One of the basic steps in starting a business is to sign a contract for the provision of accounting services. For the performance of this works, the seller issues an invoice. The purchaser, who is an active VAT taxpayer in Poland, qualifies whether this expense was for VAT-taxable activities performed by it. If so – it has the right to deduct the VAT resulting from the invoice, which follows directly from Article 86(1) of the Polish VAT Act. WIn this regard, it is useful to know how the regulations define the VAT qualification of an invoice for accounting services.

When VAT can be deducted in Poland?

The possibility to reduce the amount of output tax by the amount of input tax arises in the settlement for the period in which a tax obligation on the part of the seller arose for goods and services purchased or imported by the taxpayer, according to Article 86(10) of the VAT Act. Such an option is available no earlier than for the period in which the purchaser received an invoice. If the taxpayer does not make this reduction within the aforementioned timeframe, he may deduct VAT in accordance with Article 86(11) of the VAT Law in a JPK file for one of:

• three consecutive settlement periods (in the case of monthly settlement),
• two consecutive settlement periods (in the case of quarterly settlement).

It should be mentioned here that this change was made as part of the SLIM VAT package from 01.01.2021. Previously, the current state of law was that VAT could be deducted in two consecutive periods if settled monthly.

Example 1.

The XYZ company, which is an active VAT taxpayer in Poland that settles its accounts monthly, purchased accounting services for the settlement of its business. It received an invoice from the seller with an issue date of 01.09.2022, sales date of 31.08.2022. The company received the document on the date of issue, i.e. 01.09.2022.

According to current regulations, it will be able to deduct VAT in the following periods: September, October, November and December 2022.

Pre-supply invoice vs. VAT deduction in Poland

Issuing an invoice before a sale is made can affect purchaser’s VAT deduction. This is because it can deduct VAT in the settlement for the period in which a tax liability arose for the goods and services purchased or imported by the taxpayer. In accordance with the general rule (Article 86(1)), a taxpayer is allowed to deduct VAT when the following conditions are jointly met: receipt of an invoice, the emergence of a tax obligation on the part of the seller, and the relationship of the purchased goods or services to taxable activities. The key in this case is the emergence of tax obligation, so the mere possession of an invoice, does not give the right to deduct.

Example 2.

The XYZ company is an active VAT taxpayer that settles its accounts monthly, purchased accounting services for the settlement of its business. It received an invoice from the seller with an issue date of 31.05.2022, sales date of 30.06.2022. The company received the document on the date of issue, i.e. 31.05.2022.

According to current regulations, it will be able to deduct VAT in the following periods: June, July, August and September 2022.

In summary, if a business purchases accounting services, it is entitled to deduct input tax from the invoice to the extent that it will be used for taxable activities. However, it cannot do so earlier than during the period when the seller’s tax obligation arises, and it must have a VAT invoice documenting the transaction at the time the document is included in the JPK.

Author: Alicja Kostyra, Manager of the VAT area at MDDP Outsourcing.

Sources:

Act of March 11, 2004 on Value Added Tax.