VAT on Facebook advertising in Ukraine. Who will pay +20% and what to do with it?

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The author is Anton Meshcheryakov, a targetologist at the ADINDEX agency.


From the beginning of 2022, launching ads through Facebook (Meta) is subject to a 20% value-added tax. This innovation is connected with the law of Ukraine “On Amendments to the Tax Code of Ukraine on the abolition of taxation of income received by non-residents in the form of payments for the production and distribution of advertising.”

What does this mean for businesses and Facebook advertisers?

Advertising on Facebook has become more expensive for Ukrainians. Now 20% is automatically added to your advertising bills.

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Fig.1. Example of a paid VAT invoice

You can check if there is VAT in your advertising account using the “Billing” section:

  1. Open the Billing section.

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  1. Click on the ID number of one of the transactions to open the description of the account.

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Fig. 3. Example of a transaction ID for a paid Facebook account

An example of a paid invoice without VAT:

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Fig. 4. Example of a paid invoice without VAT


Who will pay 20% more for ads in 2022?

This will affect advertisers who have “Ukraine” in the “Buyer” field in their company or personal address, but who have not confirmed that they are registered as a legal entity or as a private entrepreneur, and have not added a VAT number to their Facebook ad account. 

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Fig. 5. Section “Information about the company”

 

You can avoid adding tax to your accounts if you specify the taxpayer number in your account settings and check the box that you yourself are responsible for paying VAT in accordance with the Tax Code of Ukraine.


How do I remove the VAT write-off for Facebook ads and make myself liable to pay the tax?


In the left menu of the advertising account, select the “Billing” section again, and go to the “Payment settings” item.

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Find the “Company Information” section and click “Edit”

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Next, in the window that opens, you need to fill in the “Tax information”.

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If you enter your company’s valid VAT number in the VAT ID field, the tax will no longer be calculated in Facebook payments. Without this information, Facebook will continue to add 20% to ad bills.


Is it possible to bypass VAT on Facebook ads?

In order to avoid sanctions and fines from the tax authorities in the future, we do not recommend experimenting and indicating “foreign” VAT payer numbers in the tax information section.

Not all methods shared by users will be effective in the long run, as the ad account and business manager can be blocked.


Conclusion

Summarizing all of the above: when working with targeted advertising in 2022, it is important for entrepreneurs and advertisers to plan advertising budgets including VAT and include it in the cost of their goods and services.