Value added taxation procedure of services received by the VAT payer from non-resident…

Press service of the State Tax Service of Ukraine, published 07 August 2024 at 10:13 Chapter: News

Value added taxation procedure of services received by the VAT payer from non-resident.

Can the VAT payer claim budgetary refunding for services received from non-resident who is not registered as the VAT payer?

Legal bases of the VAT taxation are established by Section V and Subsection 2 of Section XX of the Tax Code of Ukraine (hereinafter – Code).

Sub-paragraph "b" Paragraph 185.1 Article 185 of the Code stipulates that taxation object is the operations of taxpayers for supply of services, supply place of which is located in the customs territory of Ukraine, according to Article 186 of the Code.

Supply place of services is the supplier’s registration place, except for operations specified in Paragraphs 186.2, 186.3 and 186.3¹ Article 186 of the Code (Paragraph 186.4 Article 186 of the Code).

Therefore, the VAT taxation procedure of supply of services directly depends on the place of their supply.

Peculiarities of VAT taxation of services supplied by non-residents, supply place of which is located in the customs territory of Ukraine, are defined in Articles 180 and 208 of the Code.

Paragraph 180.2 Article 180 of the Code stipulates that person responsible for charging and paying tax to the budget in case of supply of services by non-residents, including their permanent representative offices, not registered as taxpayers, if supply place of services is located in the customs territory of Ukraine, is a recipient of services, except in cases established by Article 208¹ of the Code.

Recipient of services supplied by non-residents, supply place of which is located in the customs territory of Ukraine, accrues tax at the basic tax rate or at the 7 percent rate for services specified in Clauses 4 – 6 of Sub-paragraph "c" Paragraph 193.1 Article 193 of the Code, on the tax base determined according to Paragraph 190.2 Article 190 of the Code.

At the same time, recipient of services – taxpayer, according to procedure defined by Article 201 of the Code, prepares tax invoice indicating amount of accrued tax, which is the basis for assigning tax amounts to tax credit in the prescribed manner. Such tax invoice is subject to obligatory registration in the Unified Register of Tax Invoices (Paragraph 208.2 Article 208 of the Code).

If recipient of services is registered as taxpayer, amount of accrued tax is included in tax liability of declaration for relevant reporting period (Paragraph 208.3 Article 208 of the Code).

It should be noted that according to Paragraph 8 of Procedure for filling out tax invoice, approved by Order of the Ministry of Finance of Ukraine №1307as of 31.12.2015, registered with the Ministry of Justice of Ukraine on 26.01.2016 under №137/28267 (hereinafter – Procedure №1307), preparing tax invoices, specifics of filling in which are set out in Sub-paragraphs 10 - 15 of Procedure №1307, in the upper left part of such invoices in column "Not subject to provision to the recipient (buyer) for reason" an "X" is marked and, in particular, in case of compiling tax invoice by the recipient (buyer) of services from non-resident, reason type "14" is indicated.

Paragraph 12 of Procedure №1307 specifies, in particular, that in case of tax invoice compiled by the recipient (buyer) of services from non-resident, supply place of which is located in the customs territory of Ukraine, a conditional Individual tax number is inserted in line "Individual tax number of the supplier (seller)" of such invoice "500000000000",  and in line "Supplier (seller)" indicate name (Last name, first name, patronymic) of non-resident and through whom – country in which the seller (non-resident) is registered, line "Tax number of the taxpayer or series (if available) and passport number" is not filled. In lines provided for filling in the buyer's data, the recipient (buyer) notes own data. Section B of tax invoice is filled out without special peculiarities.

Procedure for determining amount of tax to be refunded from the State budget of Ukraine and settlement terms are determined by Article 200 of the Code.

Sub-paragraph "b" of Paragraph 200.4 Article 200 of the Code specifies, in particular, that amount of negative value, calculated according to Paragraph 200.1 Article 200 of the Code, is subject to budgetary refunding at the payer’s request in amount of tax actually paid by the recipient of products/services in previous and reported tax years periods to suppliers of such products/services or to the State budget of Ukraine, in part that does not exceed amount calculated according to Paragraph 200¹.3 Article 200¹ of the Code at the time of receipt of tax declaration by the controlling authority, to relevant taxpayer’s account in a bank/non-bank payment service provider and/or to payment account of monetary obligations or repayment of tax debt of such taxpayer from other payments paid to the state budget.

Based on norms of Sub-paragraph "b" Paragraph 200.4 Article 200 of the Code, the taxpayer cannot declare for budgetary VAT refunding amounts accrued for receipt of services from non-resident, not registered as the VAT payer, supply place of which is located in the customs territory of Ukraine, since such amounts are not paid either to the service provider or to the State budget of Ukraine.