August 4, 2011 at 13:31VAT exemption for software transactions (part 2)
In the first part of the article, we discussed the general issues of exemption from VAT on transactions with software, and also examined in detail the tax consequences of concluding separate agreements for creating software and transferring exclusive rights to it to third parties.
Now I propose to dwell on the problems of applying VAT exemptions when distributing programs and databases on licensing and sales contracts, which cause a lot of questions from software distributors.
As a rule, a new software distribution scheme is based on concluding a chain of sublicensing agreements. At the same time, many market participants continue to be wary of the tax consequences of such transactions. According to many consultants, the use by the taxpayer of privileges under sublicensing agreements in the future may result in additional charge of VAT and recovery of tax penalties from interest.
However, despite the fact that the Tax Code of the Russian Federation (the Tax Code of the Russian Federation) contains a direct indication of the exemption from VAT of the right to use programs and databases only under a license agreement, we believe that it is possible to use this benefit in case of granting rights to software under a sublicense agreement .
As a justification for this position, we can refer to the following. The indicated agreements have one and the same subject - granting the right to use computer programs and databases for a term. The contracts are distinguished by the subject composition: in the licensing agreement, the licensor acts as the author or other copyright holder (i.e., the owner of exclusive rights), and in the sublicensing agreement as the licensor is the person who was previously granted the right to use the software.
In our opinion, the VAT exemption is not limited to the provision of preferences to developers when introducing software rights into civil circulation under a license agreement. The copyright holder of exclusive rights to programs or databases can be any person who is not the author, and who received such rights by way of alienation, under a contract for the creation of software, or in any other manner prescribed by law. Thus, the Federal Law of July 19, 2007 N 195-ФЗ puts the authors on an equal footing with other copyright holders. Therefore, in the same way, it would be wrong to put the owners of derivative rights (licensees) with the owners of secondary rights (copyright holders who are not developers) in unequal taxation conditions. That is, the provisions under discussion are not related to the establishment of the special tax status of the author or copyright holder,
The position on the admissibility of applying the provisions of the Federal Law of July 19, 2007 N 195-ФЗ when transferring software rights by the licensee on the basis of a sublicensing agreement was also repeatedly confirmed in letters of the RF Ministry of Finance (see Letter of the RF Ministry of Finance dated December 25, 2007 N 03-07 -11/640, Letter of the RF Ministry of Finance of January 30, 2008 N 03-07-07 / 06, Letter of the RF Ministry of Finance of February 21, 2008 N 03-07-08 / 36, Letter of the RF Ministry of Finance of 01.04.2008 N 03 -07-15 / 44, Letter of the Ministry of Finance 02.11.2009 N 03-07 / 280, 09.11.2009 N 03-07-11 / 287).
Strictly speaking, the sale of a copy of a computer program or a database on a physical medium is not accompanied by the granting of rights to use it.
On the basis of Article 1280 of the Civil Code of the Russian Federation, a person lawfully owning a copy of a computer program or a copy of a database (user) is entitled without the permission of the author or other copyright holder and without paying additional remuneration to carry out the actions necessary for the functioning of such a program or database in accordance with their purpose, including recording and storing in computer memory (one computer or one network user). Thus, the user does not need a software license for its installation and functional use.
However, before using programs and databases, the user is usually invited to join the copyright holder’s license agreement. On the basis of clause 3 of Article 1286 of the Civil Code of the Russian Federation, it is expressly permitted to conclude licensing agreements on the right to use a computer program or database by concluding each user with the respective copyright holder an accession agreement, the terms of which are set forth on the purchased copy of such a program or database or on the packaging of this instance. The beginning of the use of such a program or database by the user, as it is determined by these conditions, means his consent to conclude a contract.
At the same time, a copy of such software, as indicated above, prior to the conclusion of the license agreement could be sold to the user under the contract of sale of its tangible medium. Those. the sale of an instance under a sales contract precedes the exercise of rights under a license agreement. At the same time, wrapping licenses usually do not contain remuneration conditions, and therefore, in principle, they do not meet the requirements of the law on a license agreement, because on the basis of the absence of a condition on the amount of remuneration or the procedure for determining it in a reimbursable license agreement, the agreement shall be deemed not concluded.
Due to the lack of transfer of software rights in these cases, the VAT exemption introduced by the Federal Law of 19.07.2007 N 195-FZ is not applicable.
The Ministry of Finance of the Russian Federation shares the position that operations to transfer rights to use the software when selling their copies on media in commodity packaging containing the terms of a license agreement (packaging license) are subject to VAT. However, at the same time, the RF Ministry of Finance makes one significant reservation, according to which VAT is accrued if a license agreement in writing is not concluded at the time of such implementation (see Letter of the RF Ministry of Finance dated December 29, 2007 N 03-07-11 / 648, Letter of the RF Ministry of Finance dated February 21, 2008 N 03-07-08 / 36, Letter of the Ministry of Finance of the Russian Federation dated 01.04.2008 N 03-07-15 / 44).
Thus, the Ministry of Finance of the Russian Federation leaves open the possibility of applying VAT exemptions when transferring software on tangible media with the correct execution of contractual relations. The Letter of December 29, 2007 N 03-07-11 / 648 explicitly states that when an organization carries out activities to distribute software products through a network of resellers (dealers, distributors) with the transfer of non-exclusive rights from the manufacturing organization through a chain of intermediaries to the final consumer on the basis of the licensing agreements concluded by them, then in accordance with the Federal Law of 19.07.2007 N 195-ФЗ such operations are not subject to value added tax.
Similarly, the issue can be resolved in the case of software delivery as part of the hardware and software complex under OEM conditions. In this case, the software actually preinstalled on the computer is purchased and, in the absence of a separate license agreement for its use, the application of VAT exemption is unreasonable. However, the supply of equipment with installed software may be accompanied by the conclusion of a license agreement, the remuneration of which will not be subject to VAT.
When providing copies of the software under a licensing agreement on tangible media in commodity packaging, the issue of their exemption from VAT should also be resolved positively. The transfer of tangible media to the licensee is carried out in the order of fulfillment of obligations under the license agreement, so there is no need to separate their value from the license fee and add VAT to it.
As rightly pointed out by the Ministry of Finance of the Russian Federation in the Letter dated 01.04.2008 N 03-07-15 / 44, these operations are exempt from taxation, regardless of the method of transferring computer programs and databases. Therefore, if the transfer of these rights provides tangible media in which the results of intellectual activity are expressed, as well as documentation, technical means of protection and other accessories in packaging that are necessary for the effective use of the results of intellectual activity, the transfer of such tangible media and accessories is exempt from tax value added, provided that their value is taken into account in the value of rights transferred under license (subli enzionnym) contracts. Moreover, the amount of value added tax presented by suppliers, including tangible carriers, documentation, technical means of protection and other accessories used in the implementation of operations to transfer rights to use the results of intellectual activity that are not taxable, in accordance with paragraphs. 1 p. 2 Article 170 Tax Code are taken into account in the cost of the corresponding goods (works, services) and are not accepted for deduction.
At the same time, we draw attention to the fact that in the case of applying VAT exemption for transactions with boxed software and OEM products, it is necessary to take into account high tax risks in connection with the possible re-qualification of transactions for the following reasons.
The transfer of rights "in a chain" will be based on the sublicensing scheme. Based on the law, the licensee cannot transfer to the sub-licensee more rights than he himself received under the license agreement. Thus, in order to grant the sub-licensee rights to use the programs, the licensee needs to acquire such rights that, in principle, are not required for the implementation of the programs. In the case of distribution of boxed software, its copy has already been put into civil circulation by replication on tangible media and their sale by the first seller. Consequently, the right to reproduce and distribute copies has already been used. The distributor does not need the right to reproduce (install) and functionally use the software sold; its purpose is the subsequent implementation, and not the extraction of useful properties of such software.
The same situation is with OEM products: the terms of the license agreement are accepted by the software installer, then such software is transferred as part of the equipment and does not require the end user to re-enter the license agreement.
Thus, sublicensing agreements for the provision of rights to boxed software and OEM products can be considered sham transactions aimed at obtaining tax benefits from the application of VAT benefits
Now I propose to dwell on the problems of applying VAT exemptions when distributing programs and databases on licensing and sales contracts, which cause a lot of questions from software distributors.
VAT on sublicense agreements
As a rule, a new software distribution scheme is based on concluding a chain of sublicensing agreements. At the same time, many market participants continue to be wary of the tax consequences of such transactions. According to many consultants, the use by the taxpayer of privileges under sublicensing agreements in the future may result in additional charge of VAT and recovery of tax penalties from interest.
However, despite the fact that the Tax Code of the Russian Federation (the Tax Code of the Russian Federation) contains a direct indication of the exemption from VAT of the right to use programs and databases only under a license agreement, we believe that it is possible to use this benefit in case of granting rights to software under a sublicense agreement .
As a justification for this position, we can refer to the following. The indicated agreements have one and the same subject - granting the right to use computer programs and databases for a term. The contracts are distinguished by the subject composition: in the licensing agreement, the licensor acts as the author or other copyright holder (i.e., the owner of exclusive rights), and in the sublicensing agreement as the licensor is the person who was previously granted the right to use the software.
In our opinion, the VAT exemption is not limited to the provision of preferences to developers when introducing software rights into civil circulation under a license agreement. The copyright holder of exclusive rights to programs or databases can be any person who is not the author, and who received such rights by way of alienation, under a contract for the creation of software, or in any other manner prescribed by law. Thus, the Federal Law of July 19, 2007 N 195-ФЗ puts the authors on an equal footing with other copyright holders. Therefore, in the same way, it would be wrong to put the owners of derivative rights (licensees) with the owners of secondary rights (copyright holders who are not developers) in unequal taxation conditions. That is, the provisions under discussion are not related to the establishment of the special tax status of the author or copyright holder,
The position on the admissibility of applying the provisions of the Federal Law of July 19, 2007 N 195-ФЗ when transferring software rights by the licensee on the basis of a sublicensing agreement was also repeatedly confirmed in letters of the RF Ministry of Finance (see Letter of the RF Ministry of Finance dated December 25, 2007 N 03-07 -11/640, Letter of the RF Ministry of Finance of January 30, 2008 N 03-07-07 / 06, Letter of the RF Ministry of Finance of February 21, 2008 N 03-07-08 / 36, Letter of the RF Ministry of Finance of 01.04.2008 N 03 -07-15 / 44, Letter of the Ministry of Finance 02.11.2009 N 03-07 / 280, 09.11.2009 N 03-07-11 / 287).
VAT on sales contracts for software copies (box software and OEM products)
Strictly speaking, the sale of a copy of a computer program or a database on a physical medium is not accompanied by the granting of rights to use it.
On the basis of Article 1280 of the Civil Code of the Russian Federation, a person lawfully owning a copy of a computer program or a copy of a database (user) is entitled without the permission of the author or other copyright holder and without paying additional remuneration to carry out the actions necessary for the functioning of such a program or database in accordance with their purpose, including recording and storing in computer memory (one computer or one network user). Thus, the user does not need a software license for its installation and functional use.
However, before using programs and databases, the user is usually invited to join the copyright holder’s license agreement. On the basis of clause 3 of Article 1286 of the Civil Code of the Russian Federation, it is expressly permitted to conclude licensing agreements on the right to use a computer program or database by concluding each user with the respective copyright holder an accession agreement, the terms of which are set forth on the purchased copy of such a program or database or on the packaging of this instance. The beginning of the use of such a program or database by the user, as it is determined by these conditions, means his consent to conclude a contract.
At the same time, a copy of such software, as indicated above, prior to the conclusion of the license agreement could be sold to the user under the contract of sale of its tangible medium. Those. the sale of an instance under a sales contract precedes the exercise of rights under a license agreement. At the same time, wrapping licenses usually do not contain remuneration conditions, and therefore, in principle, they do not meet the requirements of the law on a license agreement, because on the basis of the absence of a condition on the amount of remuneration or the procedure for determining it in a reimbursable license agreement, the agreement shall be deemed not concluded.
Due to the lack of transfer of software rights in these cases, the VAT exemption introduced by the Federal Law of 19.07.2007 N 195-FZ is not applicable.
The Ministry of Finance of the Russian Federation shares the position that operations to transfer rights to use the software when selling their copies on media in commodity packaging containing the terms of a license agreement (packaging license) are subject to VAT. However, at the same time, the RF Ministry of Finance makes one significant reservation, according to which VAT is accrued if a license agreement in writing is not concluded at the time of such implementation (see Letter of the RF Ministry of Finance dated December 29, 2007 N 03-07-11 / 648, Letter of the RF Ministry of Finance dated February 21, 2008 N 03-07-08 / 36, Letter of the Ministry of Finance of the Russian Federation dated 01.04.2008 N 03-07-15 / 44).
Thus, the Ministry of Finance of the Russian Federation leaves open the possibility of applying VAT exemptions when transferring software on tangible media with the correct execution of contractual relations. The Letter of December 29, 2007 N 03-07-11 / 648 explicitly states that when an organization carries out activities to distribute software products through a network of resellers (dealers, distributors) with the transfer of non-exclusive rights from the manufacturing organization through a chain of intermediaries to the final consumer on the basis of the licensing agreements concluded by them, then in accordance with the Federal Law of 19.07.2007 N 195-ФЗ such operations are not subject to value added tax.
Similarly, the issue can be resolved in the case of software delivery as part of the hardware and software complex under OEM conditions. In this case, the software actually preinstalled on the computer is purchased and, in the absence of a separate license agreement for its use, the application of VAT exemption is unreasonable. However, the supply of equipment with installed software may be accompanied by the conclusion of a license agreement, the remuneration of which will not be subject to VAT.
When providing copies of the software under a licensing agreement on tangible media in commodity packaging, the issue of their exemption from VAT should also be resolved positively. The transfer of tangible media to the licensee is carried out in the order of fulfillment of obligations under the license agreement, so there is no need to separate their value from the license fee and add VAT to it.
As rightly pointed out by the Ministry of Finance of the Russian Federation in the Letter dated 01.04.2008 N 03-07-15 / 44, these operations are exempt from taxation, regardless of the method of transferring computer programs and databases. Therefore, if the transfer of these rights provides tangible media in which the results of intellectual activity are expressed, as well as documentation, technical means of protection and other accessories in packaging that are necessary for the effective use of the results of intellectual activity, the transfer of such tangible media and accessories is exempt from tax value added, provided that their value is taken into account in the value of rights transferred under license (subli enzionnym) contracts. Moreover, the amount of value added tax presented by suppliers, including tangible carriers, documentation, technical means of protection and other accessories used in the implementation of operations to transfer rights to use the results of intellectual activity that are not taxable, in accordance with paragraphs. 1 p. 2 Article 170 Tax Code are taken into account in the cost of the corresponding goods (works, services) and are not accepted for deduction.
At the same time, we draw attention to the fact that in the case of applying VAT exemption for transactions with boxed software and OEM products, it is necessary to take into account high tax risks in connection with the possible re-qualification of transactions for the following reasons.
The transfer of rights "in a chain" will be based on the sublicensing scheme. Based on the law, the licensee cannot transfer to the sub-licensee more rights than he himself received under the license agreement. Thus, in order to grant the sub-licensee rights to use the programs, the licensee needs to acquire such rights that, in principle, are not required for the implementation of the programs. In the case of distribution of boxed software, its copy has already been put into civil circulation by replication on tangible media and their sale by the first seller. Consequently, the right to reproduce and distribute copies has already been used. The distributor does not need the right to reproduce (install) and functionally use the software sold; its purpose is the subsequent implementation, and not the extraction of useful properties of such software.
The same situation is with OEM products: the terms of the license agreement are accepted by the software installer, then such software is transferred as part of the equipment and does not require the end user to re-enter the license agreement.
Thus, sublicensing agreements for the provision of rights to boxed software and OEM products can be considered sham transactions aimed at obtaining tax benefits from the application of VAT benefits