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UPD and invoice – how to use these documents in Russia?

03.11.2023
UPD and invoice – how to use these documents in Russia?

The UPD (Universal Transfer Document) and invoice are key documents in the accounting and bookkeeping system of the Russian Federation. What are they, what are they for and what are their main differences?

What is a UPD in Russia?

The UDD is a universal transfer document, which replaced such documents as the delivery note and invoice. It has become the main tool for reflecting transactions involving the sale of goods, performance of work or provision of services. The UDD combines the functions of several documents, thus simplifying the accounting system and reducing administrative costs for entrepreneurs.

Functions of an invoice in Russia

An invoice is a document that represents an accounting record for delivered goods or rendered services. Its main task is to record VAT data. The invoice allows you to control the movement of money and goods between the parties to the transaction, serves as a basis for tax assessment and accounting reporting.

What are the differences between a DDS and an invoice?

At first glance, it may seem that a UDD and an invoice are one and the same thing. But this is not quite true. The main difference is as follows:

  • Content. The UDD contains information not only about goods or services, but also about the contracts on the basis of which transactions are carried out. An invoice, on the other hand, focuses solely on the goods or services and their cost.
  • Scope of application. The DDS is used in a wider range of transactions, including those that were previously reflected only in the delivery note.
  • Purpose of creation. The UDD was created to simplify the accounting process and make it more transparent for all participants of economic relations. An invoice, on the other hand, is primarily used to record VAT.

How should these documents be filled in correctly?

When filling out the UPD and invoice, you need to be careful and accurate to avoid mistakes and subsequent problems with the tax inspectorate.

For the UPD:

  • Enter the full details of both parties to the transaction.
  • Specify the details of the contract or supply agreement.
  • Spell out all items of goods or services with their quantity and cost.
  • Specify the dates and terms of delivery.

For an invoice:

  • Give the name and details of the supplier and buyer.
  • Spell out each item with VAT.
  • Specify the amount payable and payment terms.

Who can apply the DDS in Russia

There are no restrictions for companies or individual entrepreneurs to use the UDD. However, before using this document, it is necessary to obtain the consent of the counterparty and make sure that the contract specifies a condition for its use. If the contract specifies other documents for the execution of the transaction, it is not possible to use the UDD. In order to introduce the UPD into its practice, a company or an individual entrepreneur must make the relevant changes to its accounting policy and approve the UPD form or use the one provided by the Federal Tax Service. The main advantage of using a UDD is to save money on accounting, simplify document flow and make it possible to account for VAT.

Why should one be careful with these documents?

Errors in a UPD or invoice can lead to serious tax and legal consequences. Incorrectly executed documents can raise questions from the tax inspectorate, which can lead to fines or even criminal liability. In addition, incorrectly executed documents can cause misunderstandings between the parties to a transaction, which in turn can lead to commercial disputes.

For which transactions can the UPD be used

The UPD does not apply to all types of trade transactions. There is a specific list of cases where its use is permissible. This list includes, for example, the supply of goods, the transfer of rights to property or the results of work and services performed.

Although Annex No. 2 to the Federal Tax Service’s letter No. MMV-20-3/96@ sets out the cases where it is permissible to use a UDD, the existence of such a document does not oblige a company or an individual entrepreneur to use it in every transaction. In practice, organisations have the freedom to choose between the UPD and other documents, such as invoices or delivery notes, depending on agreements with partners.

Even within the same contract, different documents can be used. For example, after the first shipment of goods, the parties can change the format of the documentation, moving, for example, from the UPD to delivery notes and invoices, by entering into a relevant supplementary agreement.

Final thoughts

In Russia’s modern economy, the correct execution of documents plays a key role. UDDs and invoices are not just papers, they are tools that help entrepreneurs conduct their business legally, transparently and efficiently. Therefore, it is worth treating their completion with the utmost responsibility.

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