IPK dated 14.08.2017 N 1597/6/99-99-15-03-02-15/IPK

STATE FISCAL SERVICE OF UKRAINE

INDIVIDUAL TAX CONSULTATION

dated 14.08.2017 N 1597/6/99-99-15-03-02-15/IPK

About VAT taxation

The State Fiscal Service of Ukraine considered an appeal regarding the procedure for VAT taxation of transactions involving the supply by a non-resident (software owner) to a resident of services for the development, modification and refinement of a functional component of software, namely, changes to the software code and, guided by Article 52 of Chapter II of the Tax Code of Ukraine ( hereinafter - PKU), informs.

According to the Laws of Ukraine of March 23, 2000 N 1587-III "On the distribution of copies of audiovisual works, phonograms, videograms, computer programs, databases" (hereinafter - Law N 1587), of December 23, 1993 N 3792-XII " On copyright and related rights" (hereinafter - Law N 3792) a computer program is a set of instructions in the form of words, numbers, codes , diagrams, symbols or in any other form, expressed in a form suitable for reading by a computer computer, which put it into action to achieve a certain goal or result (this concept covers both the operating system and the application program expressed in source or object codes).

A copy of a computer program is a copy of a computer program that is made directly or indirectly from this computer program and contains all or part of the moving images recorded in the computer program (both with and without sound) (Article 2 of Law No. 1587).

At the same time, the components of a computer program are parts of the software, which can be parts (modules) based on or with the help of which a certain program is created, and/or act as independent computer programs.

Therefore, taking into account the provisions of Laws N 1587 and N 3792, the program code of the software specified in the application falls under the definition of a component of such software.

Relations arising in the field of tax and fee collection are regulated by the norms of the PKU (Clause 1.1 of Article 1, Section I of the PKU).

According to the norms of the current legislation, taxpayers are obliged to independently declare their tax obligations and determine the essence and compliance of their transactions with those listed in the PKU.

At the same time, Clause 44.1 of Article 44, Section II of the PKU provides that for taxation purposes, taxpayers are required to keep records of income, expenses and other indicators related to the determination of taxable objects and/or tax liabilities, based on primary documents , accounting registers, financial statements, other documents related to the calculation and payment of taxes and fees, the maintenance of which is provided for by law.

The legal bases of VAT taxation are established by Section V and Subsection 2 of Section XX of the PKU.

According to subparagraphs "a" and "b" of clause 185.1 of Article 185 of Chapter V of the PKU, the object of VAT taxation is the transactions of VAT payers for the supply of goods/services, the place of supply of which, in accordance with Article 186 of Chapter V of the PKU, is located in the customs territory of Ukraine.

The supply of goods means any transfer of the right to dispose of the goods as the owner, including the sale, exchange or donation of such goods, as well as the supply of goods by court order (subclause 14.1.191 of clause 14.1 of article 14 of section I of the Code of Civil Procedure).

The supply of services means any operation that is not the supply of goods, or any other operation for the transfer of rights to objects of intellectual property rights and other intangible assets or the provision of other property rights in relation to such objects of intellectual property rights, as well as the provision of services , which are consumed in the process of committing a certain action or carrying out a certain activity (subclause 14.1.185 of clause 14.1 of article 14 of chapter I of the PKU).

Clause 26 of Subsection ¹ of Chapter XX of the Code of Civil Procedure stipulates that for operations on the supply of software products temporarily, from January 1, 2013 to January 1, 2023 , a preferential VAT regime has been introduced, according to which operations on the supply of software are exempted from taxation products.

For the purposes of this clause of the PKU, software products include:

the result of computer programming in the form of an operating system, system, application, entertainment and/or educational computer program (their components), as well as in the form of Internet sites and/or online services;

cryptographic means of information protection.

The peculiarities of VAT taxation of operations for the supply of software products are defined in the Generalized tax consultation, approved by the order of the Ministry of Revenue dated 07.10.2013 N 536 (hereinafter - UPC N 536), except for the provisions of UPC N 536, which determine the procedure for VAT taxation of operations for granting the right to use software products , which was valid until 01.01.2015.

In particular, the Code of Civil Procedure No. 536 specifies that transactions involving the supply of software products from a non-resident to a resident in the customs territory of Ukraine and from a resident to a non-resident are not subject to VAT.

Operations for the supply of individual components of software products, based on or with the help of which certain software products are created, or which can act as independent computer programs, are exempt from VAT taxation.

The rules for drawing up a tax invoice (including filling in the type of reason and conditional codes) are regulated by Article 201 of Chapter V of the PKU and are regulated by the Procedure for filling out a tax invoice, approved by the order of the Ministry of Finance of Ukraine dated 31.12.2015 N 1307, registered with the Ministry of Justice of Ukraine on 26.01.2016 under N 137/28267 (as amended by the order of the Ministry of Finance of Ukraine dated February 23, 2017 N 276).

For transactions subject to VAT and transactions exempt from VAT, separate tax invoices are drawn up (Clause 201.5 of Article 201 of Chapter V of the PKU).

Tax invoices that are not provided to the buyer, as well as tax invoices drawn up for the supply of goods/services that are exempt from VAT, are subject to registration in the Unified Register of Tax Invoices (Clause 201.9 of Article 201 of Chapter V of the PKU).

In case of exemption from VAT taxation, the entry "Without VAT" is made in the tax invoice with reference to the relevant clauses (subclauses), articles, subsections, sections of the PKU and/or international agreement, which provide for exemption from VAT taxation (paragraph 201.3 of Article 201 of Section V of the PKU ).

Regarding the VAT taxation of transactions for the supply of services (works) for the development of software products, we inform you that in the event that the performers of such services (works) do not acquire ownership rights to the software products in the process of their creation, and after the completion of the performance of such services (works) the ownership right to finished software products (its components) will be purchased by the customer, then such transactions are not subject to the provisions specified in Clause 26 ¹ of Subsection 2 of Chapter XX of the PKU, and are taxed in the generally established manner. At the same time, VAT taxation of operations for the supply of services is carried out taking into account the place of supply of such services.

At the same time, it should be noted that taxpayers are required to keep separate records of operations for the supply and purchase of goods/services that are subject to taxation, as well as those that are not subject to taxation and are exempt from taxation in accordance with Chapter V of the Civil Code (Clause 201.14 of Article 201 of Chapter V of the Code of Civil Procedure).