What taxes does an individual entrepreneur pay on a patent?
Chapter 26.5 of the Tax Code of the Russian Federation regulates the activities of businessmen who work for PSN. This mode can only be applied by individual entrepreneurs. Also, this system is only applicable to certain types of activities. The most common ones are:
- Retail trade, including consignment goods,
- catering,
- transportation,
- provision of services.
Taxes that must be paid under PSN
To switch to PSN, you must fill out an application in the prescribed form. After submitting the application, the tax service gives a response on whether the patent will be issued or refused. The inspectorate calculates the value of the patent and indicates it in the documents. Regardless of whether a businessman has employees or not, an individual entrepreneur on a patent does not pay the following taxes and mandatory payments in 2020: personal income tax, VAT, income tax, real estate tax.
There is no need to fill out declarations on PSN. You just need to enter the data in the income book. To operate in this mode, accounting is not required and cash registers are not used. The size and types of mandatory contributions for the patent system depend on whether the individual entrepreneur has employees or not. All mandatory contributions are made to the tax office. Previously, they were accepted by the Pension Fund.
The essence of the patent system
A patent is a permitting document that allows individuals to conduct business activities for a certain period of time. You can purchase such a permit from the tax office. This tax regime is very popular among novice entrepreneurs working in the service sector. Young businessmen using this system get the opportunity to test their chosen niche during the life of the patent.
The three hundred and forty-sixth article of the Tax Code provides a detailed list of those areas of business where this system can be used. Entrepreneurs providing personal and household services can use the patent. This mode is also available to owners of small production workshops and shops with an area of less than fifty square meters. In order to use this mode, an entrepreneur must submit an appropriate application to the registration authority . The validity period of a patent varies from one to twelve months. After this period, the entrepreneur must purchase a new permit.
The application must be submitted two weeks before the expected start date of the business. This factor must be taken into account when purchasing a new permit. Current rules prohibit patent renewal. It should also be said that the operation of this system is strictly tied to the territory of the municipality. This means that an entrepreneur who bought a patent in Moscow cannot work in other cities of Russia. Regional authorities independently set the price for this permit. This fact explains the differences in patent costs for the same fields of activity in different regions.
Mandatory contributions for PSN
An individual entrepreneur for a patent pays amounts for compulsory medical and pension insurance. The payment amount is fixed. The amount of the contribution is influenced by the possible income of the individual entrepreneur. When receiving a patent whose term is less than a year, income is calculated as follows:
- possible income for the year is divided into 12 months;
- the result obtained is multiplied by the number of months during which the patent is valid.
Reducing UTII for insurance premiums for individual entrepreneurs without employees - how to pay taxes
In the case where the probable income does not exceed 300,000 rubles, the individual entrepreneur must deposit 29,354 rubles by December 31, 2019. If the amount of income is over 300,000 rubles, then before 07/01/2020 you are required to additionally contribute an amount to pension insurance that is equal to 1% of the income that exceeds 300,000 rubles.*
Important! The amount of payments for OPS in general cannot exceed 234,832 rubles. Thus, if the calculated amount of payments exceeded the specified maximum amount, then the amount of 234,832 rubles must be contributed to pension insurance.*
For health insurance for 2020, an amount equal to 6,884 rubles is paid. It must be paid by December 31, 2019*
It is not necessary for individual entrepreneurs to make contributions to the Social Insurance Fund on a patent. However, he can do this of his own free will. If a businessman wishes, he must deposit 3,925.44 rubles.
What contributions are required to be made for PSN?
Patent cost
As we noted above, the main advantage of the PSN is the lack of connection between the entrepreneur’s income and the amount of taxation. The value of a patent is based on the entrepreneur's potential income that can be received within one year. The tax rate under this regime is equal to six percent of potential income.
In order to find out the cost of a patent, an entrepreneur needs to visit the official website of the Federal Tax Service. A special service is available on this website that allows you to calculate the amount of mandatory contributions. To do this, it is necessary to enter into the system information about the region and municipal territorial entity where the entrepreneur plans to operate. Next, you need to indicate the direction of business and the expected period during which the patent will be used. In some cases, the entrepreneur needs to provide additional information such as the size of the sales area or the number of hired employees.
Differences in taxes and contributions for individual entrepreneurs with and without employees
Next, it is important to know what taxes an individual entrepreneur pays on a patent if he has no employees:
- to the pension fund 26%;
- in the Federal Compulsory Medical Insurance Fund 5.1%.
I opened an individual entrepreneur but did not work - do I have to pay taxes and contributions to the Pension Fund?
In 2020, for those individual entrepreneurs who use a patent, lower rates are applied, providing for deductions for employees. An entrepreneur on a PSN may not have more than 15 employees. For them, by law, it is necessary to pay insurance contributions in the amount of 20% to the Pension Fund. The Social Insurance Fund and the Federal Compulsory Medical Insurance Fund do not make payments for employees.
Important! In addition to contributions for employees, individual entrepreneurs must make mandatory contributions for themselves. They are entered into the Pension Fund and the Federal Compulsory Compulsory Medical Insurance Fund. Also from income that exceeds 300,000 rubles. 1% is deducted.
Insurance premiums for employees
Until 2020, under the patent taxation system, individual entrepreneurs could apply reduced tariffs for calculating contributions in favor of employees - only according to the Pension Fund of Russia (20%). Since 2020, this benefit has ceased to apply (Tax Code, part 2, article 427, clause 2, clause 3, as amended on September 29, 2019).
Now insurance premiums for employees amount to 30% and are charged to three funds - Pension (22%), medical (5.1%) and social insurance (2.9%). You also need to make deductions for injuries - the interest rate is set depending on the type of business.
To calculate, we take the accrued income for each employee and multiply it by the interest rate.
Rules for filing a tax return on a patent
If you don’t pay taxes as an individual entrepreneur, what will happen and what fines will you face?
Those entrepreneurs who use the patent system work with the tax authorities in the most simplified form. Order of the Ministry of Finance dated October 22, 2012 No. 135n approves the procedure and form for maintaining an income book, which entrepreneurs using the patent system are required to maintain.
Thus, on the basis of paragraph 2 of Art. 6 of Law 402-FZ, an entrepreneur on a PSN does not have to keep accounting records.
A declaration on PSN is not provided. This is fixed in Article 346.52. Since the entrepreneur is exempt from accounting, he does not provide financial statements. As a result, it turns out that an entrepreneur applying a patent is freed to the maximum from interaction with regulatory authorities. Contacting the tax office is only necessary when you need to obtain a patent or stop using this regime.
Requirements for submitting a declaration under PSN
What is a patent for an individual entrepreneur?
PSN is a special tax regime applied by individual entrepreneurs in accordance with their requirements imposed by the legislation of the Russian Federation. LLCs, CJSCs and other forms of legal entities cannot use this tax regime. An individual entrepreneur using this special tax regime is exempt from maintaining accounting records and using cash registers, with restrictions.
To obtain a patent as an entrepreneur:
- Must not have more than 15 employees in the field covered by the patent.
- The share of income from patent activities should not be less than 70% of the total total income of the individual entrepreneur.
Does not apply in cases of a trust management agreement for a property fund, as well as when carrying out activities under simple and investment partnership agreements.
A patent can only be valid in the territory of the constituent entity of the Russian Federation specified in this document. One individual entrepreneur can obtain several patents for each individual region of the country.
Issued at any time for a period of 1 to 12 months within one calendar year.
In order to extend the validity of this special tax regime, you must submit an application to the Federal Tax Service before December 20 of the current year.
How are tax payments on PSN calculated?
A patent is granted for a period of 1 month to 12 months. The tax period lasts for the entire period of validity of the patent. If the individual entrepreneur stops working on the PSN, the tax period ends when the individual entrepreneur is deregistered.
The tax rate under the patent taxation system is established by each subject of the Russian Federation:
- 0% rate: based on clause 3 of Art. 346.50 of the Tax Code of the Russian Federation in the region, tax holidays can be provided for individual entrepreneurs for a period of 2 years. This applies only to those individual entrepreneurs who first began to work using this system. Tax holidays are valid only for the following areas of activity: provision of personal services, work in the scientific, social or industrial sphere;
- rate, which is equal to 6%: tax holidays cease to apply in 2020. If this law is in force in the subject, and the entrepreneur is registered for the first time, then the patent is paid for for two years. Otherwise the rate will be 6%;
- in the Republic of Crimea and Sevastopol the rate is 4%.
A businessman should not calculate the cost of a patent himself. This procedure is carried out by the tax office. The document states the total amount of tax and when it must be paid.
The value of a patent is determined in two ways:
- when issuing a document for a year, the tax base must be multiplied by 6%;
- if the validity period is less than 12 months, the tax base is first divided into 12 months. Then the resulting amount is multiplied by the number of months the patent is valid, then multiplied by 6%.
You can use a patent cost calculator online on the tax office website.
How to calculate payment under the patent system
Types of activities covered by patent in 2020 for individual entrepreneurs
According to the law, only individual entrepreneurs can work on the patent tax system.
PSN is not provided for organizations. What is the essence of a patent? This is a time-limited permit to carry out a specific activity. Purchasing a patent means automatically paying a fixed tax. If an entrepreneur is engaged in several types of work or provides different services, then he must buy the appropriate number of patents.
A patent can be purchased to provide household services, for example, when opening a beauty salon, veterinary clinic, or a clothing or shoe tailoring shop. The owner of the patent can care for children and the elderly and conduct tutoring activities. It is also possible to acquire a patent for the provision of production services, for example, the processing of agricultural products or the manufacture of agricultural tools. If a businessman decides to open a store or cafe, then he can also buy a patent (provided that the area of the store or catering premises is no more than 50 square meters).
IMPORTANT! The types of activities that fall under the patent for individual entrepreneurs are given in paragraph 2 of Art. 346.43 Tax Code of the Russian Federation. Regional authorities can adopt their own laws on PSN, adding other services to the basic list, but they cannot reduce the list of activities specified in the code. The types of activities covered by a patent in 2020 for individual entrepreneurs the basic list have not changed compared to last year.
PSN cannot be used for activities under a simple partnership agreement or trust management of property.
Penalty for late payment
If the patent is not paid on time, then a penalty will be charged for each day of late payment. They are equal to 1/300 of the Central Bank refinancing rate of the unpaid amount. A fine for late payment is not imposed on an individual entrepreneur. Only penalties are paid.
A fine can be imposed in two cases:
- the tax has not been paid at all;
- The tax amount is greatly underestimated.
Article 122 of the Tax Code establishes a fine equal to 30% of the unpaid amount to the budget.
Attention! This amount is established in the event that the authorities do not detect any violations. If signs of violations are detected based on Articles 129.3 and 129.5, the fines will be much higher.
What are the benefits of the PSN system
Among the main benefits of the PSN regime it is worth highlighting:
- a businessman independently chooses for how long to purchase a patent. This will be most beneficial for those who carry out seasonal work;
- The tax amount is calculated simply and clearly. Compared to other modes, PSN is the easiest to calculate. You just need to multiply your tax rate by your likely income. The latter is calculated by the state. An entrepreneur does not need to calculate the amount of a patent. These actions are carried out by the tax office and written down in the document itself;
- There is no need to use a cash register for cash payments. Based on the laws, an individual entrepreneur with a patent may not use the cash register if he can issue the buyer a document that will confirm payment. As a result, the individual entrepreneur does not have to pay the amount for the cash register and incur the costs of servicing it. There is also no need to submit documents on the use of cash register systems to the tax authorities;
- The amount of contributions to the Pension Fund and Social Insurance Fund has been reduced. Individual entrepreneurs on PSN pay contributions to these bodies at reduced rates on the basis of Art. 58 Federal Law 212;
- there is no need to prepare and submit reports to the tax authorities. There is no need to submit a declaration under the patent regime.
The patent system is one of the easiest to use for individual entrepreneurs. The cost of a patent is easy to calculate. There is no need to maintain accounting reports on PSN.
*Prices are current as of July 2020.
Is it profitable to work for PSN?
An individual entrepreneur must decide for himself whether to work under the patent tax system or not. In some cases, the use of this special tax regime is relevant, but in some cases it is more profitable to use other regimes, for example, the simplified tax system.
For example, it is extremely profitable to apply the patent taxation system when providing services by an individual entrepreneur himself without the use of hired labor with the high cost of these services at minimal cost.
Each case is individual and before choosing this tax regime option, you need to carefully calculate everything and compare it with other regimes. It is imperative to pay attention to local legislation in this area, especially those issues that relate to permitted economic activities.
The video uses an example of the provision of passenger transportation services in Moscow. describes the calculation of tax and the application of the patent tax system.
