The project of paid parking in Moscow (as per the decree of the Moscow Government No.543-PP d.d. 10.05.2012) was to solve the main traffic problems, including low speed of traffic, unsafe conditions for cars and pedestrians, and unavailability of parking space downtown during daytime. In Moscow downtown, currently there are over 29,000 paid parking slots (47,000 overall). Parking elsewhere is forbidden, and subject to penalty fee of at least 3,000 rubles (part 5 of clause 12.16 of the Administrative Offences Code of Russia). Following Moscow’s example, some other Russian cities also deployed paid parking areas, with Yekaterinburg and St. Petersburg being among the first to do so. Drivers have to use paid parking services not only in downtown areas but also in airports.
The services of keeping company vehicles in paid city parking areas may be payable by the company directly from its operating account, or via an accountable person. A company may also refund the charges incurred by the employee in connection with parking a personal vehicle, provided they used it for job purposes. In order to prove such expenses, employees shall provide advance statements and documents confirming payments for parking services to the accounting office. The business-related nature of the trip has to be confirmed by a trip ticket specifying the route to the districts featuring paid parking (in case of Moscow, a list of such streets is provided in Appendix 1 for the Decree of the Moscow Government No.298-PP d.d. 05.17.2913, hereinafter referred to as Decree 289-PP), or by specifying the address of a business meeting in an office memo.
If a company’s employees often use paid parking services, for instance, if their line of work involves travelling, it’s reasonable to compile a local regulation to regulate the procedure of payments for paid parking. Such document may also specify the following:
- list of employees subject to refunds for parking company/own vehicles;
- approved methods for parking payments;
- procedure for refunding employees for such expenses;
- list of confirming documents;
- terms of submitting such papers to the accountant’s office.
The system of paid parking in this case is pre-paid and fully automatic. There are several ways of paying for parking a vehicle in such area (clause 2.3 of Rules for Using City Parking Spaces and Allocating Vehicles Therein as approved in the Decree 289-PP):
- payment via charging a virtual parking account of the driver via website or mobile app;
- payment from cellphone account via text message;
- payment via parking meter with plastic cards or parking cards purchased in advance;
- payment with e-wallet, via bike terminals, or with cash via QIWI terminals;
- with parking passes.
Paid Parking in Financial Accounting
Expenses for paid parking are considered expenses for regular corporate activities (sub-clauses 5, 7, 16, 18 of PBU 10/99 as approved by the Decree of Russian Ministry of Finance No.33n d.d. 05.06.1999). Receipts (if CRE is used) or accountable forms, i.e. parking recepts may be used as documents confirming the payment for parking.
Paid Parking in Tax Accounting
In order to calculate revenue tax, there may be several options of accounting expenses for parking, provided the confirming documents are executed correctly.
If the vehicle in question is owed by the company, such expenses may be classified as misc being expenses for maintenance of corporate vehicles (sub-clause 11 of item 1 of clause 264 of the Russian Tax Code). If an employee went for a business trip on a company car, such expenses may be classified as travelling expenses (sub-clause 12 of item 1 of clause 264 of the RTC).
An employee is subject to refunds accountable only within established norms in case of using a company car (decree of the Russian Government No.92 d.d. 02.08.2002; letter by Russia’s FTS No. ShS-37-3/2199 d.d. 05.21.2010). According to the supervising bodies, the Government’s regulations incorporate all additional expenses (as per the Ministry of Finance’s letters No.03-03-06/70852 d.d. 12.04.2015, No.03-03-04/2/63 d.d. 09.15.2005, Russia’s MTA No. 04-2-06/419@ d.d. 06.02.2004), therefore an employee using their own vehicle for the company’s purposes is not subject to separate refund for paid parking. In this case, a company may execute a contract for car leasing, and consider the amount of lease and all expenses related to operation of the car as lease payments and miscellaneous expenses related to production and realization (as per sub-clauses 19 & 49 of item 1 of clause 264 of the RTC).
PIT for Parking Payment Refunds
PIT (item 3 of clause 217 of the RTC), charges for mandatory pension/social/medical insurance (item 2 of part 1 of clause 9 of the Federal Law No.212-FZ d.d. 07.24.2009), and fees for accident insurance and occupational maladies (sub-clause 2 of item 1 of clause 20.2 of the Federal Law No. 125-FZ d.d. 07.24.1998) are not deductible.
As for personal income tax calculated for the refund of a paid parking of a personal car during business trips, the Russian Ministry of Finance believes (as per Letter of the Ministry of Finance No.03-04-06/14428 d.d. 04.25.2013) that the list of business trip-related expenses not included in the employee’s list of incomes for the PIT calculation purposes is closed. This list does not include parking-related expenses, therefore, those amounts, should they are refunded, are subject to PIT as per generally established procedure.
However, all refunds established pursuant to Russian legislation, and related to execution of an office by an employee (item 3 of clause 217 of the RTC) are exempt from PIT payments. PIT for the refund of parking expenses for an employee who went on a business trip on their own car may not be deductible if the refund is executed as refund of expenses related to usage of a personal car, not as business trip expenses (as per the letter by Russia’s Ministry of Finance No.03-04-06/6-328 d.d. 12.01.2011).
VAT
As for possible VAT deductions, a norm (as per item 1 of clause 172 of the RTC) specifying that tax deductions are to be based on an invoice is applicable. If there is only a receipt, and VAT is specified therein, it is not subject to deduction and accounting as a part of expenses for revenue taxes.
Still, in Moscow, paid parking services provided by AMPP NPE (Mosparking) is not subject to VAT (sub-clause 4.1 of item of clause 146 of the RTC) as services rendered by public establishments is not subject to VAT taxation (letter by Russia’s FTS No. ED-4-3/13952 d.d. 08.01.2013).
Source:
