Officials indicate that supplier costs for store services for priority display of goods are taken into account as advertising expenses within 1 percent of the company's revenue. Some judges agree that such expenses are considered advertising expenses. However, most consider these costs to be other expenses and recommend taking them into account in full.
Stanislav Dzhaarbekov,
partner of the company "MCFER-consulting", certified auditor
One of the problems with advertising expenses is that some types of such expenses are standardized at 1 percent of sales revenue. Moreover, in the author’s opinion, the composition of standardized expenses is determined unsuccessfully. It is not clear why there is a need to limit advertising costs. As you know, advertising is the engine of trade. Accordingly, the more advertising expenses, the more income and the higher the tax base.
The problem of limiting advertising costs is the following: it establishes a list of advertising costs, both standardized and taken into account in full. However, the line between advertising and other expenses for promoting a product is very thin. In this regard, controllers often include things that are not advertising as advertising expenses. In such situations, such expenses fall under regulated advertising (since they are not on the list of non-standardized advertising expenses).
A similar situation has developed with regard to the costs of priority display of goods (merchandising).
We believe that here we need to understand what merchandising is - is it advertising or not?
The essence of merchandising (priority display of goods) is that the performer (store retail) places the supplier’s goods in the most visible and convenient display locations for the buyer, which increases the likelihood of purchasing the goods.
Thus, advertising is primarily information about the product.
The point of priority display is not to disseminate any additional information about the product, but to place the product in a more visible and convenient location on the sales floor. The author believes that priority display is a product promotion service; it is not advertising, since it does not contain additional information about the product.
Along with priority display, a retail store can post product information for customers. Such additional information may be recognized as advertising, and then the service provided by the contractor includes services for priority display (merchandising) and advertising services. But such advertising is recognized as an expense without restrictions as a window dressing service.
Judicial practice generally follows the approach that priority display services are not recognized as expenses for regulated advertising, but are other expenses taken into account without limiting the amount.
Thus, the judges of the FAS Moscow District considered the following situation.
The store provided the society with services related to special display and services related to highlighting the taxpayer’s products by providing billboards (boards for displaying visual aids about the product), which are placed in places where goods are displayed indicating information that the taxpayer’s products are located in this location.
Dispute between tax office and the taxpayer was precisely on the issue under consideration: is merchandising regulated advertising or other expenses for promoting a product?
The judgment was rendered in favor of the taxpayer. At the same time, in its decision, the court noted that services for priority display of goods are subject to full accounting as part of other expenses associated with production and (or) sales, since they are not recognized as advertising in relation to the provisions.
Accommodation services billboards(boards for placing visual aids about the product) and price tags in places of special display represent services for decorating points of sale of goods with advertising materials (window display decoration). Such services are also taken into account for profit tax purposes in full.
It is worth noting that the display of goods involves the placement of the goods themselves in places of sale, but the buyer does not receive additional information about the product or its manufacturer as a result of the display of the goods. Any information is contained only on the product packaging. In turn, the information contained on the packaging is not advertising in itself.
The purpose of advertising is to create or maintain interest in the advertised persons, their type of activity, goods, ideas and undertakings, as well as to promote the sale of goods, ideas and undertakings. At the same time, the purpose of placing information on product packaging is to provide the buyer with information about consumer properties the product, its purpose, composition, storage conditions, date and place of manufacture and packaging, etc.
Providing specified information, as well as other information containing the main characteristics of the product and its purpose, is the responsibility of the seller in order to ensure that consumers can correctly select the product. Thus, identifying the information placed on packaging with product advertising contradicts the goals and essence of advertising activities.
In another ruling by the judges of the Federal Antimonopoly Service of the Moscow District, it is also noted that the display of goods represents a certain location of the goods themselves in the places of their sale and does not contain additional details and information. The purpose of the display is to attract customers' attention to the product, to stimulate the purchase of certain products, which is achieved by proper placement of the product (taking into account a certain area of the sales floor, the level of shelves, as well as other factors). Thus, identifying the display of a product with its advertising contradicts the goals and essence of advertising activities. This judgment was also made in favor of the taxpayer.
Other judges have expressed the same approach.
However, there are some court decisions where merchandising expenses have been recognized as advertising expenses.
Thus, when examining one of the cases, the arbitrators of the Moscow District came to the conclusion that the costs of priority display are advertising costs. But in this court case the dispute was not about whether such expenses are normalized or not, but about whether such expenses are recognized at all or not. The court decision was made in favor of the taxpayer.
A similar conclusion was made by the judges of the Ural District.
Based on the above, the author believes that the costs of priority display (merchandising) are recognized as other expenses. If such services are accompanied by the placement of billboards with information about the product, then this part of the costs is recognized as non-standardized advertising, like window dressing.
At the same time, given the position of the Russian Ministry of Finance on this issue, such an approach may cause controversy with tax inspectors. Therefore, companies must independently assess the risks of claims from inspectors. To substantiate your position, we recommend using the established judicial practice on this issue.
Document:
Merchandising and its reflection in tax accounting
Among the expenses that are dearly loved in business environment, merchandising costs occupy a special place. Such expenses can amount to quite a decent amount and are made on on an ongoing basis(that is, from month to month); At the same time, it is difficult for inspectors to control the reality of receiving such services, as well as the adequacy of pricing.
What is merchandising?
State Committee for Entrepreneurship in letter dated December 8, 2009 No. 15041, referring to Great encyclopedia Cyril and Methodius, defined merchandising as types of marketing that promote intensive promotion of goods in retail trade without active participation special personnel(for example, skillful placement of goods in trading floor, original design of counters and display cases, organization of presentations with the distribution of souvenirs, provision of discounts and benefits).
In turn, the State Tax Administration (see letter dated January 28, 2010 No. 806/6/23-4016/40) understands merchandising as a new direction trade marketing, covering primarily:
Display and placement of goods at the point of retail sale;
Ensuring an appropriate assortment and sufficient quantity of goods;
Organization of local advertising, for example: installation of special branded equipment at a retail outlet (refrigerators, displays, racks, shelves, etc.), presentation structures (pedestals, exhibition stands, advertising stands, stands for advertising materials, etc.), placement printed advertising products (booklets, posters, garlands, flags, etc.), organization of on-site promotions in the form of tastings, free distribution, etc.;
Analysis of sales indicators;
Solving certain issues pricing policy on the maximum trade markup;
Instruction for sellers retail stores regarding consumer characteristics of the product, methods of motivating consumers.
It should be noted that the State Tax Administration took a rather strange position regarding tax accounting merchandising expenses. Thus, in the consultation in the “Bulletin of the Tax Service of Ukraine” No. 37/2007, the taxpayer was allowed to include in the gross costs “expenses for promoting goods on the market, pre-sale preparation and placement (display) of goods on display cases and special structures<...>(provided that this product sold (provided) by such payer).”
But in the above-mentioned letter from the State Tax Administration dated January 28, 2010. No. 806/6/23-4016/40, when organizing tax accounting for such expenses, it was proposed to be guided by the “marketing” letter dated July 29, 2008 No. 15176/7/15-0217, which sets out the following position of the tax authorities:
«<...>Marketing expenses are reflected in gross costs only if they correspond to the costs of pre-sale and promotional activities specified in subclause 5.4.4 of clause 5.4 of Art. 5 of the Law [On Profit] (in particular, services for placing products at points of sale, services for cleaning, packaging, prompt replenishment of goods on shelves, posting information about goods, etc.).
Moreover, in accordance with the specified subparagraph of the Law, the taxpayer has the right to include in the gross costs marketing expenses for goods (work, services) that are sold (provided) by such a taxpayer. That is, these expenses must be directly related to the economic activities of the taxpayer.”
The main problems that such a position gives rise to:
1) reduction of marketing (including merchandise design) services to expenses for pre-sale and advertising events. As a result, a particular taxpayer is potentially at risk of a discussion with the inspector about how pre-sale and advertising services he received are and whether they really fit within the scope of the clause. 5.4.4 of the Law on Profit;
2) arising from clause. 5.4.4 of the Law on Profit recognition of gross costs from the customer only if marketing (including merchandising) services are provided for goods sold by such customer. This condition - with its fiscal interpretation - creates problems when working with large trade (retail) networks: as a rule, such networks provide marketing services to their suppliers at retail sales goods in chain stores (the ownership of such goods no longer belongs to the supplier, the retailer).
Previously, we recognized that such services are without any doubt related to the business activities of the supplier (they are carried out in connection with the sales of its goods and are ultimately aimed at increasing its income); therefore, the corresponding costs should be included in the gross costs. In addition, it is obvious that p/n. 5.4.4 of the Law on Profit can also be understood non-fiscally: services must relate to goods that, in principle, are sold by the payer; the sequence (first services - then sale or first sale - then services) and tax periods of transactions do not matter.
Nevertheless, we assumed that the gross value of such services could be questioned by tax authorities: they say, ownership of the goods has passed from the supplier to the retailer - therefore, services are paid for promoting not their own, but someone else’s goods. The above letters and consultations of the State Tax Administration, as well as the practice of on-site inspections confirmed the relevance of our assumptions.
In such a situation, disputes naturally were transferred to the courts. Thus, in the resolution of the District Administrative Court of Kiev dated November 21, 2008 No. 10/410, a progressive conclusion was made that the Law on Profit, as well as others regulations do not provide guidance that expenses for pre-sale services should only be incurred in respect of goods that are the property of the taxpayer. Services provided by supermarkets (marketing services, services for promoting goods in retail chains, services for introducing new products into the assortment list of goods, services for organizing the sale of goods, services for stimulating demand, merchandising services) directly influenced the results of the supplier’s activities and were aimed at to receive income.
Of particular interest to merchandising lovers is the Vadsud definition dated 04/08/2010 No. K-16160/07. As follows from the definition, Vadsud agreed that services for promoting goods on the market, distributing goods, ensuring standards, placing goods in retail outlets are related to the business activities of the supplier (product manufacturer and wholesaler) and are considered its pre-sale and promotional activities. Such services provide demand for these goods, and therefore provide the supplier with future income. At the same time, the gross costs of pre-sale and advertising expenses do not depend on the availability of ownership of the product at the time of receiving services - it is only important that the product is sold by such a supplier.
In other words, Vadsud agreed with the State Tax Administration that merchandising services are included in the gross costs on the basis of p/p. 5.4.4 of the Law on Profit. However, firstly, the court demonstrated a broad understanding of pre-sale and promotional activities (see the list of services provided under the plaintiff’s agreement with the distributor cited in the definition), and secondly, it rejected the fiscal interpretation of the construction used in the clause. 5.4.4 (“in relation to goods (work, services) sold (provided) by such a payer”). The court did not agree that the goods for which pre-sale and advertising services are provided must at that moment be the property of the payer; if such goods have ever been sold or will be sold by such a payer, then this is sufficient to include such expenses in the gross costs*.
We hope that this position of Vadsud concerns not only “Oleyna” (see the text of the definition) and will be of a general nature.
_________________
* By the way, this definition(if his ideas are creatively developed) opens up the opportunity for commission agents/attorneys to include expenses for pre-sale preparation and advertising events in the EOI. Let us recall that the tax authorities unreasonably denied costs in this situation, citing the intermediaries’ lack of ownership of the goods (see letter of the State Tax Administration in Kyiv dated April 12, 2006 No. 244/10/31-106).
In Letter of the Ministry of Finance of Russia dated April 22, 2015 N 03-03-06/22913, financiers explained the procedure for tax accounting of merchandising costs. In the trade marketing system, this is a set of measures aimed at increasing sales volumes in retail trade. Merchandising develops the popularity of brands by influencing consumers. This impact consists of carrying out special work on the placement and display of goods, creating an effective stock and designing points of sale. These events expand the number of buyers of a certain trademark by stimulating the desire of the end consumer to choose and buy the promoted product, as well as highlighting the product relative to competitors.
The organization of merchandising involves the manufacturer, distributor and retailer. The manufacturer’s task is to create products of a certain brand, promote them on the market, improving packaging and assortment, stimulate the buyer by creating a positive image of the product (its fame, usefulness, etc.). The distributor ensures the constant presence of goods in trading network. And the retailer directly sells these products to the consumer, while working with the manufacturer and wholesaler (or independently) to display and design the placement of brands in such a way as to attract additional attention of the end buyer and encourage him to buy.
The Letter does not say who exactly contacted the Ministry of Finance for clarification. But from its contents we can conclude that we are talking about manufacturer costs.
How can he qualify and take into account such expenses for profit tax purposes? If we are talking about attracting the attention of the buyer, then we can say that we are talking about advertising expenses. But the main difference between merchandising and regular advertising is that purchase stimulation occurs unnoticed by the consumer. The impact in this case is not on the consciousness, but on the subconscious of the buyer.
It all started with negativity
Initially, officials had a negative attitude towards merchandising. Or rather, not to this phenomenon itself, but to the costs that arise in this case.
So, for example, in Letters of the Department of Tax Administration of Russia for Moscow dated September 16, 2003 N 26-08/50782, Department of the Federal Tax Service of Russia for Moscow dated January 27, 2006 N 20-12/5532 and dated May 4, 2006 N 20-12/36664 @ Tax authorities decided that such costs cannot be taken into account in tax expenses as economically unjustified.
The point is this. In accordance with Art. 506 of the Civil Code of the Russian Federation, under a supply contract, a supplier-seller engaged in entrepreneurial activities undertakes to transfer, within a specified period, the goods produced or purchased by him to the buyer for use in entrepreneurial activity or for other purposes not related to personal, family, household or other similar use.
According to Art. 494 of the Civil Code of the Russian Federation, display of goods at the place of sale (on counters, in display cases, etc.), demonstration of samples or provision of information about the goods sold (descriptions, catalogs, photographs of goods, etc.) at the places of their sale are recognized as a public offer in within the framework of a retail purchase and sale agreement.
Based on this, the tax authorities decided that it was economically unjustified to pay retail trade for what it was already obliged to do. Why would a store purchase goods for retail at all if the store does not advertise it for sale to customers?
Gradual recognition
Nevertheless, merchandising has lived, is alive and, most likely, will continue to live. It is impossible to deny the obvious. Therefore, in the end, officials backed down (Letters of the Ministry of Finance of Russia dated 04/02/2008 N 03-03-06/1/244 and dated 04/27/2010 N 03-03-06/1/294).
But financiers view merchandising more narrowly - as an element of advertising. According to Art. 3 Federal Law dated March 13, 2006 N 38-FZ “On Advertising” advertising is information distributed in any way, in any form and using any means, addressed to an indefinite circle of people and aimed at attracting attention to the object of advertising, creating or maintaining interest in it and its promotion on the market.
Officials agree that according to the Constitution of the Russian Federation (Part 1, Article 8), only the taxpayer himself can decide for himself whether the expenses he makes are effective and appropriate. At the same time, tax authorities, in turn, have the right to prove that such costs are economically unjustified.
If the taxpayer believes that he needs merchandising as advertising, then he can take advantage of the provisions of Art. 779 of the Civil Code of the Russian Federation and conclude an agreement for the provision of paid services with a retail trade facility. This article establishes that under a contract for the provision of paid services, the contractor undertakes to provide services on the instructions of the customer, and the customer undertakes to pay for these services.
If the purpose of concluding a paid contract for the provision of merchandising services is the actions of a retail trade organization aimed at attracting the attention of potential buyers to the supplier’s goods by using special technologies for displaying goods, therefore, such actions can be considered as advertising services.
And here you need to remember that the costs of this type of service should be taken into account in tax expenses within the limits established by clause 4 of Art. 264 of the Tax Code of the Russian Federation, that is, no more than 1% of revenue.
Judicial hesitation
The case law regarding marketing expenses is mixed.
There are at least two court decisions (Resolutions of the Federal Antimonopoly Service of the West Siberian District dated August 6, 2008 N F04-4721/2008(9200-A46-40), F04-4721/2008(10739-A46-40) in case N A46-5896/ 2007 and FAS Volga District dated September 16, 2008 in case No. A49-395/08), in which the judges considered that merchandising costs can be taken into account in tax expenses in full, since merchandising services cannot be classified only as elements of advertising. We especially note that the first of the cases was supported by the Determination of the Supreme Arbitration Court of the Russian Federation dated February 11, 2009 N VAS-15731/08.
Contrary to usual, this determination of the highest court did not have much influence on further court decisions. Thus, in the Resolution of 04/06/2011 N KA-A40/2665-11, the judges agreed with the qualification of expenses for displaying goods as advertising and with the fact that they are normalized for profit tax purposes.
So, it’s probably not worth arguing with officials, unless, of course, we are talking about some fabulous sums. But the outcome court session As we see, it is impossible to predict.
Accounting
The costs under consideration relate to expenses for ordinary activities of the manufacturer of goods in accordance with clause 5 of PBU 10/99 “Expenses of the organization” (approved by Order of the Ministry of Finance of Russia dated May 6, 1999 N 33n). Such expenses should be reflected in accounting in account 44 “Sales expenses”.
Expenses for the implementation of a set of merchandising activities should be reflected in accounting in the reporting period in which they occurred, regardless of the time of actual payment of funds and other forms of implementation. This is the requirement of clause 18 of PBU 10/99.
Merchandising expenses are commercial expenses of the manufacturer and, therefore, can be recognized in the cost of sold products, goods, works, services in full reporting year their recognition as expenses for ordinary activities (clause 9 of PBU 10/99).
Example. JSC "Svoyak" produces alcoholic beverages. When introducing Rodnaya Storona JSC into the retail trade network, the company entered into an agreement in May 2015 for the provision of merchandising services from June 1, 2015. At the same time, an agreement was concluded with New Design LLC for the provision of services for the development of merchandising events.
By virtue of these agreements, New Design LLC, directly in the retail trade network of Rodnaya Storona JSC, will develop a set of measures that this company will carry out so that the turnover of Svoyak JSC products in this retail network is maximum.
JSC "Svoyak" pays for the services of JSC "Rodnaya Storona" for the implementation of the developed activities. New Design LLC estimated the cost of its services at 300,000 rubles, including VAT of 45,762.71 rubles. The order for the development of merchandising events was completed by May 25, 2015.
According to the agreement, Svoyak JSC pays monthly to the retail chain for its services in carrying out merchandising activities. The monthly cost of such a service is 60,000 rubles, including VAT of 9,152.53 rubles.
Revenue from sales of JSC "Svoyak", determined in accordance with Art. 249 of the Tax Code of the Russian Federation, for the first half of 2015 amounted to 84,500,400 rubles. The standard advertising expenses, calculated from 1% of this amount, is equal to 845,004 rubles.
Apart from merchandising activities, all other advertising costs of the company are not standardizable for the purpose of calculating income tax.
Thus, for tax purposes with corporate income tax for a given reporting period, the company can recognize the entire amount of merchandising costs in the normalized advertising costs, since RUB 305,084.76. (300,000 - 45,762.71 + 60,000 - 9152.53)< 845 004 руб.
In the accounting records of JSC "Svoyak" these facts economic life must be reflected in the following entries:
Debit 60 Credit 51
- 300,000 rub. - paid for the service of a specialized company for the development of merchandising events;
Debit 44 Credit 60
- RUB 254,237.29 (300,000 - 45,762.71) - included in sales expenses are the costs of drawing up an action plan;
Debit 19 Credit 60
- 45,762.71 rub. - reflected “input” VAT;
Debit 44 Credit 60
- 50,847.47 rub. (60,000 - 9152.53) - expenses for payment for services of the retail network are recognized as expenses;
Debit 19 Credit 60
- 9152.53 rub. - reflected “input” VAT;
Debit 68, subaccount "VAT calculations", Credit 19
- RUB 54,915.24 (45,762.71 + 9152.53) - “input” VAT is charged to settlements with the budget.
Question
Please tell me how to document the document and invoice for services for guaranteed placement in the sales area of the entire range of goods of the supplier. (amount including VAT 18%)
We- trade organization, we supply goods for Crocus City, the contract stipulates the conditions for the service of guaranteed placement of our goods in the sales area.
What kind of wiring? how to accept expenses and VAT.
Answer
VAT amounts presented to the organization by the contractor for goods placement services (Merchandising) are subject to deduction after registration of these services, as well as in the presence of correctly completed invoices of the contractor (clauses 1, 2 of Article 171, paragraph 1, 2 clause 1 art. 172 Tax Code RF).
If, in accordance with Ch. 25 of the Tax Code of the Russian Federation, these expenses are of an advertising nature and are accepted for profit tax purposes according to the standards, then the amounts of VAT on such expenses are subject to deduction in the amount corresponding to the specified standards. This follows from paragraph. 2 clause 7 art. 171 Tax Code of the Russian Federation.
The accounting entries will be as follows:
D 44 K 60 — Costs for guaranteed placement of goods are reflected (Merchandising)
D 19 K 60 - Reflects the amount of VAT presented by the service provider
D 68 K 19 - The submitted VAT is accepted for deduction
D 90-2 K 44 - Expenses for guaranteed placement of goods (Merchandising) are written off to the cost of goods sold
D 60 K 51 - Listed cash to the seller of the goods
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In a competitive environment, manufacturers, and trading enterprises too, are interested in ensuring that the goods they sell do not stay on the shelves for long, because their profits and level of profitability depend on this. Therefore, using a variety of market and marketing approaches to trade, in particular merchandising, such enterprises can significantly increase sales volume and at the same time have the opportunity to record the costs incurred.
Definition of concepts and legal aspects
Ukrainian legislation does not directly define what merchandising is. Translated from English, “merchandising” means promoting a product on the market. Merchandising can be considered a separate direction or a marketing tool (element).
Depending on the target area of research, different authors consider merchandising and new form sales of goods, and a set of actions necessary to show the product to the buyer from the most advantageous angle, and support for the product being sold. In a general definition, merchandising is a set of activities that includes the development and implementation of methods and mechanisms, the purpose of which is to promote goods, as well as attract customers to a particular outlet, which will help increase its profits.
In the specialized literature, centralized merchandising is distinguished, visual merchandising, seasonal merchandising, electronic merchandising, supplier merchandising and merchant merchandising, etc.
Merchandising covers all aspects related to the display of goods on the sales floor of a store, its placement, starting with ensuring their availability in commercial premises, presentation of goods (display), emphasizing their advantages, availability of price tags and information materials for goods and ending with definition economic indicators, reflecting the profitability of trade in such goods, provided that a certain part of the display is allocated to them. Therefore, it is logical that the most effective use of merchandising will be in retail stores, supermarkets, hypermarkets, self-service stores, pharmacies, etc. That is, in those places where the buyer is with the product, so to speak, face to face, without the direct participation of the seller or consultant . On the other hand, merchandising is ineffective in online trading. Here its action and influence are either completely absent or very limited.
Merchandising is a set of sales technologies that allow you to present a product potential buyer in the most favorable material and psychological conditions. Various, at first glance, little things are important here: the color of the room, lighting, grouping of goods according to certain characteristics or brands, prices on price tags (everyone knows the move of crossing out the old price and putting a lower one next to it), etc.
As you can see, there are many definitions and characteristics of merchandising. However, its main task and essence is how to arrange the product in the store so that it is sold most effectively and without the participation of the seller.
Retailers and manufacturers incur certain costs when carrying out events and activities related to merchandising. At the same time, they can do this on their own (the marketing department can do this, and large enterprises it is advisable to have a special department or division for merchandising), and by involving third parties economic activity(which, accordingly, will provide merchandising services). In this regard, the question arises about the legal registration of receiving merchandising services. After all, as we noted above, a separate form of merchandising agreement is not provided for by current legislation. However, since merchandising is inherently part of marketing ( marketing services), it is necessary to take the contract for the provision of services as a basis. This opinion is confirmed by the letter of the State Tax Administration of January 28, 2010 No. 806/6/23-4016/40, where the tax authorities explained that such relations correspond to the essence of the service agreement. This means that when concluding such agreements with a counterparty, one must comply with the norms of Chapter 63 of the Civil Code.
Tax authorities' opinion
As for the legality of agreements that provide for merchandising expenses, the main legal acts defining the types, requirements, and procedure for concluding business contracts are the Economic Code of Ukraine and the Civil Code of Ukraine.
Thus, in accordance with Articles 626 - 628 of the Civil Code of Ukraine, a contract should be understood as an agreement between two or more parties aimed at establishing, changing or terminating civil rights and responsibilities.
The parties are free to enter into an agreement, choose a counterparty and determine the terms of the agreement, taking into account the requirements of this Code, other acts of civil legislation, and customs business turnover, requirements of reasonableness and fairness.
That is, when concluding agreements for the provision of merchandising services, a business entity should be guided, first of all, by the above-mentioned regulations.
Letter from State Tax Administration of January 28, 2010 No. 806/6/23-4016/40
As for the conclusion of contracts for the provision of services, Article 901 of Chapter 63 of the Civil Code of Ukraine determines that under a contract for the provision of services, one party (performer) undertakes, on the instructions of the second party (customer), to provide a service consumed in the process of performing a certain action or carrying out certain activities, and the customer undertakes to pay the contractor for the specified service, unless otherwise provided by the contract. The provisions of Chapter 63 of the Civil Code of Ukraine can be applied to all contracts for the provision of services, if this does not contradict the essence of the obligation. Also, such an agreement should include other essential provisions, in particular: the duration of the agreement, the procedure and amount of payment, liability for violation of conditions, etc.
Accounting
Since merchandising is one of the areas (elements) of marketing, the costs associated with it (both for the merchandising services received, and the enterprise’s own expenses for the merchandising operations of its division) are taken into account in accounting as marketing expenses as part of sales expenses based on clause 19 P(S)BU 16 1. More detailed structure sales expenses are given in Method Recommendations No. 145 2. Note that separately the costs for merchandising in the indicated regulatory documents not highlighted. They are part of marketing expenses (for example, clause 3.8 of Method Recommendations No. 145, in particular, includes the costs of window dressing, production of labels, price lists, etc., which, of course, directly relates to merchandising), or partly as part of the costs of pre-sale preparation of goods. The mentioned expenses are reflected as expenses of the reporting period in which they were incurred (clause 7 P(S)BU 16). Therefore, if, for example, an enterprise has its own merchandising department with a certain staff of employees, their salaries, together with the corresponding accruals (USC), will go to account 93 as part of sales expenses.
1 Position(standard) accounting“Expenses”, approved by order of the Ministry of Finance dated December 31, 1999 No. 318.
In addition, a business may incur other costs associated with the operation of its merchandising department. So, these could be the costs of posters placed near the goods, special price tags handed over to distributors so that the price of the goods is indicated on them, the costs of renting premises in the supermarket where the equipment (of the manufacturer or trader of the goods) is located. All these expenses, according to the author, will also be reflected in sales costs. Obviously, some will note that, for example, the cost of brochures can be considered as advertising costs. We do not deny the close connection between marketing, advertising and merchandising, which, in principle, is part of them. The boundary separating these concepts is quite narrow, so in general we can consider that all this is marketing, i.e., sales expenses of the enterprise.
Sometimes an enterprise purchases equipment (such as OS or MNMA), which is subsequently used to organize merchandising events (for example, refrigeration equipment so that the client can always purchase a carbonated drink at the checkout or in the sales area chilled, or special retail structures to visually highlight the product among competitors). Depreciation of such equipment will also be included in sales expenses - see clause 19 of P(S)BU 16.
In some cases, for merchandising purposes, enterprises transfer their equipment (own shelving, racks, refrigerators), used to place goods, for safekeeping to retail enterprises (shops, supermarkets). This is because behind some objects (for example, refrigeration equipment) should be supervised, but it is not always economically profitable to appoint a responsible person for this. Therefore, it is better to shift this burden to the enterprise where such equipment is located. In this case, of course, you will pay a certain amount for accommodation (renting a hall), which again will be included in sales costs. Usually, the transfer for safekeeping is formalized by an appropriate agreement, and during the transfer itself, an acceptance certificate is drawn up. Since the mentioned tangible assets (in the form of fixed assets, MNMA, etc.) remain on the balance sheet of the enterprise transferring the equipment, it is the enterprise that charges depreciation, which should be included in sales expenses. Assets received for safekeeping are reflected in off-balance sheet account 023 " Material assets in safekeeping."
As we noted, merchandising services received and provided by third parties (this can be both enterprises and entrepreneurs) will also be included in sales expenses. In particular, entrepreneurs can provide, for example, services for displaying goods on the shelves of retail stores and retail outlets enterprises, etc.
Tax accounting
Income tax
In tax accounting the situation is similar. The GCU does not contain a definition of “merchandising”. There are no merchandising expenses included in the expenses specified in Art. 138 NKU. However, tax specialists in the EBNZ (subcategory 110.07.20) expressed the opinion that the costs incurred for obtaining merchandising services can be included in the composition of sales costs as costs for advertising, marketing, as well as pre-sale preparation of goods on the basis of paragraph. "g" pp. 138.10.3 NKU. In addition, according to the author, the aforementioned consultation from the EBNZ confirms the right to include amounts for independent organization of merchandising of your goods as tax expenses. Namely, tax expenses may include as sales expenses expenses for the same booklets, posters, price tags, etc., as well as depreciation of fixed assets and MNMA used in merchandising promotions, wages employees involved in merchandising and accruals for such salaries. Note that, according to paragraphs. 153.4.2 of the Tax Code, if an enterprise transfers its own fixed assets for safekeeping to trade enterprises, this in no way affects the tax accounting of both the recipient and the enterprise providing the fixed assets object 1.
Therefore, provided that all necessary primary documents(clause 138.2 NKU) trading enterprise can take such expenses into account in tax accounting as part of other expenses, since they are directly related to its business activities - trade.
At the same time, if there is a relationship with a non-resident, one should take into account the restrictions on the attribution of expenses established by paragraphs. 139.1.13 NKU. Thus, expenses incurred (accrued) in the reporting period in connection with the purchase of merchandising services from a non-resident (except for expenses incurred (accrued) in favor of permanent representative offices of non-residents, which are subject to taxation in accordance with clause 160.8 of the Tax Code), the enterprise has the right to take into account as part of tax expenses within 4% of income (revenue) from the sale of products (goods, works, services) (less VAT and excise tax) for the year preceding the reporting year. If such a non-resident has an offshore status, such expenses are not included in the tax bill at all. At the same time, one should not forget about the so-called repatriation tax, which must be paid when paying income to a non-resident in accordance with Art. 160 NKU 2.
These expenses, as part of sales expenses, are included in other expenses, which are recognized as expenses of the reporting period in which they were incurred (clause 138.5 of the Tax Code). In the income tax return 3 they should be reflected in line 06.2.
On the other hand, an enterprise can provide merchandising services to other business entities. Accordingly, during the period of signing the act with the customer, such contractor must recognize income both in accounting (clause 12 P(S)BU 15 4) and in tax accounting (clause 137.1 of the Tax Code). All expenses directly related to the provision of merchandising services will be included in the cost of services provided (clause 11 P(S)BU 16 and clause 138.8 of the Tax Code).
Value added tax
As for VAT, it works here general rule: if there is a properly executed tax invoice (clause 198.6 of the Tax Code) and (if necessary) registered in the Unified Register (clause 201.10 of the Tax Code), the enterprise is the recipient of merchandising services (or goods/works/services related to the organization of merchandising by the enterprise itself) will be entitled to a VAT tax credit. And, of course, such goods, works/services must be used in taxable transactions within the framework of business activities. Since, as we have already noted, merchandising is part of marketing, in the case of receiving merchandising services from a non-resident, the subject of VAT taxation does not arise. Indeed, in accordance with clause 186.4 of the Tax Code, the place of supply of such services will be the place of registration of the supplier of merchandising services. It should be taken into account that clauses 186.2 and 186.3 of the Tax Code do not directly contain the specified services (neither merchandising nor marketing). 5
If, on the contrary, a Ukrainian enterprise provides such services, then it turns out that VAT taxes arise in any case, regardless of the status of the recipient. A similar point of view of tax authorities is set out in the EBNZ (subcategory 130.05), which states that “The operation of supplying marketing services by a VAT payer is subject to VAT, regardless of whether they are provided to a resident or non-resident.”
Example 1 Manufacturer company non-food products Alpha has a merchandising department in its structure.
In order to increase sales volume in the current period, the following expenses were incurred:
- New price tags were ordered, as well as photos of product samples in the amount of 12,000 UAH (including VAT). Price tags and photos will be used in merchandising events;
- merchandising services were received from a legal entity (in particular, professional display of goods on the shelves of all points of sale of the company’s products in supermarkets outside the region of production was ordered for the amount of UAH 36,000 (including VAT);
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