calculate the share of input VAT that cannot be deducted: “based on the cost of goods shipped,” the sale of which is exempt from VAT, in the total cost of shipments for the month (or quarter). But what is considered the value of the “shipped” bill? The Department of Indirect Taxes of the Federal Tax Service confidently told us that this is nothing more than the cost of goods for which the company paid with this bill.

But why not the book value of the bill? After all, paragraph 4 of Article 170 does not talk about the sale price. He does not specify at all what value of the bill he is talking about. But its value is indicated by another article, which also concerns settlements with bills - 172nd. It establishes a special rule for calculating the amount of VAT deduction for goods purchased with a bill of exchange: based on its book value (that is, the one at which it was purchased - clause 14 of PBU 19/02). And it is often less than the cost of the goods for which the bill is transferred. If this is exactly your case, then by taking the book value of the bill of exchange and the sales value of VAT-taxable shipments to calculate the share, you can slightly reduce the tax that cannot be deducted.

An additional argument in favor of doing just that is paragraph 7 of Article 3 of the Code. It directs that any ambiguities therein be interpreted in favor of taxpayers. The tax authorities’ option is in favor of the budget. After all, it turns out that for the same transaction, VAT, which can be deducted on goods purchased for a bill of exchange, will have to be calculated based on its lower value - the balance sheet. And the amount that cannot be deducted for general business expenses is based on the greater cost of the goods themselves.

You can further reduce the amount of VAT not deductible if you take the proceeds from the sale of goods subject to VAT, taking into account this tax, to calculate the share. This will again go against the beliefs of tax officials, who insist that when calculating the proportion, the cost of shipped goods must be “cleared” of VAT (letter of the Ministry of Taxes of January 19, 2004 No. 03-1-08/111/18). But since the Tax Code says nothing on this matter, this issue can be resolved using accounting policies. Indicate in it that you are calculating the share based on the cost of shipments including VAT. At least the courts agree with this (for example, resolution of the Federal Antimonopoly Service of the West Siberian District dated August 2, 2004 No. F04-5288/2004 (A45-3291-25)).

Did you get a loan? Stay without deduction
The same trick as paying with a bill of exchange can be issuing a loan. After all, “services for providing a loan in cash”, just like the sale of securities, are not subject to VAT (subclause 15, clause 3, article 149 of the Tax Code). Therefore, the Federal Tax Service is convinced that a company that has provided a loan to someone, even its own employee, cannot deduct part of the input tax and must keep separate records of it under paragraph 4 of Article 170 of the Tax Code. Unless, of course, the cost of providing a loan is less than 5 percent of total expenses for the month or quarter.
It is unlikely that firms that issue loans from time to time have any direct costs for these operations. Therefore, in calculating the 5 percent limit, you need to take only the portion of general business expenses attributable to the provision of the loan. This part must be calculated based on the share of the cost of the “shipped service” for providing a loan in the total cost of shipments for the month or quarter. And the cost of the loan service will be the amount of interest that the borrower will have to pay.
And if the share of expenses for issuing a loan exceeds the maximum 5 percent, then the tax authorities will not allow input VAT on them to be deducted. Having discovered that its amounts have not yet been taken into account separately, the inspectors will restore all VAT accepted for deduction during the period of the loan. Moreover, there is little chance of challenging this in court. Thus, considering a similar dispute, the Federal Arbitration Court of the North-Western District made a decision in favor of the tax authorities (resolution dated March 31, 2004 No. A42-3992/02-22).
At first glance, everything is simple with the now popular interest-free loans. After all, if there is no interest, then the cost of the “service” to provide it is zero, which means that all input VAT on general business expenses can be safely deducted. However, as we were told by the Department of Indirect Taxes of the Federal Tax Service, if we are talking about loans between interdependent persons, the inspectorate will calculate the “cost of the service” at the refinancing rate (the tax authorities stubbornly consider it to be the market price of loans). And interest-free loans are often issued either to subsidiaries, or to founders, or to directors and other employees.

Pure accounting approach
Another way to avoid losing the VAT deduction for general business expenses when paying with bills of exchange is suggested by one of the court decisions. The tax authorities' claims against the company that used them were declared illegal by the arbitrators (resolution of the Federal Antimonopoly Service of the West Siberian District dated March 3, 2004 No. F04/1066-81/A67-2004).
The method is based on the fact that paragraph 4 of Article 170 does not say exactly how to maintain the separate accounting of input VAT prescribed by it. This tax, like most others, is calculated according to accounting data (Clause 1, Article 54 of the Tax Code). And it allows the accountant to choose how to reflect transactions with securities in general, and therefore with bills of exchange in particular: as income and expenses for ordinary activities or as others.
By choosing the latter, you will separately show all transactions with bills on account 91 “Other income and expenses”, thereby organizing their separate accounting. And you will begin to reflect all expenses for ordinary activities on account 26 “General business expenses” (or 44 “Sales expenses”), and then write off as a debit to account 90 “Sales”.
The latter has nothing to do with the score 91. It turns out that in account 26 (or 44) you will have expenses that relate exclusively to activities subject to VAT. And there will simply be no costs that cannot be clearly attributed to VAT-taxable or non-VAT-taxable transactions. This means that all VAT on general business expenses can be easily deducted. The judges emphasized that in this case, all costs on “incoming” invoices form the cost of the company’s products, subject to VAT, and not bills of exchange.