In practice, there are situations when citizens borrow money from organizations through the conclusion of loan agreements. When calculating personal income tax, this entails the appearance of income from the borrower in the form of percent of material benefits. The tax agent here is the organization that issued such a loan. In our article, we consider what it is, material benefits, as well as features of the category. In addition, we will analyze the reasons for its appearance and the taxation procedure.
Civil Law Loan Base
Borrowed relations, as a rule, are formalized through a loan agreement, according to which the lender (first party) transfers money or other things into the ownership of the borrower (second party) that differ in generic characteristics. In turn, the borrower assumes the obligation to repay the lender the same loan amount (amount of money) or an equal amount of other things received by him, of the same quality and kind. Such rules are provided for in paragraph 1 of Art. 807 of the Civil Code of the Russian Federation. It must be added that currency values and foreign currency can also be the subject of a loan agreement in the Russian Federation.
The contract is considered effective from the moment of transfer of money or other items. According to paragraph 1 of Art. 808 of the Civil Code of the Russian Federation, this agreement between citizens must be concluded in writing if its amount is not less than 10 times the minimum wage established by law. If the organization serves as a lender, the contract is concluded exclusively in writing, and regardless of the amount.
Interest
Consider the material benefits of loans. It is important to note that the lender is entitled to receive directly from the borrower interest on the loan amount in the manner and amount determined by the agreement, unless otherwise provided by the loan agreement or the law in force in the country. In the absence of conditions in the agreement regarding the size of interest, their value is revealed by the existing rate at the location of the lender. When it is a legal entity, we will talk about its location, where the actual certain bank interest rate (in other words, the refinancing rate), and at the time of payment by the borrower of the monetary amount of the debt or its specific part under paragraph 1 of Art. 809 of the Civil Code of the Russian Federation.
According to paragraph 4 of Art. 809 of the Civil Code of the Russian Federation when repaying the loan amount, which is provided at interest under paragraph 2 of Art. 810 of the Civil Code of the Russian Federation, the lender ahead of schedule has the right to receive interest from the borrower under the loan agreement accrued inclusively until the day the money is returned in full or in part.
By virtue of Art. 210 of the Tax Code in force in the Russian Federation, when identifying the tax base for personal income tax, incomes in the form of material benefits from personal income tax are also taken into account. It is worth noting that a citizen may have material benefits in three cases. Among them:
- Material benefits from savings on interest. It arises in the case of using credit borrowed money that is received from individual entrepreneurs or organizations. An exception in this case is transactions with credit cards during the interest-free period, which is established in the agreement regarding the provision of credit cards.
- Material benefit from savings on the purchase within the framework of a civil law agreement of commercial products (services, services) from citizens, individual entrepreneurs or organizations. A prerequisite here is their mutual dependence on an individual.
- Income in the form of tangible benefits in the acquisition of securities.
Percentage Savings
Consider the material benefits of an interest-free loan. So, if the money was received in accordance with the contract of such a loan, the borrower has the opportunity to save on interest payments. This means that he makes a profit with which, according to the rules provided by tax legislation, is withheld from personal income tax. It is worth noting that the material benefit on an interest-free loan appears even when the terms of the agreement or the loan agreement require the payment of interest, but their value is less than 9% (according to the foreign currency loan). This amount may also be 3/4 of the refinancing rate. Bank of Russia, which is set on the date of receipt of borrowed money (according to the ruble loan).
There are exceptions everywhere
An exception to this rule is the material benefit received from the savings on interest directly for the use of borrowed money that the taxpayer actually spent on the purchase or construction of a residential apartment, house, room or parts thereof in the territory of the Russian Federation. From Art. 224 of the Tax Code of the Russian Federation follows: if the taxpayer has documented the use of borrowed funds for the purchase of housing, income tax physical. persons with benefits from interest savings are withheld at a rate of 13%. In other situations, in other words, if there are no documents, the rate will be 35%.
This procedure applies primarily to those incomes in the form of benefits of the material plan that were received after January 1, 2005 (letter of the RF Ministry of Finance dated June 16, 2006). What documentation the taxpayer agrees to confirm the intended purpose of the borrowed money is not indicated in the Tax Code in force in the Russian Federation. In accordance with the opinion of specialists of the Ministry of Finance, the type of securities confirming the purpose of the loan for the acquisition of residential territories depends on the method and form of payment for real estate objects that are acquired (letter dated 02.04.2007).
Taxation procedure
In accordance with the provisions of paragraph 1 of Art. 226 of the Tax Code of the Russian Federation, if a Russian company provided a loan to its own employee and at the same time he received material benefits at the interest rate, the lender is obliged to calculate the personal income tax amount, then withhold it from the employee’s income and transfer it to the state budget. It should be noted that withholding tax is necessary at the expense of any money that the company accrues to its employee. As a rule, this is done upon payment upon delivery. The tax may also be withheld from the taxpayer’s money, which is paid according to his order to third parties. It must be remembered that the tax amount that the company can withhold should not, under any circumstances, be more than 50 percent of the amount paid. Employees of the financial department notice that in order to perform their functions, the agent for taxes and duties does not require a special power of attorney from the employee.
Sometimes it happens that the tax agent is not able to withhold the tax on personal income. persons from the borrower for one extremely simple reason: the employee does not receive income from the agent for taxes and fees at all. In this case, the latter undertakes to inform the tax authority at the place of its own account in writing of information regarding the impossibility of withholding the tax payment and transmitting data on the amount of debt relevant to the taxpayer (according to paragraph 5 of Article 226 of the Tax Code of the Russian Federation).
Occurrence of benefits
The material benefit date is the date that interest is paid according to the loan agreement or loan agreement. For example, in accordance with the rules of the contract, the employee is obliged to pay interest every month no later than the fifteenth day. So, the material benefit on an interest-free loan will appear in the same numbers every month. The contract may provide for the payment of interest simultaneously with the repayment of the loan amount. In this case, the amount of benefits according to the loan agreement is revealed only once, usually at the end of the agreement period. If the loan is not repaid this year, and the corresponding interest is not paid, then the benefits of the material plan are calculated at the end of the year, in other words, on December 31. If the company issued an interest-free loan, then the date of receipt of income by the borrower in the form of material benefits is the date of return of the borrowed money (according to the letter of the Ministry of Finance of Russia dated 02.04.2007.
Determination of the tax base
It is worth noting that personal income tax on the material benefit of a loan can be defined as the excess of the percentage for the use of money taken on credit, calculated as 3/4 of the current refinancing rate, over the percentage that is calculated based on the terms of the agreement. The calculation uses the refinancing rate determined by the Bank of Russia directly on the date of receipt of the borrowed money. At the same time, it does not matter at all whether it changed during the period of use of this money or not.
Calculation based on the current refinancing rate
Further, it is advisable to calculate the amount of interest for the use of borrowed money based on the current refinancing rate, and then from the interest rate established by the loan agreement. The calculation is made in accordance with the formula: SUM = SUM x 3/4 of the refinancing rate. x K: 365 (366) days,% of days, where SUM - loan amount; K - the number of days of using the loan.
It is worth noting that in the second situation, instead of the refinancing rate, nothing other than the amount of interest in accordance with the contract is taken. To get the final result from the first amount, you need to subtract the second and multiply by 35%.
The tax base in terms of material benefits from savings on interest on loans (loans) in the foreign currency of the foreign state should be defined as the excess of the percentage for using borrowed money, calculated on the basis of the rate of 9 percent per annum, over the percentage that is calculated on the basis of the terms of the agreement. The calculation algorithm is the same as in the case of ruble loans.
In order to calculate the material benefits, you should determine the number of days the loan is used. The starting date is the day the borrowed money was issued, and the ending date is the day that precedes the loan repayment day. If funds are not returned in the current year, but interest is paid in accordance with the conditions, the last day of interest calculation shall be recognized as the end date. If the loan was issued in the current year and the benefits of the material plan have already been calculated in the same calendar year, then the start date will be the day that follows the last day included in the previous calculation mat. benefits.
Let's look at an example.
So, we will analyze the corresponding example. Suppose, on July 1, 2007, a company issued a loan to one of its employees with a repayment period of February 1, 2008. In accordance with the terms of the current contract, the borrower is obliged to pay interest in two stages: October 1, 2007, and also on the date of loan repayment. In this case, the calculation of material benefits is implemented once. The borrowed funds were in use by the taxpayer for 122 days, that is, from the date the loan was issued (July 1, 2007) to the day that was the last when calculating interest (in other words, September 30, 2007).
In 2008, the benefit will also be calculated only once. The taxpayer will use the borrowed funds for 123 days: from the day following the last day included in the previous calculation of benefits (in other words, October 1, 2007), to the day preceding the day of loan repayment (January 31, 2008).
If an interest-free loan was issued this year, the beginning of the term for its use coincides with the date of direct issue. The end of the period in this case falls on the last day of the year in accordance with the calendar. Assume that an interest-free loan was issued in previous years. In such circumstances, the start date is the same as the day following the last day included in the calculation of the benefits of the material plan the previous time, and the loan repayment date is considered final.
Benefit from the purchase of securities
Individuals (citizens) have the opportunity to own certain securities in various ways, however, material benefits occur only when they are received on free terms or purchased at prices that are lower than market prices. It is advisable to recall that in accordance with the relevant provisions of the Federal Law, effective April 22, 1996, under the name “On the Central Bank Market”, emission securities are allowed to be circulated in the organized securities market. Among them are stocks, corporate and government bonds, as well as savings and certificates of deposit.
Final part
So, we fully examined the category of material benefits, analyzed the concept, definition, causes, characteristics and taxation procedure. In addition, we made a calculation, showed everything with a specific example. In conclusion, it should be noted that the object of a single type social tax is payments in accordance with labor, copyright, and civil law agreements, the subject of which is the provision of services and performance of work. The material benefit does not apply to such payments; accordingly, it cannot be recognized as the object that is subject to the UST (according to the letter of the Ministry of Finance of Russia dated 02.04.2007).