Errors that do not allow VAT to be deducted
The possibility of deducting VAT on corporate expenses is one of the most important privileges of an entrepreneur. Due to the fact that the basic amount of this fee in Poland is 23%, being an active VAT taxpayer allows you to significantly reduce company costs. However, in order for the entrepreneur to take advantage of such a privilege, his expenses must be accurately documented - primarily with a VAT invoice. It should be ensured that the documents received from contractors do not contain errors - it may happen that such an incorrect invoice will prevent the taxpayer from settling the input VAT.
Invoice from a non-existent entity
Although it sounds bizarre, invoices from a non-existent entity may actually be released. It is both a company that is not actually registered anywhere, and a registered company based on untrue, inaccurate or out-of-date data. For this reason, such an entity submits incorrect tax declarations and does not show the tax due related to the sale of goods or services.
The inability to deduct VAT from invoices issued by a non-existent entity results directly from the VAT Act (Article 88 (3a) (1) (a)).
Not only invoices from a non-existent entity will not allow the entrepreneur to deduct VAT. Similarly, corrective invoices, customs documents or duplicate invoices are also considered incorrect documents.
The activity is exempt from taxation
Most of the goods and services traded are subject to VAT. There are, however, activities that are exempt from it. An example is the universal postal service.
If it happens that the entrepreneur, when purchasing any of the above-mentioned goods or services, receives an invoice from the issuer at a rate of 5%, 8% or 23%, it is not possible to deduct such tax, even if it has been paid. This rule results from the VAT Act, Art. 88 sec. 3a point 2.
One action, two invoices
There are situations when, as a result of a mistake or negligence, one business activity is documented with more than one invoice. Of course, this is not about the original and the copy, but about, for example, two invoices with different numbers for exactly the same transaction.
So far, this issue has been regulated by Art. 88 sec. 3a point 3 of the VAT Act, which clearly indicated the possibility of deducting the tax only once. Currently, as of April 1, 2013, this provision has been repealed, therefore there is no direct legal basis in such a situation. This does not mean, however, that the taxpayer can double his costs and deduct the tax twice - in the event of an inspection, such action will be questioned by the tax authorities.
The Polish government is striving to liberalize the regulations and reduce the importance of the invoice itself in economic turnover, following the example of Western countries. Although at present it is still an extremely important document, it should not be forgotten that the essence of the matter is in fact the economic activity that is documented by it. Without this action, the invoice cannot be correct.
Therefore, it is not possible to deduct VAT on invoices that document activities that have not actually been made, invoices containing amounts inconsistent with reality or those that document the activities described in art. 58 and 83 of the Civil Code. Such activities are contrary to the regulations, their purpose is to circumvent the existing regulations or are based on a declaration of will made to the other party for the sake of appearance.
In each of the above-mentioned situations, it is considered that the economic activity did not take place, and therefore it should not be documented by an invoice. If the document is issued, it is referred to as the so-called blank invoice. Obviously, the taxpayer cannot deduct input tax from such proof - it results from Art. 88 sec. 3a point 4.
Invoices issued by the buyer - always?
An entrepreneur who is an active VAT taxpayer may use the so-called self-billing. This concept means that the taxpayer, when purchasing goods or services from the contractor, issues an invoice on his behalf documenting such activity. The condition that must be met for such action to be possible is prior agreement between the parties of such a course of proceedings. Invoices issued by the buyer on behalf of the seller must be accepted by the buyer.
Under the new, slightly liberalized regulations, it is up to the parties to decide how the vendor's consent to self-invoice the customer will be documented. However, it should be remembered that an invoice that is not accepted by the seller cannot be used by the buyer-issuer to deduct VAT. Therefore, special attention should be paid to obtaining indisputable evidence of an agreement between the parties on self-billing.
Entrepreneurs who are active VAT taxpayers should therefore pay special attention to the correctness of issued invoices. otherwise, it may turn out that either they have lost the possibility to deduct the tax on the purchase or have deducted it illegally, thus exposing themselves to negative consequences on the part of the tax authorities.