E-commerce Accounting: Delivery, Ads, and Damaged Goods

Accounting for delivery, advertising, and damaged goods in e-commerce

The main rule for an online store is: delivering goods from the supplier to your warehouse increases the initial cost of inventory, while delivery to the buyer, advertising, marketing, packaging for shipment, maintenance of the sales warehouse, salaries of sales staff, and other sales-related expenses are recognized as period expenses and are not "added" to the cost of the goods. Damaged goods cannot remain in inventory: in accounting, they are written off to other operating expenses, while for VAT and sole proprietors on different tax systems, the consequences vary. (Law of Ukraine)

The biggest risks in e-commerce today are not the expenses themselves, but their documentation: primary documents with mandatory details are required, electronic documents are permissible; the payment scheme determines whether a cash register (RRO/PRRO) is needed; delivery compensation may fall into the VAT base; and when goods are damaged, a VAT payer often has to accrue compensating tax liabilities. That is why accounting for delivery, advertising, and the write-off of defective goods must be built together with the contractual sales model, rather than "added" after an inspection. (Law of Ukraine)

1. Accounting for delivery expenses

Delivery from the supplier to your warehouse

If the goods are traveling from the supplier to your warehouse, storehouse, or fulfillment center, the costs of such delivery belong to transportation and procurement expenses and are included in the initial cost of inventory. The initial cost of inventory does not include sales expenses and above-norm losses and shortages. Therefore, inbound logistics increases the value of the goods and is not immediately written off as a period expense.

Delivery to the buyer

When a product is already sold and is traveling to the buyer, this is not "additional cost formation" but a sales expense. National Accounting Standard 16 explicitly classifies as sales expenses, in particular, packaging materials, salaries of sales staff, advertising and marketing expenses, operating lease of sales-related assets, as well as costs for transportation, transshipment, insurance, forwarding, and other services related to the delivery of goods to the buyer under the contract. (Law of Ukraine)

Delivery between your warehouses

Moving finished products or goods between warehouses of departments, branches, or representative offices also belongs to sales expenses. For e-commerce, this is important if you work with a central warehouse, a dark store, pickup points, or individual marketplace warehouses. (Law of Ukraine)

If the buyer pays separately for delivery

Here it is important who exactly ordered the transportation. If the buyer orders the carrier and pays them directly, the seller usually has neither income from the delivery nor their own expense for it. If the seller orders the carrier and the buyer only compensates this amount to the seller, for VAT purposes this compensation typically falls into the contractual value of the supply, because the Tax Code includes any amounts received as compensation for the value of goods or services. In the fiscal receipt, the name of the product or service must be identified, so it is safer to show delivery sold separately as a separate line item. (Law of Ukraine)

If the parcel was not picked up or returned

The return of an unclaimed parcel does not turn the "outbound" delivery into a transportation and procurement expense. If the buyer or carrier does not compensate the costs for dispatch or return delivery, this usually remains a sales-related expense for the seller. If compensation is provided by the contract and actually collected, it is reflected separately according to the contract terms and the seller's tax system. (Law of Ukraine)

2. What can be included in the expenses of a company and sole proprietor

Legal entities

For companies on corporate income tax, the base is the financial result according to accounting data with adjustments provided by the Tax Code. For ordinary expenses on delivery, advertising, packaging, or write-off of damaged goods, there is no separate "tax list" as for sole proprietors on the general system: the key is proper accounting reflection and the availability of appropriate primary documents. (Law of Ukraine)

Sole proprietors on the general system

For a sole proprietor on the general taxation system, the object of taxation is net taxable income: revenue minus documented expenses related to business activities. The list of expenses in clause 177.4 of the Tax Code includes, in particular, the cost of purchased and sold goods, as well as communication services, advertising, cash settlement services, rent, repair, maintenance of property, forwarding, and other services directly related to the production or sale of goods. Therefore, for a general system entrepreneur, expenses for advertising, delivery, warehouse rental, acquiring, and some related costs are not "forbidden in themselves" — they must be directly related to the business, paid for, and confirmed by documents. (Law of Ukraine)

Sole proprietors on the single tax

The single tax is not calculated from profit. The base is income, not income minus expenses, so delivery, advertising, rent, salary, packaging, or damaged goods do not reduce the single tax amount. At the same time, these expenses are still important for management accounting, pricing, confirming the origin of goods, and for a VAT payer — also for VAT accounting. (Law of Ukraine)

3. Advertising, marketplaces, commissions, and acquiring

Advertising and marketing expenses are directly classified by NAS 16 as sales expenses. This applies to social media ads, contextual advertising, targeting, SEO/SEM services, promotion on marketplaces, paid boosting of goods, sales commissions, and most services that actually ensure the sale of goods. (Law of Ukraine)

But an invoice from a marketplace often contains services of a different nature. What is actual promotion or sale usually goes into sales expenses; and the fee for cash settlement or banking services is no longer a sales expense, but an administrative expense. Therefore, one act or register from a marketplace sometimes has to be decomposed in accounting into several types of expenses according to the economic essence of the service. (Law of Ukraine)

A paper certificate of completion is not mandatory just because the service is provided online. Primary documents can be drawn up in electronic form, and with an electronic contract, the seller is obliged to confirm receipt of the order. Consequently, an electronic contract or public offer, electronic act, invoice, report from the dashboard, register of services, payment instruction, correspondence, and other documents can work to account for expenses on a marketplace, advertising, or delivery, if together they contain mandatory details and allow identifying the transaction. (Law of Ukraine)

4. Which documents to keep so expenses are not "rejected"

For tax and accounting purposes, transactions must be supported by primary documents; accounting based on them is directly required by both the Law on Accounting and the Tax Code. Primary documents can be paper or electronic, but must contain mandatory details. (Law of Ukraine)

The practical minimum for e-commerce is usually as follows:

5. Cash registers (RRO/PRRO) for delivery and online payment

The Law on RRO defines a settlement operation as accepting cash, payment cards, payment checks, tokens, etc., at the place of sale of goods or services, and imposes on the seller the obligation to conduct such operations through an RRO/PRRO and provide the buyer with a settlement document. Financial sanctions are provided for violating this rule: 100% of the cost of goods (works, services) for the first violation and 150% — for each subsequent one. (Law of Ukraine)

If the buyer pays by ordinary cashless transfer from account to account using IBAN details, such payment is not considered a settlement operation within the meaning of Law No. 265, and an RRO/PRRO is not applied. But when the seller accepts card payment on the website, via a payment button, acquiring, POS terminal, courier, or another model where an electronic payment means or cash is actually accepted, an RRO/PRRO is already needed. (Tax Service)

When selling with cash on delivery, there is no universal rule that "the receipt is always printed by someone else". The tax office directly states that the need for an RRO/PRRO depends on the terms of the contract between the seller and the carrier, and in certain e-commerce models, the obligation to issue a fiscal receipt is placed entirely on the seller. Therefore, before launching cash on delivery, you need to check: who accepts the money, who is a party to the settlement operation, who generates the receipt, and what document is enclosed in the parcel. (Tax Service)

In the fiscal receipt, the name of the product or service must identify the transaction. Therefore, when delivery is sold separately, it is safer to show it on a separate line, rather than "hiding" it inside the cost of the goods without explanation. This is especially important if the buyer sees a separate delivery amount in the cart, order, or offer. (Law of Ukraine)

Example

6. Accounting for damaged goods

In accounting, shortages and losses from damage to valuables are attributed to other operating expenses. At the same time, NAS 9 does not allow including above-norm losses and inventory shortages in the initial cost of inventory. That is, damaged goods are not "smeared" across the rest of the other goods and are not left in the warehouse — they are written off in a separate transaction. (Law of Ukraine)

For companies paying corporate income tax, this means that the write-off of such goods affects the financial result according to accounting rules; there is no special separate prohibition on such an expense in the general income taxation regime, provided the transaction is properly documented. (Law of Ukraine)

For sole proprietors on the general system, the situation is stricter. The Tax Code ties expenses, in particular, to the cost of purchased and sold goods, and the accounting form explicitly directs the reflection in expenses of the cost of purchased inventory items that are sold or used in production. Because of this, the cost of damaged but unsold goods usually does not reduce the taxable income of a general system entrepreneur in the way it works in the accounting of a legal entity. (Law of Ukraine)

For a single tax payer, the write-off of damaged goods does not affect the amount of the single tax, because the single tax base is income, not the financial result or net profit. But it is still necessary to document the damage: for internal control, explaining discrepancies in balances, and confirming the origin and movement of goods. (Law of Ukraine)

VAT on damaged goods

If a VAT payer purchased goods with VAT and included it in the tax credit, and the damaged goods actually cease to be used in taxable business operations, clause 198.5 of the Tax Code requires the accrual of compensating tax liabilities and the drawing up of a consolidated tax invoice. The base for such accrual under clause 189.1 of the Tax Code for goods is determined based on their purchase price. (Law of Ukraine)

7. What to stipulate in internal rules and contracts

To ensure stable expense accounting in e-commerce, it is advisable to immediately define in the contract, offer, and internal rules:

If these rules are not prescribed in advance, the same amount can "diverge" between the cost price, sales expenses, administrative expenses, VAT base, and cash register receipt. This is why in e-commerce, the correct model of documents and settlements is often more important than the expense amount itself. (Law of Ukraine)

Official sources

Програма обліку товару для інтернет-магазинів, крамниць, торгових точок, складів та виробництва