Legal registration of the SMM advertising budget

When receiving SMM services, the customer needs to pay for the advertising budget. It is distinguished by its purpose. These funds are not transferred to the performer, but to the social networks which your ad is placed. Several problems can arise here. The customer must understand the purpose of these payments and take them into account correctly. You can read how to do this in our article.


Advertising budget in SMM

How to prescribe in the contract the obligation of the customer to replenish the advertising budget in SMM

Among the obligations of the Customer in the Agreement for the provision of SMM services, it is necessary to prescribe the obligation to replenish the advertising budget, i.e. funds that are used to pay for the advertising itself and are not payment for the services of an SMM specialist. This condition should be included and spelled out in detail in order to exclude possible disputes in the future. In addition, it is necessary to determine where the Customer transfers funds for the advertising budget:

  • The customer can directly transfer funds of the social network on which the advertisement is placed;
  • The customer can replenish the advertising budget through the contractor, i.e., first, the funds are transferred to the settlement account of the contractor.

How to adopt an advertising budget if SMM services are provided on the STS "Income"?

If an organization or individual entrepreneur has a simplified taxation system (STS) with an object of "income", then the rate, as a general rule, is 6% of income. Therefore, if the performer accepts the advertising budget on his account, then he must pay a 6% tax from it.

How to adopt an advertising budget if SMM services are provided on the STS “Income minus expenses”?

Under the simplified taxation system “Income minus expenses”, the tax rate, as a general rule, is 15% of profit. Therefore, if the performer accepts the advertising budget on his account, and then transfers it in full to the social network, then the tax amount will be 0 rubles.

Organizations on the simplified tax system do not pay VAT. For the customer, this means that he will not be able to accept the input VAT. Then the option when the customer pays the advertising budget himself will be more profitable.

How to adopt an advertising budget if SMM services are provided on OSNO?

Organization on general taxation system pays income tax, the rate of which is 20%. Profit is calculated as in the previous case, income minus expenses. Consequently, the performer, accepting and transferring the entire advertising budget to the platform, does not pay tax on it.

Organizations on GTS pay VAT, so the customer can accept input VAT. 

Risks of accepting an advertising budget in SMM: unjust enrichment or service fees

In the Agreement or the Annex, the advertising budget should be prescribed as expenses, stipulating that it is not a payment for services. There is no established judicial practice, but it cannot be ruled out that the customer will demand the return of the advertising budget as an unjust enrichment. Unjust enrichment is a legal term that may be unfamiliar to the customer and the contractor, but in court will become the basis for a refund. It means property that was received by a person without a proper basis.

The second possible risk is the recognition of the advertising budget as payment for services. In fact, if the customer turns out to be dissatisfied, he may demand to return from the contractor along with the usual payment for SMM services and the advertising budget. However, this development of events does not seem to be fair at all. Therefore, in order to reduce the risks of collecting funds from you that you did not receive yourself, prescribe the advertising budget as an independent payment.

Thus, the advertising budget is a "sore spot" when concluding a contract for the provision of SMM services. First, it's worth considering how to factor in your advertising budget into your tax system. Secondly, the advertising budget may be included in the cost of payment for services in general, therefore the Agreement must contain specific conditions on the advertising budget, in particular, the Customer's obligations to replenish it, the amount, etc. If you have any questions about the correct design of the advertising budget, contact the lawyers of A4 Law Firm.


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