Charity tax: how to help people without legislation getting in the way

The concept of charity

The concept of charitable activity is contained in Federal Law No. 135-FZ and is understood as providing “disinterested (free of charge or on preferential terms)” assistance to those who need it.

Assistance can be provided in the form of a voluntary “transfer of property, including funds, to citizens or legal entities, disinterested performance of work, provision of services, and provision of other support.” In addition, voluntary donations are permitted by Article 582 of the Civil Code of the Russian Federation.

What are the goals of charitable activities?

Please note that the goals of charitable activities are enshrined in law. Their list is given in Art. 2 of Federal Law No. 135-FZ and looks like this:

• social support and protection of citizens, including improving the financial situation of low-income people, social rehabilitation of the unemployed, disabled people and other persons who, due to physical or intellectual characteristics or other circumstances, are not able to independently realize their rights and legitimate interests;
• preparing the population to overcome the consequences of natural disasters, environmental, industrial or other disasters, and to prevent accidents;
• providing assistance to victims of natural disasters, environmental, industrial or other disasters, social, national, religious conflicts, victims of repression, refugees and internally displaced persons;
• promoting the strengthening of peace, friendship and harmony between peoples, the prevention of social, national, and religious conflicts;
• promoting the strengthening of the prestige and role of the family in society;
• promoting the protection of childhood, motherhood and paternity;
• promoting activities in the field of education, science, culture, art, enlightenment, spiritual development of the individual;
• promoting activities in the field of prevention and protection of citizens' health, as well as promoting a healthy lifestyle, improving the moral and psychological state of citizens;
• promoting activities in the field of physical culture and sports (with the exception of professional sports);
• environmental protection and animal welfare;
• protection and proper maintenance of buildings, objects and territories of historical, religious, cultural or environmental significance, and burial sites;
• training the population in the field of protection from emergency situations, dissemination of knowledge about protecting the population and territories from emergency situations and ensuring fire safety;
• social rehabilitation of orphans, children without parental care, street children, children in difficult life situations;
• providing free legal assistance and legal education to the population;
• promoting volunteerism;
• participation in activities to prevent neglect and juvenile delinquency;
• promoting the development of scientific, technical, artistic creativity of children and youth;
• promoting patriotic, spiritual and moral education of children and youth;
• support for socially significant youth initiatives, projects, children's and youth movements, children's and youth organizations;
• facilitating activities for the production and (or) distribution of social advertising;
• assistance in the prevention of socially dangerous forms of behavior of citizens.”

At the same time, sending money and other material resources, providing assistance in other forms to commercial organizations, as well as supporting political parties, movements, groups and campaigns is not charitable activity. It is also prohibited to conduct pre-election campaigning or explanatory work on referendum issues simultaneously with charitable activities.

Concept and goals

In accordance with N135-FZ dated 08/11/1995. The definition of charitable activity means selfless provision of assistance to those who need it. Assistance can be expressed in the provision of sums of money, in free services, in the donation of food and other goods, in the performance of work at one’s own expense.

The same regulatory act specifies the goals of charitable activities:

1. Material assistance, social rehabilitation and support for citizens who are unable to independently defend their rights due to various life circumstances.
2. Providing assistance to the population in eliminating the consequences of natural disasters, accidents, catastrophes and in their prevention.
3. Support for victims of various types of disasters, military operations, repressions, religious and national oppression.
4. Activities to preserve and strengthen the peaceful interaction of peoples.
5. Participation in the formation of public opinion about the values ​​and role of the family.
6. Assistance on issues of protection of children and parents.
7. Providing assistance to children left without parents and guardians.
8. Assistance in the development of education, science, art and culture.
9. Activities aimed at promoting a healthy lifestyle, the need for disease prevention, physical education and sports.
10. Support for children's and youth organizations.
11. Promoting the moral education of the younger generation, the development of children's creativity, and the formation of patriotism among young people.
12. Assistance in the creation and distribution of social advertising.
13. Assistance in legal education of the population.
14. Activities related to the protection of culturally and naturally significant objects and territories.
15. Help with environmental protection and animal welfare.

In other words, gratuitous assistance must be aimed at good, socially and naturally significant goals in order to be considered charity.

Transferring funds or providing free services to commercial organizations, political parties and activist movements is not considered charitable activity. Also, gratuitous assistance to social institutions cannot be a tool in political struggle during election campaigns.

Who is involved in charitable activities?

Individual citizens or organizations that provide charitable assistance, as well as recipients of this assistance, take part in charitable activities. The legislation divides participants in charitable activities into three categories: philanthropists, volunteers, and beneficiaries.

1. Philanthropists are persons who carry out charitable activities in the form of “disinterested (free of charge or on preferential terms) transfer of ownership of property, including funds, provision of services to charitable organizations for the purposes of charitable activities.”
2. Volunteers are “individuals who carry out charitable activities in the form of gratuitous work or provision of services (volunteer activities).”
3. Beneficiaries are persons who receive assistance from philanthropists and volunteers.

Both private and legal entities can participate in charitable activities.

To encourage charitable activities, in addition to the Federal Law of August 11, 1995 N 135-FZ “On Charitable Activities and Charitable Organizations,” our state has adopted a number of tax regulations that provide tax benefits to taxpayer organizations and individual taxpayers. Let's look at their pros and cons.

Charity participants

Participants and norms of charity are specified in the special Federal Law “On Charitable Activities and Organizations” dated August 11, 1995 No. 135-FZ. In this case, we can distinguish 3 main participants in these legal relations: benefactor (person providing charitable assistance), volunteer (individual who disinterestedly performs work within the framework of charity), beneficiary (the final person to whom charitable assistance is intended).

Charitable foundations play a special role in these legal relations. These are non-profit organizations that collect help from philanthropists and distribute it among beneficiaries. At the same time, only charitable foundations officially registered as non-profit organizations (hereinafter referred to as NPOs) have tax benefits. In addition, it is extremely important what type of activity is specified in the charter of such an organization. Deviation from statutory activities deprives the organization of a number of tax benefits.

ConsultantPlus experts reviewed frequently asked questions from taxpayers:

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Income tax

Current tax legislation requires organizations engaged in charitable activities to provide assistance to those in need only from net profits. In this regard, organizations are not exempt from paying income tax on amounts that were allocated to charity.

So, by virtue of paragraphs. 16 and 34 art. 270 of the Tax Code of the Russian Federation, when determining the tax base, expenses “in the form of the cost of gratuitously transferred property (work, services, property rights) and expenses associated with such transfer”, as well as “targeted deductions made by the taxpayer for the maintenance and management of non-profit organizations statutory activities."

The Ministry of Finance of the Russian Federation believes that expenses incurred by an organization as part of charitable activities do not meet the requirements of Art. 252 of the Tax Code of the Russian Federation and, therefore, cannot reduce the tax base for income tax (see Letter dated April 16, 2010 No. 03-03-06/4/42, Letter dated April 4, 2007 No. 03-03- 06/4/40). However, regional authorities, if desired, can reduce the tax rates at which the charitable foundation is taxed. This right is given to them by Article 284 of the Tax Code of the Russian Federation, according to which the legislative authorities of the constituent entities of the Russian Federation are given the right to reduce income tax rates in the part subject to credit to the regional budget (up to 13.5%) for certain categories of taxpayers.

Signs of expenses

All expenses included in the calculation of income tax must meet a number of mandatory criteria. Otherwise, such costs cannot be taken into account as tax expenses. What are these criteria?

Economic feasibility

One of the prerequisites for recognizing charitable expenses for income tax purposes in 2020 is their economic justification. Of course, this concept is evaluative, that is, not a single legal act regulating the tax sphere contains an exact list of expenses that fit this definition.

Based on numerous judicial practices, we can highlight the basic principles for recognizing certain expenses as economically justified:

• direct relationship between expenses and business activity (resolution of the Federal Antimonopoly Service of the Moscow District dated May 30, 2013 No. A40-79395/12-90-422);
• the direction of the costs incurred by the company to generate income, determined by the results of all economic activities of the organization, and not by the receipt of income in a specific tax period (determinions of the Supreme Arbitration Court dated January 19, 2009 No. 17071/08, Constitutional Court dated June 4, 2007 No. 320-O-P);
• the connection of the expenses incurred with the obligations of the organization, the terms of the contract or the provisions of the law (Resolution of the Federal Antimonopoly Service of the Central District dated 04/09/2013 No. A35-7128/2012);
• prices correspond to the market level (resolution of the Federal Antimonopoly Service of the East Siberian District dated November 19, 2013 No. A33-16624/2012).

Documentation

Another mandatory condition for recognizing expenses is documentary evidence. Depending on the types of transactions and the category of expenses incurred, supporting documents may differ. The main thing is that they can, together with other evidence, confirm the very fact and amount of the organization’s expenses (clause 1 of Article 252 of the Tax Code of the Russian Federation).

VAT benefits

But there is a benefit for philanthropists when paying VAT.

By virtue of paragraphs. 12 clause 3 art. 149 of the Tax Code of the Russian Federation, the gratuitous transfer of goods, works, services, property rights within the framework of charitable activities has been exempt from VAT since 2016. The main condition is that such activities must be carried out in accordance with Federal Law No. 135-FZ and not concern excisable goods.

In order to be able to apply the preferential VAT taxation of charitable donations, certain conditions must be met. As mentioned above, the main one is the provision of charitable assistance only for purposes specified by law.

Let’s say a construction organization carried out work on a free of charge basis to repair a school building and purchase the materials necessary for the repair. These works are exempt from VAT (see Letter of the Ministry of Finance of Russia dated May 10, 2012 N 03-07-07/49). Also, the presentation by the company of gifts to employees retiring relates to business transactions that pursue a goal such as “social support and protection of citizens, including improving the financial situation of the poor,” and are exempt from VAT (see Resolution of the Federal Antimonopoly Service dated July 4, 2012 N A14-2540/2011).

The free transfer of children's gifts to employees of an enterprise for their children in order to promote and strengthen family values, show concern for the younger generation, and promote the protection of motherhood, childhood and paternity is charitable assistance; preferential taxation is applied: the organization is exempt from VAT, since these actions cannot be characterized as the transfer of goods for the taxpayer’s own needs or as an operation for the sale of goods. (see Resolution of the Federal Antimonopoly Service of the Moscow Region dated 04/06/2009 N KA-A40/2403-09).

In addition to meeting its objectives, an organization that engages in charitable activities must document such transactions to qualify for the benefit. An approximate list of documents on the basis of which this can be done was provided by the Ministry of Finance of Russia in letter dated October 26, 2011 No. 03-07-07/66. Tax authorities, assessing the legitimacy of an organization’s claim to preferential taxation of sponsorship assistance, will take into account the following documents:

• an agreement with the recipient of charitable assistance for the free transfer of goods, performance of work, provision of services as part of charitable activities;
• copies of documents confirming the registration of the specified goods, works, and services by the recipient of charitable assistance;
• documents indicating the intended use of goods (work, services) received as part of charitable activities.

If an individual receives charitable assistance, it is sufficient to submit a document confirming the actual free receipt by the citizen of goods, works or services (see letter of the Federal Tax Service of Russia for Moscow dated December 2, 2009 No. 16-15/126825, letter of the Ministry of Finance of Russia dated October 26, 2011 No. 03-07-07/66).

If donations (not necessarily charitable) are made only in cash to non-profit organizations for the implementation of statutory activities not related to entrepreneurship, or to individuals, then there is no need to collect a package of documents at all. Moreover, in this case one should not claim a charitable benefit. The gratuitous transfer of funds in the form of a donation is not recognized as the sale of goods, works, services and, accordingly, is not subject to VAT from the transferring party on other grounds (clause 3 of Article 39, subclause 1 of clause 2 of Article 146 of the Tax Code of the Russian Federation). This position is also confirmed by decisions of arbitration courts (see resolution of the FAS Moscow Region dated January 26, 2009 No. KA-A40/13294-08, FAS PO dated January 26, 2009 No. A55-9610/2008).

And finally, if a benefactor carries out transactions both subject to VAT and exempt from taxation, he is obliged to keep separate records of them (Clause 4 of Article 149 of the Tax Code of the Russian Federation). In this case, the taxpayer develops the procedure for separate accounting of transactions independently and discloses it in the accounting policy.

So, a taxpayer-philanthropist has the right to apply an exemption from VAT on transactions carried out within the framework of charitable activities only if he complies with the above conditions.

How taxes are calculated

Income tax

The cost of gratuitously transferred property and expenses for it are not taken into account when taxing profits. They do not meet the requirements of paragraph 1 of Art. 252 of the Tax Code of the Russian Federation - they are not aimed at generating income.

Expenses for the cost and transfer of property, work or services to charity are in the list of expenses that are not taken into account when taxing profits.

Single tax

When calculating the single tax under the simplified tax system, charity expenses are also not taken into account. This is explained simply: expenses for charity are not included in the list of expenses that can reduce the profit received.

VAT

The transfer of goods, performance of work and provision of services within the framework of charity is not subject to VAT. All these actions fall under the exemption.

In order to take advantage of this benefit, the company must have supporting documents:

• an agreement or contract with the recipient of charitable assistance for the free transfer of goods, performance of work or provision of services;
• copies of documents confirming the acceptance of charitable assistance;
• acts or other documents indicating the intended use of the assistance received.

Waiver of VAT benefits

Organizations can voluntarily refuse VAT benefits. This is stated in paragraph 5 of Art. 149 of the Tax Code of the Russian Federation: “refusal from preferential taxation can be carried out only in relation to those transactions that are provided for in paragraph 3 of this article.” In this case, the taxpayer must submit an application for refusal of the benefit to the tax authority at the place of registration no later than the first day of the tax period (year) in which he wishes to refuse the benefit or suspend its use.

Perhaps you have decided to engage in charity work seriously and for a long time and plan to purchase goods for this regularly. In this case, having refused the VAT benefit, in accordance with clause 1 of Art. 172 and paragraph 1 of Art. 171 of the Tax Code, you will have the opportunity to deduct the amount of “input” VAT. Sometimes this is more profitable than the tax exemption itself.

"Input" VAT

According to the norms of Art. 170 of the Tax Code of the Russian Federation, the amounts of VAT presented by the seller of goods donated as part of charity must be taken into account in the cost and are not subject to deduction. At the same time, VAT accounting requires that if the goods were originally purchased for activities subject to VAT, and the tax was accepted for deduction, then upon its transfer, the VAT previously accepted for deduction should be restored (paragraph 1, paragraph 2, paragraph 3, Art. 170 of the Tax Code of the Russian Federation). Tax amounts in relation to fixed assets and intangible assets are also subject to restoration in proportion to their residual value without taking into account revaluations.

Thus, if property on which the “input” VAT was previously accepted for deduction is transferred to charity, the tax must be restored in the tax period in which the transaction took place within the framework of charitable activities. In accordance with the procedure provided for in paragraph. 3 pp. 2 p. 3 art. 170 of the Tax Code of the Russian Federation, the restored tax is not included in the cost of the transferred property, but is taken into account as part of the taxpayer’s other expenses, as provided for in Art. 264 Tax Code of the Russian Federation.

Accounting

In accordance with paragraph 12 of PBU 10/99 “Expenses of the organization,” payments related to charitable activities are taken into account as part of other expenses.
They are reflected in account 91 “Other income and expenses”. Since in accounting, payments within the framework of charitable activities, including “input” VAT, can be taken into account as expenses, but in tax accounting this is not possible, a permanent tax difference arises, and, as a consequence, a permanent tax liability. It is determined by multiplying the constant tax difference by the profit tax rate in effect on the reporting date (clauses 4, 7 of PBU 18/02 “Accounting for calculations of corporate income tax”). Example
LLC "Alfa" purchased clothing as part of its commercial activities for its subsequent resale for a total amount of 354,000 rubles (including VAT -54,000 rubles).
However, later it was decided to transfer it to a fund to help victims of natural disasters. As part of this operation, the company decided to use its right not to pay VAT (subclause 12, clause 3, article 149 of the Tax Code of the Russian Federation), for this purpose all the necessary documents were drawn up. The following entries must be made in accounting: DEBIT 41 CREDIT 60
− 300,000 rub.
– purchased clothes; DEBIT 19 CREDIT 60
− 54,000 rub.
– “input” VAT is reflected based on the supplier’s invoice; DEBIT 68 subaccount “VAT” CREDIT 19
− 54,000 rub.
– accepted for VAT deduction; DEBIT 91 subaccount “Cost of sales” CREDIT 41
− 300,000 rub.
– the cost of goods donated as part of charitable assistance is reflected in other expenses; DEBIT 91 subaccount “Cost of sales” CREDIT 68
− 54,000 rub.
– the amount of “input” VAT previously accepted for deduction has been restored; DEBIT 99 CREDIT 68
− 70,800 rub. ((RUB 300,000 + RUB 54,000) × 20%) – permanent tax liability is reflected (subclauses 4, 7 of PBU 18/02 “Accounting for income tax calculations”).

If the company does not have documents that give the right to exemption from VAT, in order to avoid disputes with controllers, it will need to charge tax.

Invoice

From January 1, 2014, when performing transactions that are not subject to VAT in accordance with Art. 149 of the Tax Code of the Russian Federation, there is no need to issue invoices, keep logs of received and issued invoices, purchase books and sales books. Changes have been made to clause 5 of Art. 168 of the Tax Code of the Russian Federation and clause 3 of Art. 169 of the Tax Code of the Russian Federation. The mentioned obligations remain for taxpayers who apply tax benefits under Art. 145 of the Tax Code of the Russian Federation. Such persons draw up invoices without allocating the corresponding tax amounts (clause 5 of Article 168 of the Tax Code of the Russian Federation).

Accounting for charitable donations

Organizations that engage in charitable activities are required to reflect this in their accounting records. The general procedure for recognizing expenses in accounting has been established (hereinafter referred to as PBU 10/99).

Paragraph 17 of PBU 10/99 states that the expenses of a business entity are subject to recognition in accounting, regardless of its intention to receive revenue or other income, as well as the form of such expenses (monetary, in-kind and other). All expenses, according to paragraph 4 of PBU 10/99, are divided into:

• expenses for ordinary activities;
• other expenses.

According to clause 11 of PBU 10/99, other expenses include the transfer of funds (contributions, payments, etc.) related to charitable activities, as well as expenses for sporting events, recreation, entertainment, cultural events educational activities and other similar events. Thus, taking into account the provisions of the Chart of Accounts for accounting the financial and economic activities of organizations and the Instructions for its application, approved by Order of the Ministry of Finance of Russia dated October 31, 2000 N 94n, in the accounting records of the organization, the transfer of donations will be reflected using account 91 “Other income and expenses” .

In accordance with clauses 4 and 7, the organization must exclude from the calculation of the tax base for income tax for both the reporting and subsequent periods the costs incurred in connection with the provision of gratuitous charitable assistance. According to this indicator, a permanent tax liability is formed in accounting. The wiring is as follows:

Debit 76 - Credit 51 - funds were transferred in the form of donations; Debit 76 - Credit 41 - goods transferred as part of charitable assistance; Debit 91 - Credit 76 - donation expenses are included in other expenses; Debit 91 - Credit 76 - the cost of goods donated is included in other expenses; Debit 91 - Credit 68 - VAT is charged on the cost of goods transferred free of charge; Debit 99 - Credit 68 - reflects the permanent tax liability on the cost of transferred funds, transferred goods and the amount of VAT.

Income tax and simplified tax system

When determining the base for income tax and the single “simplified” tax, approximately the same rules apply as in the case of VAT.

Obviously, the organization receives economic benefits from receiving any property (results of work or services). And it is recognized as income, which is taken into account for tax purposes (Article 41 of the Tax Code of the Russian Federation).

At the same time, Article 251 of the Tax Code provides a list of income that is not taken into account when determining the tax base (including “simplified” income). Among them, targeted revenues are mentioned for the maintenance of non-profit organizations and the conduct of their statutory activities. Such receipts, in particular, are (clause 2 of Article 251 of the Tax Code of the Russian Federation):

• donations;
• income in the form of gratuitously received results of work (services).

Of course, to be exempt from taxation, the beneficiary organization must keep separate records of income (expenses) received (incurred) within the framework of targeted revenues.

The cost of ordinary (non-charitable) gifts is included in non-operating income on a general basis at the market price (clause 8, part 2, article 250 of the Tax Code of the Russian Federation). There you will also have to take into account property used for other purposes (including money), the results of work (services) received as part of charitable assistance (clause 14 of Article 250 of the Tax Code of the Russian Federation).

As for the benefactor, he cannot take into account when taxing either the value of the gratuitously transferred property (results of work or services), or the expenses associated with such transfer (clause 16 of article 270, clause 1 of article 346.16 of the Tax Code of the Russian Federation).

Filling out a tax return

According to the Procedure for filling out a VAT return, approved. By Order of the Federal Tax Service of Russia dated October 29, 2014 N ММВ-7-3/ [email protected] , transactions that are not subject to taxation (exempt from taxation) are subject to reflection in section. 7 VAT returns. In column 1 on line 010 section. 7 of the declaration reflects the transaction codes established in Appendix 1 to this Procedure. For the gratuitous transfer of goods and/or property rights (for the gratuitous performance of work or provision of services) within the framework of charitable activities, code 1010288 is provided.

Charitable activities of individuals and personal income tax

The tax legislation of the Russian Federation also supports philanthropists - individuals. Article 219 of the Tax Code of the Russian Federation provides that citizens who are philanthropists have the right to a social tax deduction. This means that the taxpayer will be returned part of the funds spent on charity: taxes will be reduced by the amount of social tax deduction in an amount equal to this assistance. That is, he will receive from the budget part of the personal income tax (NDFL) he paid for the year, that is, in fact, 13% of the amount of his expenses for charity.

Who to help

Citizens can count on a reduction in personal income tax if they provide gratuitous assistance to organizations whose activities are socially oriented. So, according to paragraphs. 1 clause 1 art. 219 of the Tax Code of the Russian Federation, a taxpayer has the right to receive a social tax deduction in the amount of income transferred by him in the form of donations to the following organizations:

• charity organisations;
• socially oriented non-profit organizations (for their implementation of activities provided for by the legislation of the Russian Federation on non-profit organizations);
• non-profit organizations operating in the field of science, culture, physical culture and sports (except for professional sports), education, enlightenment, healthcare, protection of human and civil rights and freedoms, social and legal support and protection of citizens, assistance in protecting citizens from emergency situations , environmental protection and animal welfare;
• religious organizations (to carry out their statutory activities);
• non-profit organizations (in the matter of forming or replenishing endowment capital in accordance with Federal Law dated December 30, 2006 N 275-FZ “On the procedure for the formation and use of endowment capital of non-profit organizations”).

According to paragraph 2 of Article 11 of the Tax Code of the Russian Federation, organizations in this case mean all legal entities that are formed in the Russian Federation, as well as foreign legal entities, companies and other corporate entities with civil legal capacity, created in accordance with the legislation of foreign states, international organizations , branches and representative offices of these foreign persons and international organizations established on the territory of the Russian Federation. Thus, if financial assistance was provided to branches and representative offices of Russian organizations, it will not be taken into account when receiving a social tax deduction. Also, if a citizen provides financial assistance directly to an individual, he will also not be able to reduce his tax base.

Value added tax

When transferring property (results of work or services) free of charge, questions inevitably arise about the calculation of VAT. This is due to the fact that such a transfer is considered a sale and, on the basis of paragraph 1 of Article 146 of the Tax Code, is recognized as an object of taxation. But in order to find out whether it is necessary to charge a tax, it is also necessary to determine for what purposes the received money or other property will be used.

If we are talking about charity, then there is no taxable object. Subparagraph 12 of paragraph 3 of Article 149 of the Tax Code states that the transfer of goods (performance of work, provision of services), transfer of property rights free of charge within the framework of charitable activities is not subject to taxation (with the exception of excisable goods). A product, in turn, is any property (including money) intended for sale (clause 3 of Article 38 of the Tax Code of the Russian Federation).

Important

Donations, like charitable funds, are also not included in the VAT tax base, since they are not related to the sale of goods, work or services (letter of the Federal Tax Service of Russia dated December 10, 2012 No. ED-4-3/20919).

Those who want to take advantage of the benefit must fulfill one condition: the property must go specifically to charitable purposes. This is, for example (Article 2 of Law No. 135-FZ):

• social support and protection of citizens: improvement of the financial situation of low-income people, social rehabilitation of the unemployed, disabled people, etc.;
• providing assistance to victims of natural disasters, catastrophes, social, national, religious conflicts, refugees and internally displaced persons;
• strengthening peace and preventing social, national, religious conflicts;
• protection of motherhood, childhood and paternity;
• support for education, science, culture, art, enlightenment, spiritual development;
• prevention and health protection, as well as promotion of a healthy lifestyle;
• support for physical culture and sports (except professional);
• environmental protection and animal welfare;
• social rehabilitation of orphans and children without parental care;
• provision of free legal assistance and legal education;
• development of scientific, technical, artistic creativity of children and youth;
• production and distribution of social advertising.

In order not to charge tax, the parties need to draw up the following documents (letters of the Ministry of Finance of Russia dated October 26, 2011 No. 03-07-07/66, Federal Tax Service of Russia for Moscow dated March 5, 2009 No. 16-15/019593.1, resolution of the Federal Antimonopoly Service of the North Caucasus District dated 08/21/2013 in case No. A32-26727/2012):

• agreement for the gratuitous transfer of goods (performance of work, provision of services) within the framework of charity;
• papers confirming that charitable assistance has been registered;
• acts or other papers indicating the intended use of charitable property (results of work or services).

It should be especially noted that if a company carries out operations both as part of its business activities and in the form of charity, then it must keep separate records of taxable and non-taxable transactions (clause 4 of Article 149 of the Tax Code of the Russian Federation). You can organize it yourself. VAT amounts can be deducted in full only if the share of expenses for non-taxable transactions does not exceed five percent of the total expenses (paragraph 9, paragraph 4, article 170 of the Tax Code of the Russian Federation). This requirement also applies to charitable activities (Resolution of the Federal Antimonopoly Service of the Moscow District dated October 11, 2011 No. A40-138316/10-90-799). If the company decides to abandon the exemption for charitable transactions, then the need to maintain separate accounting will no longer be necessary.

Important

Directing money or providing other assistance to commercial organizations, as well as supporting political parties, movements, groups and campaigns are not considered charity (Clause 2 of Article 2 of Law No. 135-FZ).

In what form to provide assistance?

Tax authorities and financial departments (see Letter of the Ministry of Finance dated March 2, 2010 No. 03-04-05/8-78) believe that in order to receive a social deduction, a charitable donation must be made in cash.

Arbitration courts have a different opinion (see Resolution of the FAS UO dated 08.12.2008 N F09-9086/08-S2, Resolution of the FAS PO dated 28.06.2006 in case No. A12-29703/05-S51). The donation can be made by donating food, in which case the taxpayer retains the right to receive a social tax deduction. To substantiate their position, the courts rely on the norm of paragraph 1 of Art. 582 of the Civil Code of the Russian Federation, by virtue of which “a donation is recognized as the gift of a thing or right for generally beneficial purposes.”

In accordance with Art. 1 of Federal Law N 135-FZ “charity is understood as the charitable activities of citizens and legal entities through the disinterested (free) transfer of property, including money, to citizens or legal entities, the disinterested performance of work, the provision of services, and the provision of other support.”

From the meaning of these norms it follows that the transfer of funds is only one of the possible ways of providing charitable assistance.

In this regard, the tax authorities’ restrictive interpretation of paragraphs. 1 clause 1 art. 219 of the Tax Code of the Russian Federation contradicts paragraph 3 of Art. 39 of the Constitution of the Russian Federation. It says that “in Russia, voluntary social insurance, the creation of additional forms of social security and charity are encouraged.”

Income tax

If the beneficiary is an individual (for example, as part of social support or maternity protection), then the benefactor will most likely have a question about withholding personal income tax. For the answer, we turn to paragraph 8.2 of Article 217 of the Tax Code. It says that charitable assistance received from a Russian or foreign charitable organization is not taxed.

Such an organization is a non-governmental (non-state and non-municipal) non-profit organization created specifically for charitable activities (Clause 1, Article 6 of Law No. 135-FZ), for example, a charitable foundation. If the help comes from an ordinary company that does not have the status of a charitable organization, the tax will have to be withheld.

It happens that a company employee does not receive, but, on the contrary, provides charitable assistance. In this case, he has the right to receive a social tax deduction.

A deduction is provided when transferring charitable donations (subclause 1, clause 1, article 219 of the Tax Code of the Russian Federation):

• charitable organizations;
• socially oriented non-profit organizations;
• non-profit organizations operating in the field of science, culture, physical culture and sports (except for professional sports), education, enlightenment, healthcare, protection of human and civil rights and freedoms, social and legal support and protection of citizens, assistance in protecting citizens from emergency situations, environmental protection and animal welfare;
• religious organizations;
• non-profit organizations for the formation or replenishment of target capital.

Thus, a deduction can be obtained only if charitable property is transferred through a special organization (letter of the Ministry of Finance of Russia dated December 30, 2013 No. 03-04-08/58234). For targeted assistance, the benefactor is not entitled to a deduction.

A “charitable” deduction is provided in the amount of actual expenses, but not more than 25 percent of the amount of taxable annual income. To obtain it, the employee will have to contact the tax office (clause 2 of article 219 of the Tax Code of the Russian Federation).

How to calculate the amount of deduction and tax refundable

The amount that the taxpayer spent from personal funds is subject to deduction. But the total benefit cannot exceed 25% of annual income, and this limitation generally applies to all expenses related to charity and donations.

However, only income taxed at a rate of 13% is taken into account. Therefore, taxpayers who are non-residents of the Russian Federation, for whom the personal income tax rate is different, cannot take advantage of the social deduction. At the same time, the balance of the social tax deduction for charity is not carried over to the next year. It remains unused.

Example: Citizen A. in 2020 donated 200,000 rubles for the statutory activities of a religious organization. They also received charitable assistance to a non-profit sports organization in the amount of 275,000 rubles.

The amount of the annual income of citizen A. for 2020 before applying all tax deductions amounted to 4,521,000 rubles, including non-taxable personal income tax - 300,000 rubles.

Thus, the total limit for charity and donations is RUB 1,055,250. ((4,521,000 - 300,000) rub. x 25%). The total amount of charity was 475,000 rubles. (200,000 + 275,000).

Since the amount of donations is less than the amount of the possible limit, all of it is taken into account when calculating personal income tax for the year.

How to transfer money to charity

Citizens can transfer their funds to charity in the following ways:

• through the accounting department at the place of work, submitting a corresponding application to the chief accountant;
• from a bank account or in cash through a bank;
• through the cash desk of the organization to which the citizen provides assistance.

Transfer through an organization

An organization that is a citizen’s source of income can transfer funds to charitable purposes only on the basis of his written application. The application can indicate the frequency of transfers, specific amounts or shares (percentages) of wages and other information. And be sure to provide the account details of the beneficiary organization. The application form is free.

In this case, the documents confirming the expenses incurred will be copies of payment orders for the transfer of money for charitable purposes with the bank’s mark on execution. When filling out a payment order, in the “payment purpose” field, you must indicate: “From full name to help the boarding school”, “From full name to carry out statutory activities”. Some tax authorities require, in addition to copies of payment receipts, to also submit a certificate from the organization about the transfers made.

Transfer via bank

If the taxpayer transferred funds from his bank account, then the expenses are confirmed by a bank statement confirming the transfer of funds for charitable purposes.

It is convenient to transfer money through branches of Sberbank of Russia. I draw your attention to the fact that when filling out a document according to form No. PD-4, in the line “name of payment” you should write “transfer of funds for charitable purposes.” A receipt for this form with a bank mark is submitted to the tax authority.

If a citizen deposits money directly into the cash desk of an organization to which he provides financial assistance, then the supporting document will be a receipt for the receipt order indicating the purpose of using the deposited funds. For example: “Charitable assistance for sporting events.”

Charity and taxes

What is considered charitable activity? Are all donations classified as charitable and under what conditions is an enterprise helping citizens or organizations entitled to apply tax benefits? Legislation on charity Legislation on charitable activities consists of the relevant provisions of the Constitution of the Russian Federation, the Civil Code of the Russian Federation, the federal law “On charitable activities and charitable organizations” and other federal laws and laws of the constituent entities of the Russian Federation. Participants in charitable activities Participants (parties) in charitable activities are philanthropists (legal entities) or volunteers (citizens) and beneficiaries (citizens and legal entities in whose interests charitable activities are carried out). What is charity In accordance with Art. 1 of the Federal Law of August 11, 1995 No. 135-FZ “On Charitable Activities and Charitable Organizations” (hereinafter referred to as Law No. 135-FZ), charitable activity is understood as such voluntary activity of an enterprise, as a result of which it disinterestedly (i.e., free of charge) transfers to citizens or legal entities with funds, property, services or other support. Agreements related to the formalization of relations for the provision of charitable assistance are, by their legal nature, gratuitous. Signs of charitable activity In order for the financing of organizations to be classified as charitable activity, the following conditions must be met: - the enterprise receiving financial assistance should not be a commercial organization and should not belong to political parties and movements;
— the recipient of assistance should not have any obligations to the benefactor in return for the assistance provided to him; — the recipient organization must use financial resources strictly for their intended purpose, and submit a report on their use to the charitable organization. REMINDER: Philanthropists are not responsible for the misuse of funds transferred by them. Purposes of charitable activities Donations for strictly defined purposes listed in Art. 2 of Law No. 135-FZ: - social support for citizens; — preparing the population to overcome the consequences of natural disasters and catastrophes, to prevent accidents; — assistance to victims of natural disasters, environmental and industrial disasters, social, national, religious conflicts, victims of repression, refugees and internally displaced persons; — strengthening peace, friendship and harmony between peoples, preventing social, national, religious conflicts; - increasing the prestige and role of the family in society; — protection of motherhood and childhood; — promoting education, science, culture, art, enlightenment, spiritual development of the individual; — prevention and health protection of citizens, as well as promotion of a healthy lifestyle; — assistance to institutions of physical culture and mass sports; — nature conservation, animal protection; — maintenance of buildings that have historical and cultural value, as well as burial sites and a number of others. REMINDER: Transfer of property through sponsorship is not a charitable activity. The sponsorship contribution is recognized as payment for advertising, and the sponsor and sponsored, respectively, are the advertiser and the advertising distributor. In this regard, sponsorship and charitable assistance have different goals. Article 423 of the Civil Code of the Russian Federation stipulates that an organization providing charitable assistance should not receive payment or other consideration for the fulfillment of its “good” intentions. Meanwhile, according to the author, those who donate to charitable purposes still receive “hidden” advertising, because charitable activities help to raise the prestige of the enterprise, which, in turn, expands the circle of consumers. Note! Charity can consist not only of donating money, food, clothing and other basic necessities, but also of training and employing people with disabilities or, for example, providing free legal assistance, organizing sports clubs for children, etc. Charitable organizations The concept of a charitable organization is given in Art. 6 of Law No. 135-FZ. A charitable organization is a non-profit organization (NPO) created specifically to conduct charitable activities in the interests of society as a whole or certain categories of persons, but not to make a profit. Such an organization cannot be state or municipal; its founders can only be individuals and (or) legal entities. The status of “charitable organization” is assigned by the registration authorities of the constituent entities of the Russian Federation. A charitable organization can be registered only in the following organizational and legal forms: - public organization; - fund; - institution. REMINDER: A charitable organization is created in the form of an institution if its founder is a charitable organization. In order to make a charitable contribution or donation, the consent of the recipient is not required. In accordance with the Civil Code of the Russian Federation, such transactions are unilateral; their written form is not mandatory. To prove the transfer of funds for charitable purposes, information about the recipient and the benefactor must be indicated in the primary document - in the receipt order, acceptance certificate, etc. Nonprofit organizations must prepare reports on how they manage donations to monitor the implementation of charitable activities. This obligation is provided for in Art. 19 of Law No. 135-FZ. Very important! Not all organizations that provide charitable donations for the purposes specified by Law No. 135-FZ are classified as charitable. To obtain the status of a “charitable organization,” Law 135-FZ establishes special criteria and requires registration. Taxation of charitable donations Income tax
Until 2002, companies could allocate up to 5% of their profits to charity.
These expenses reduced the tax base. Since 2002, with the entry into force of Chapter 25 of the Tax Code of the Russian Federation, benefits for commercial organizations participating in charitable activities have been abolished. Companies can only donate funds from net profits. If a company provides free services or donates its products free of charge, then the expenses that arise do not reduce its payments to the budget. Such clarifications are given in the Letter of the Ministry of Finance of Russia dated March 12, 2006 No. 03-03-04/2/53. Only those companies that donate money to one of three areas can be exempt from income tax: culture, science or healthcare. Moreover, they will be able to receive the benefit only after the relevant ministry adds them to the list of companies that are exempt from tax. Value added
tax The transfer of goods (performance of work, provision of services) free of charge within the framework of charitable activities carried out in accordance with Law No. 35-FZ, with the exception of excisable goods, is not subject to VAT.
Any other transfer is considered gratuitous and is subject to VAT in accordance with Article 146 of the Tax Code of the Russian Federation. REMINDER: Firms may not pay VAT only if, in accordance with Law No. 135-FZ, they donate goods, work or services. Note! All conditions established by this Law must be met in order for a donation to be recognized as charity. This is how clauses are defined. 12 clause 3 art. 149 of the Tax Code of the Russian Federation. In this case, it is necessary to issue an invoice, because for transactions exempt from VAT in accordance with Art. 149 of the Tax Code of the Russian Federation, an invoice is still issued (clause 1, clause 3, article 169 of the Tax Code of the Russian Federation), only the amount of VAT is not allocated, but the inscription “Without tax (VAT)” is made (clause 5, article 168 of the Tax Code RF). At the same time, tax authorities refuse to deduct the value added tax that the company paid to suppliers of goods (works, services). It is also necessary to restore VAT on property transferred as part of charitable activities, if it was previously accepted for deduction from the budget, and pay it to the budget (clause 3 of Article 170 of the Tax Code of the Russian Federation). Tax deduction for personal income tax
A Russian citizen has the right to receive a tax deduction if he donates money to social institutions: - organizations of science, culture, education, health care and social security, which are partially or fully financed from the budget of any level;
— physical education and sports, educational and preschool institutions; - religious organizations. A citizen's expenses for charitable purposes reduce (are subject to deduction) his income tax in accordance with subparagraph. 1 clause 1 art. 219 of the Tax Code of the Russian Federation. However, the amount of the tax deduction cannot exceed 25% of annual income, which is taxed at a rate of 13%. REMINDER: Non-residents of the Russian Federation cannot take advantage of this benefit, because they pay tax on their income at a rate of 30%. To receive a “charitable” (social) deduction, a citizen must write a corresponding application to the tax office at the place of residence and submit a tax return for the tax period in which the donations were transferred (clause 2 of Article 219 of the Tax Code of the Russian Federation). To receive a tax deduction, you must document your expenses. The application must be accompanied by: - ​​a certificate of income in Form No. 2-NDFL; — payment documents that confirm that the money was transferred for charitable purposes; - donation agreement. An agreement is usually drawn up if the recipient of the money must use it strictly for certain purposes (Article 5 of Law No. 135-FZ). A tax return claiming the deduction can be filed up to three years after the tax year in which the money is donated. The document confirming the expenses incurred can be: - a certificate from the organization issued to the taxpayer at his request about transfers made at his request for charitable purposes; — a copy of the payment order with the bank’s mark on execution. If funds are transferred directly by the taxpayer from his bank account, the expenses incurred are confirmed by a bank statement confirming the transfer of funds for the specified purposes. When a taxpayer deposits funds in cash into the cash desk of an organization that receives financial assistance, the supporting document is a receipt for the cash receipt order indicating the purpose of the deposited funds. Note! Inspectors do not consider a postal receipt as a payment document. To prove that the money was credited to the current account of a charitable organization, the citizen will have to provide additional paperwork to the controllers. Taxes of recipients of charitable assistance
Recipients of charitable assistance are also forced to pay income tax on it in accordance with clause 8 of Art.
250 Tax Code of the Russian Federation. However, if they use the donations only for the purposes for which they received them, they can avoid taxation. That's what it says in paragraph. 14 clause 1 art. 251 Tax Code of the Russian Federation. If a charitable foundation transfers a donation to a citizen, the latter will have to pay 13% income tax on the amount. Some types of such income are still exempt from tax. In particular, grants to support science and education, culture and art (clause 6 of article 217 of the Tax Code of the Russian Federation). Citizens have the right not to pay tax if they have received a grant from one of 72 organizations, the list of which is established by the Government of the Russian Federation. The purpose of such a restriction is obvious - to prevent tax abuse through fictitious charitable foundations. But grants from citizens, both Russian and foreign, are not subject to taxation. When making charitable payments to a citizen, there is no tax base under the Unified Social Tax. The single social tax is charged only on the wages of fund employees (clause 1 of article 236 of the Tax Code of the Russian Federation). Taxation of a charitable organization
It is recommended that charitable organizations include a Report on the intended use of funds received (form No. 6) as part of their annual financial statements.
It reflects targeted revenues for the maintenance of the organization and the conduct of statutory (charitable) activities. If funds received within the framework of charitable activities are used by a charitable organization for other than its intended purpose, they are included in non-operating income (clause 14 of Article 250 of the Tax Code of the Russian Federation) and are subject to income tax in the generally established manner at a tax rate of 24%. Charitable organizations are required to keep separate records of income (expenses) received (produced) within the framework of targeted income and business activities. If the organization that has received targeted financing does not have such records, these funds are considered as subject to taxation from the date of their receipt. Charitable activities are not subject to VAT, but it is also impossible to deduct VAT when carrying out charitable activities. At the end of the tax period, upon receipt of charitable funds specified in paragraph 2 of Art. 251 of the Tax Code of the Russian Federation, a charitable organization in accordance with clause 14 of Art. 250 of the Tax Code of the Russian Federation must submit to the tax authority at the place of its registration a “Report on the intended use of property (including funds), work, services received as part of charitable activities, targeted income, targeted financing” as part of the corporate income tax return . Let's summarize: Ideal tax conditions for companies and citizens who engage in charity do not exist in any country in the world. Despite this, up to 95% of European entrepreneurs donate funds to charity. The system of tax incentives for charity in Russia has also not been developed. Some of the donations go to the state, and not to those for whom they were intended. However, the Government of the Russian Federation is currently discussing charity reform. It is assumed that a company or citizen who wishes to donate money will contribute it to the capital of charitable foundations. The latter is to invest in securities and banks. Accordingly, charitable projects will be carried out using interest from this capital. The Russian Ministry of Finance is ready to exempt donations from taxes if the foundation proves that it is engaged only in charity, or spins off its commercial business into a separate company. The latter, in turn, will pay all taxes as a regular organization. According to the Russian Ministry of Finance, such a system will make it possible not to mix charity and entrepreneurship. Charitable companies will not be able to receive any tax breaks. The goal of the financial department is to close any loopholes that businesses can use to evade taxes. discuss the article Elmira Bagautdinova, expert - tax consultant, member of the Chamber of Tax Consultants of Russia

Charity from legal entities to foundations

Among Russian businessmen, it is more common to provide assistance indirectly to those in need, through specially created structures - charitable foundations, one of which is the St. Petersburg charitable foundation AdVita (For Life). In most cases, this approach is driven by the desire to independently determine the circle of recipients of donations, as well as confidence in controlling costs. After all, a fund that collects and distributes funds, for example, for the treatment of cancer patients, is registered in Russia as an NPO, its activities are regulated by law, and the donor can be sure that his funds will be spent in the targeted manner. Such funds have a staff of employees responsible for searching for projects, and also submit reports to the tax authorities.

Although all charitable organizations, including foundations, are exempt from income taxation within the framework of their statutory activities, they are required to annually submit reports to the tax authorities on the expenditure of funds received as part of charitable contributions. If the Federal Tax Service considers such expenses to be inconsistent with the statutory goals, then all funds received will be recognized as income of the fund, subject to taxation. For example, a charitable foundation does not have the right to buy real estate or make other investments with donors’ money.

As for the charitable organizations themselves, as mentioned above, you can transfer money to a charitable foundation or transfer property only at the expense of your profits, if the taxpayer applies the general taxation system. Taxpayers under the simplified taxation system also cannot reduce their income by amounts of charitable assistance. A closed list of expenses by which organizations using the simplified tax system can reduce the income received is given in Article 346.16 of the Tax Code of the Russian Federation, and charity expenses are not included in it.

Benefactor accounting

According to Art.
270 of the Tax Code of the Russian Federation, organizations can make donations only from net profit; when determining the taxable base for income tax, these expenses of funds are not taken into account. In accounting they are shown as part of other non-operating expenses. Table 1. Accounting entries for the benefactor

Useful information: Use of account 91 in accounting.

Charitable assistance can be processed through accounting in another way. If a charitable company keeps records of several recipients of donations, then it can additionally use account 76 broken down by counterparty. For example, assistance in the form of transfer of funds will be displayed by the following transactions:

• Dt76 Kt51
• Dt91.02 Kt76

Case Study

Limited Liability Company "Calculator" in May 2019 purchased 5 laser printers with a total cost of 175,000 rubles. (including VAT 20% - 29,166.67 rubles). In August 2020, all printers were transferred to Luchik LLC as part of a charity campaign.

Accounting entries for business transactions.

May 2020:

• Dt10.09 Kt60:
  145,833.33 rubles – printers as part of the MPZ were capitalized.
• Dt19 Kt60:
  RUB 29,166.67 – “input” VAT is displayed.
• Dt68 Kt19:
  RUB 29,166.67 – VAT from the supplier is accepted for deduction.

August 2020:

• Dt91.02 Kt10.9:
  RUB 145,833.33. – printers transferred to Luchik LLC were written off.
• Dt19 Kt68:
  RUB 29,166.67 – VAT restoration.
• Dt91.02 Kt19:
  RUB 29,166.67 – the restored VAT is taken into account as part of other costs.