What is the patent taxation system and who benefits from it

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

A convenient option for entrepreneurs who want to mess with reporting less.

What is the patent tax system

This is a special tax regime for individual entrepreneurs. It allows you to pay a fixed amount for the year and receive exemption from other taxes (but not insurance premiums).

Who is the patent tax system suitable for?

Entrepreneurs who are engaged in certain types of activities. The list is rather large and contains items mainly related to services and retail, for example:

• Computer Repair;
• production of bakery and confectionery products;
• slaughter, transportation, distillation and grazing;
• repair of jewelry and bijouterie;
• babysitting and the sick.

The regions can independently expand this list, so it is better to double-check whether you can switch to this tax regime in a special FTS.

There are other restrictions as well. An individual entrepreneur loses the right to the patent taxation system (PSN) if his annual income exceeds 60 million or he hires more than 15 employees under labor contracts and agreements of a civil nature.

In general, it should be understood that the regional authorities have the authority to change the terms of the patent taxation system. In addition, there are additional requirements for some of the activities. So in any incomprehensible situation, it is better to consult with an experienced lawyer or accountant.

How to switch to a patent tax system

You must submit an application to the Federal Tax Service no later than 10 days before the start of the application of the PSN. You should contact the tax office at the place where the entrepreneur plans to do business. This can be done in person, through a representative, by letter with a list of attachments or in electronic form.

The answer must be given within five days. It will be either a patent or a refusal to issue it. Usually, tax debts, the lack of the right to use a special regime, or incorrect filling out of documents lead to a negative result.

The date of tax registration is the day the patent starts valid.

One entrepreneur can acquire several patents and pay accordingly for each one.

How much does a patent cost

This is determined by the regional authorities based on the average earnings of a business in your field of activity. If your income is below the level at which the region determines the value of a patent, it is more profitable to choose a different tax regime.

How much you have to pay will also be affected by the date when you issue the PSN. It is issued only within a calendar year for a period of one to 12 months. Therefore, in the middle of the year, a patent can be obtained up to a maximum of December 31st.

An easy way to find out the numbers you need is to use the FTS service. The calculator will also tell you when to deposit money.

When to pay for a patent

It depends on the period of its validity:

• If a patent is issued for a period of less than six months, the money is paid in one payment while it is valid.
• If a patent is issued for a period of more than six months, one third of the cost is paid within 90 days from the date of its receipt, the remainder - until the expiration date.

How and when to report

Since the amount of tax does not depend on actual earnings, there is no need to file a declaration and report to the Federal Tax Service on patent activities. But you still have to keep the income book.

PSN does not exempt from the need to submit tax reports for employees.