What is a netting agreement between organizations? What is a Settlement Agreement? Is there a netting agreement between the three organizations? Where can I download a sample netting agreement? We will try to give quite understandable and clear answers to all these and other questions in our article.
Let's first find out what is offsetting? In theory, offsetting is a kind of universal way, in the relationship of two or more organizations, to fulfill their responsibilities. Let us give an example so that you can better understand the situation of netting between organizations. Imagine that your organization has to pay a supplier for products they have delivered. In turn, the supplier "owes" your company for the help that your organization once provided to him. The supplier can repay his "debt" in this way. It was a clear situation when netting was carried out for different services and under different contracts: supply and service.
Let's now consider another situation. Let's say your company has hired a contractor to design your office space. Money to the contractor is paid gradually, as the work done increases. Let's say it comes new stage design and need to pay money for the previous one. But there is little nuance: due to the fact that the contractor did not design this stage on time and did not meet the deadlines, he pays your company a penalty. In this case, offsetting between organizations is also possible, but for one type of contract - a contract.
But there are many aspects to the issue of netting agreements between organizations. Offsetting will not cause close attention to either tax service, nor from a partner of your organization, if it is compiled correctly, in accordance with all norms and rules, because no one needs financial and litigation after. The fact is that for an incorrectly drawn up agreement, your “conditional” contractor can formally file a lawsuit to transfer him Money for those "debts" that you consider paid off. There may also be problems with the tax authorities. Russian Federation, because if you pay taxes according to the "simplified" or cash method, then your sums of money sent as taxes will be incorrect.
Now we have to find out what registration rules the netting agreement has. Let us make a reservation right away that there are no strict norms and specific forms for filling out the netting agreement. According to the legislation of the Russian Federation, there are only two options for drawing up a netting agreement. The first option, as you might guess, is written. We will call this method unilateral offset. In accordance with article 410 of the Civil Code of the Russian Federation, your organization has the right to inform your partner about the offset in writing. The reason may be the presence of financial debts on both sides. By the way, the written form in which the offset is declared is always called differently: a letter, a message, a notice, a statement, and so on. You can download a sample of filling out a netting agreement at the very end of our article in order to visually verify that it is filled out correctly.
Don't forget the fact that netting can only formally take place when your business partner has received a netting agreement. Usually, for reliability, they proceed as follows: they send their courier with a statement and he returns with a signature from the head of the partner company that he has received the document. It is possible to send a registered letter, but in this case, do not throw out the mail notification that the document has been delivered, because later, with the development of not the most favorable events, this certificate can play into your hands.
Based on experience and practice, it can be concluded that set-off within one party only follows when the amounts of debts of both parties are known for certain. Let's bring good example for understanding. Let's say that you have documents on hand that confirm the existence of settlements with partners. If this document is a confirmation of mutual debts, then you have the right to issue a unilateral offset.
And it does not matter the fact that your partner is against such a netting agreement, because in this situation your company is completely independent of the opinion of the other party. Remember that in such a situation you have absolutely legal grounds to send a netting agreement. But the unilateral offsetting procedure is completely inappropriate if there are certain amounts of forfeit or when damage is reimbursed and at the same time you do not have official reconciliation documents.
Now consider the second version of the netting agreement. We’ll warn you right away that this method is much safer than the first one, because it draws up a statement of netting with the expectation of two parties. This is a completely legal method, you can verify this by opening article number 421 of the Civil Code of the Russian Federation.
We repeat that it does not matter at all how you sign this document - a statement, a notice, a message, and so on. Now let's talk about what must be present in the netting agreement.
Clearly articulate and label the debts that companies have to each other. For this, as a rule, prescribe:
It would not be superfluous to indicate in the netting agreement the specific period of time in which the debt was or will be repaid.
All enterprises, especially small businesses, often face a lack of working capital, so the use of such a form of payment as netting of claims has a number of advantages not only by saving money, but also by reducing the opportunity costs of the enterprise by the size of the agreement on netting claims.
However, it is not worth abusing the conclusion of offset agreements, because. this is guaranteed to attract the attention of the tax authorities to you. Lack of payment deprives the transaction of a commercial component, reduces the taxable profit of the enterprise, allows you to bypass payment through bank accounts, which makes it difficult to control the activities of the company.
An incorrectly drawn up agreement on offsetting claims (download) can be interpreted as an exchange agreement, and this entails a different accounting and tax accounting.
Unlike barter transactions, which are one bilateral contract, counter-homogeneous obligations of the parties under two or more agreements are repaid by mutual offset, in the event of the due date for the fulfillment of obligations under the contract.
Fundamentals of netting agreements
According to Art. 410 of the Civil Code of the Russian Federation the obligation shall be terminated in whole or in part by offsetting a homogeneous counter claim, the term of which has come or the term of which has not been specified or is determined by the moment of demand. A statement by one party is sufficient for set-off..
Simply put, the conclusion of an offsetting agreement is possible in the case of a relationship between two parties, they form mutual requirements: the same party is both a debtor and a creditor. And this is possible only in the case of the conclusion of two contracts, according to one of which one counterparty is the seller (goods or services), and according to the second - the buyer.
Lawyers call this counterclaims- and it is mandatory for the conclusion of such agreements. We do not advise you to resort to such agreements in the presence of a large number participants, because it is very difficult to prove circular mutual debt.
Article 411 stipulates cases of inadmissibility of set-off, among which are the requirements:
The conclusion of the mutual settlement agreement is possible only after the expiration of the payment terms. If the payment amounts are different, then the smaller amount is credited, and the difference is repaid in cash. However, it is impossible to set off obligations under a netting agreement, the fulfillment of the terms of which has not been started by either party.
Another condition for the legality of a netting agreement is homogeneity of requirements, however, the principle of homogeneity concerns only the subject of requirements, and not the causes of occurrence (see. information mail of the Presidium of the Supreme Arbitration Court of the Russian Federation of December 29, 2001 N 65 regarding the review of the practice of resolving disputes related to the termination of obligations by offsetting counterclaims of the same kind).
Before settling, it is necessary that one of the parties sends the other statement. Moreover, the fact of receipt by the other party of such notification is regarded as termination of obligations. Such confirmation may be a notice of delivery of a registered letter with a description of the attachment.
Registration of the act of mutual settlement
A properly executed agreement will save entrepreneurs from many troubles, an act of offsetting is primary settlement document. It is mandatory signed by both parties (head and chief accountant) and certified with seals (see Federal Law No. 129 “On Accounting”).
A detailed description requires a description of the composition of the debt. The parties must indicate in the act amount of liabilities in front of each other for each settlement point netting agreements. The total amount of debt is displayed as a grand total in the act. The amount of VAT is reflected separately for each type of debt and totals at the end. Goods (works, services) are subject to value added tax at the rates of 0, 10 or 18 percent. It is important not to make mistakes when calculating the amounts of VAT; when offsetting, the amount of VAT that corresponds to the type of services rendered or goods sold is singled out.
The amount of debt appearing in the act must be accompanied by supporting documents: contracts, invoices, payment documents, acts of work performed.
Settlement agreement and VAT
However, the practice of concluding agreements on mutual offset is implemented, as a rule, by a bilateral act on the offset of mutual claims. The act indicates the amount of claims, the grounds for their occurrence and the deadlines for execution. But not everything is so simple. If the amount of claims contains VAT, then the tax must be transferred by payment through the servicing bank.
The Ministry of Finance strongly recommends paying the tax in the reporting period in which the offset is carried out. Moreover, the parties retain the right to a tax deduction, despite the fact that there were no money transfers as such. Additionally, you can protect yourself by reconciling mutual settlements and signing the corresponding act.
Offsetting for simplistic people
When offsetting by an entrepreneur who is on a simplified taxation system, one should Special attention to tax such a transaction. Income reflects the cost of goods / services transferred to the buyer, and expenses include the price of the netting agreement(if the object of taxation is "income reduced by the amount of expenses").
Often, tax authorities persistently offer to offset transactions for which receivables have not been paid for a long time, thus. the amounts under the contracts can be reflected in income, and, as a result, the tax base can be increased. Note that it is solely the entrepreneur who decides whether or not to offset.
In any case, the repayment of mutual claims by offset is a very attractive way to repay the counter debt, the main thing is not to abuse it.
To date netting agreement (sample download) is very popular with small businesses. Because often in small firms there are problems with the availability of funds. And the netting agreement allows not only to save finances, but also to reduce costs.
However, the netting agreement is not suitable for too active use. This will almost completely force the fiscal authorities to pay attention to you and your business. After all, the contract, where the monetary payment is not registered, automatically cancels the commercial component in the transactions. This reduces taxable profits, eliminates the need to use bank accounts for transactions, and makes it more difficult to control the company.
We must not forget that netting agreement, drawn up incorrectly, may be considered an exchange agreement. And, therefore, must undergo another accounting.
Offsetting involves the repayment of counter homogeneous obligations - the repayment periods, of course, are prescribed. This means that it is necessary to draw up not one bilateral agreement, but two or more agreements.
Settlement agreement: basics
A mutual settlement agreement is possible only if the two parties have mutual (or, as lawyers say, counter) demands on each other. And each party is, as it were, both a creditor and a debtor at the same time. Therefore, two contracts are required. In the first, one party is the seller of a service or product, in the second, it is the buyer. It is better not to conclude a netting agreement between a large number of participants. After all, it is difficult to imagine a situation where there is a circular mutual debt. And to prove that there is such a debt is very problematic.
Article 411 of the Civil Code of the Russian Federation stipulates cases when a netting agreement is not possible. For example, if we are talking about the recovery of alimony, life maintenance or compensation for harm to health.
Is netting agreement only when payment deadlines have expired. It happens that the amounts of payment differ from each other. And then the amount that is less is taken into account. And the difference is reduced to zero cash payment. If the terms of the offsetting agreement have not yet begun to be fulfilled by either party, then the obligations under the agreement cannot be set off.
In order for the netting agreement to be recognized as legal, it is necessary that the requirements of the parties be homogeneous. The condition of homogeneity should be observed only with respect to the subject of the requirements, but not in any way the reasons for which these requirements arose. Before settling, one party must send an application to the other. It is best to do this by registered mail, and then receive a notification of delivery with a description of the attachment.
We draw up the act of mutual settlement correctly
Only correct design will avoid all sorts of complications and problems. The main accounting document in this case is an act of mutuality. In order for the act to have legal force, two signatures (the director of the company and the chief accountant) of the two parties are required, as well as certification with seals. The description of the composition of the debt must be made in detail. It is necessary to prescribe the amount of obligations of each of the parties - for all settlement clauses of the contract. The total amount must be reflected in the act. As well as the amount of value added tax. But at the same time, the amount of VAT must be written for each type of debt. VAT rate for different types works (goods or services) is 18, 10 or 0 percent. VAT, of course, must be calculated accurately.
The amount of debt that is in the act must be confirmed by a whole package of papers: invoices, payments, acts of work done, contracts.
VAT in netting transactions
De facto, offsetting transactions are carried out using a bilateral act on offsetting mutual claims. It contains the following information: grounds for claims, deadlines for execution, amount. When value added tax is taken into account in the amount of claims, it must be repaid by a payment at the bank that serves you. The Ministry of Finance advises businessmen to pay taxes in the same period in which offsets take place. Please note that both parties are entitled to tax deductions, although the money in this case de jure is not transferred. You can also insure yourself in this way: conduct a mutual settlement and draw up an act on this.
Settlement for "simplistic" businessmen
For those who act on a simplified basis, when making a netting transaction, one must carefully consider its taxation. Income here is the cost of goods (services) given to the buyer side, expenses - the price specified in the contract. It happens that representatives of the fiscal authorities ask entrepreneurs to set off in transactions where receivables are not paid for a long time. This is beneficial for them: it allows you to increase the taxable amount.
In this way, netting agreement is a convenient form of repayment of mutual debt, but it must be used carefully and without fanaticism.
To resort or not to resort to netting - this should ultimately be decided by the entrepreneur himself. If the first is decided, then download the sample netting agreement below.
In recent decades, all sorts of crisis manifestations have become more frequent. Because of this, many companies inevitably feel financial difficulties.
Having no funds to pay for the obligations assumed, they offer their creditors the option of paying with products.
In this situation, two options are possible. The first is the conclusion of a counter agreement in which the debtor changes status with the creditor and vice versa. The second option involves the signing by the parties of an agreement on netting.
This method of conducting a transaction allows you to save money. Savings occur due to the fact that profit is included in the cost of settlement products. And this means that the amount of payment costs is reduced. In addition, this method is not so strictly subject to taxation.
Peculiarities of netting agreements
It is important that such a transaction is not regarded by the legislation as an exchange transaction. For this, it is concluded when the debt of one of the participants already exists. Moreover, it is necessary that all payment terms have already expired. These terms are stipulated in the primary contract under which the debt arose.
To justify the legitimacy, it is necessary that the debtor send an appropriate letter to the creditor. From the moment of its delivery, it is considered that the primary obligations are terminated. There is a time limit for submitting notices. It says that it is possible to initiate mutual settlements only during the period that is provided for by law as a limitation period.
Another distinctive characteristic is the fact that mutual settlement agreements are drawn up one-time. That is, its subject must have a clear quantitative framework. This is due to the fact that its goal is to pay off the underpayment, and it is specific.
The legislation of the Russian Federation indicates cases in which it is prohibited to make offsets.
Why draw up deeds
Each transfer of property from hand to hand must be confirmed by relevant acts. In this case, it is mutual. Its signing confirms the closing of debt obligations.
If the value of the transferred material assets does not cover the entire debt, this amount is deducted from the amount of the debt. This fact must also be indicated in the act.
This document is signed by the participants of the primary long-term agreement. They are also parties to the settlement agreement.
Below is a standard form and a sample netting agreement, a version of which can be downloaded free of charge.
