Costs for marketing services. Economically unreasonable expenses. Costs accepted for tax purposes.
Often, business entities, when carrying out activities, attract specialists in the field of law, marketing, accounting and auditing, and management. This way of doing business has obvious advantages for the business: from saving time to getting a guaranteed result from cooperation.
The conclusion of such agreements traditionally attracts particular attention of fiscal authorities. The grounds for not accepting such expenses, including, is the lack of need for such services and the connection with the economic activities of the taxpayer; the presence in the organization’s staff of specialists performing similar functions.
To reflect the services of consultants for the purposes of calculating taxes, it is necessary to carefully consider the paperwork, as well as the justification for the need to attract third-party specialists. What are the points that regulatory authorities take their interest in assessing expenses, which documents can confirm the fact of the provision of services, we will consider using the example of court case No. A56-88341 / 2017.
The plot of the case:
RSX LLC and the Anadolu Kam Sanayi representative office concluded a contract for the provision of services for compensation, in support of the provision of services, the parties prepared reports on the provision of services, acts of services rendered, invoices. In relation to LLC RSX, an on-site tax audit was carried out, which resulted in additional accrual of VAT and income tax.
According to the tax, the LLC could not include in the income tax expenses the cost of consulting services provided by the representative office of Anadolu Kam Sanayi company, since the documents are formal in nature, do not confirm the content of the operations performed, do not allow to establish which services are provided, are not economically justified; Contractual reports include a body of analytical information.
RSX LLC had full-time personnel for the execution of functions executed on behalf of the representative office; the transaction concluded with an interdependent person is aimed at optimizing the structure of LLC RSX by removing staff for the staff, aimed at minimizing the taxes transferred to the budget, as well as financing the costs of a foreign company operating in the interests of the owners.
At the same time, the tax authority recognized logistics, supply and technical customer support services as justified, excluding expenses for marketing services and services for the sale of products, consulting services. According to the inspection, these services are classified as consulting services in the field of logistics and are already included in the costs.
Having challenged the decision, the applicant pointed out that the services were actually provided, there was no requirement to indicate additional information in the acts of the services provided, there was no duplication of functions, the staff was not withdrawn from the staff, the parties paid taxes, due to which the Company could not receive unreasonable tax benefit.
Judicial act: Decision of the Arbitration Court of the city of St. Petersburg and the Leningrad Region of July 19, 2019 in the case of A56-88341 / 2017
Court findings:
1. With regard to the content of acts of rendered services and their forms, the court indicated that the logistics and supply services were recognized as justified, therefore, the form of the act with regard to the types of services allows determining the content of the fact of the economic activity of the Company and the quantities in kind and (or) monetary measurement. Claims to the form of supporting documents are unfounded.
2. The court, having analyzed the areas of activity and functions of the logistics department and the sales department, came to the conclusion that the functions of the sales department are related to the logistics department only in that the logistics fulfills orders for delivery of products to customers formed by the sales department. The representative office interacted with all buyers of RSX LLC, as well as searched for and attracted new customers. Marketing services provided by the representative office included services for the promotion of goods from producer to consumer and were aimed at increasing the Company's income. The employees of the sales department of RSX LLC did not have.
3. The arguments of the regulatory body that reports in the field of marketing are a common set of analytical information for a group of companies do not refute the focus of such expenses on making a profit.
4. Failure to provide documents defining the pricing mechanism of the contractor’s services is not a reason for refusing to deduct expenses, since tax legislation does not make the right to recognize expenses dependent on the level of detail of documents substantiating the cost of services. Failure by the applicant to provide information about the time spent by the personnel of the contractor on the provision of services does not indicate the groundlessness of the services provided.
5. The argument about the availability of the necessary specialists in the Company's staff is not valid, since the question has been raised about the advisability of concluding an agreement, which contradicts the functions of tax control.
6. The interdependence of the parties to the transaction alone cannot serve as a basis for declaring the tax benefit unreasonable. The Inspectorate did not provide evidence of the use of interdependence in order to increase revenue and reduce costs, as well as the effect of interdependence on the conditions or results of a transaction. The legislation does not prohibit interdependent persons from conducting business with each other. The representative office of the Company reflected revenue in tax and accounting, paid taxes to the budget, the effect of the services provided is confirmed by the income received by the Company.
Comments:
1) In the case under consideration, there is a typical situation when tax authorities do not accept expenses, because, in their opinion, supporting documents do not meet the requirements of the legislation: from the contents of the contract, the act of receiving and transmitting reports, it is impossible to unambiguously determine the list of services rendered, and the documents do not have sufficient information about the volume, nature and result of the provision of services, in the documents there is no calculation of the cost of the services provided, etc.
2) The decision of the tax authority is justifiably declared invalid by the court, since during the audit no circumstances were established that evidenced the receipt of tax benefits, there is no evidence of fictitious transactions. The whole decision is based only on formal conclusions about the inconsistency of the primary documents.
3) In order to exclude claims, the taxpayer should stock up with evidence of the need to attract third parties to provide services. The arguments may be as follows: job descriptions differ from the list of services provided, employees do not have sufficient experience, a large amount of work.
4) Also, the taxpayer should take care of the competent paperwork in advance. For this, it is necessary to draw up documents confirming the provision of services (contracts, assignments to contracts, estimates or plans, acts of acceptance, reports) in accordance with the requirements of the law; describe in detail in the documents - by whom, to whom and when, when the services are provided, the list and cost (confirmed by calculation) of the services; exclude from the contract for the provision of services a ban on the use of publicly available information; clearly reflect in the act of acceptance of services the fact of the provision of the service, as well as the relationship of the provision of such a service with the activities of the taxpayer.
In the event that your litigation or other dispute, contractual work or any other form of activity concerns the issues discussed in this or our other material, we recommend checking and making sure that your legal position complies with the latest changes in practice and legislation.
We will be happy to provide you with legal assistance regarding the minimization of legal risks and available opportunities. We will try to find a solution that is right for you.
Call +7 (383) 310-38-76 or write to info@vitvet.com.
Our law firm provides various legal services in various cities of Russia (including Novosibirsk, Tomsk, Omsk, Barnaul, Krasnoyarsk, Kemerovo, Novokuznetsk, Irkutsk, Chita, Vladivostok, Moscow, St. Petersburg, Yekaterinburg, Nizhny Novgorod, Kazan, Samara, Chelyabinsk, Rostov-on-Don, Ufa, Volgograd, Perm, Voronezh, Saratov, Krasnodar, Tolyatti, Sochi).
Marina Sorokina
