No purchase invoice when importing services - consequences in VAT and PIT

In the case of concluding transactions with a foreign counterparty, it often happens that they are disclosed incorrectly or not at all. The most common such case is the purchase of photos or computer programs over the Internet. Therefore, on the part of entrepreneurs, a question arises as to how the lack of a purchase invoice when importing services affects the settlement of the transaction. Check, you will find the answer in the article!

When are we dealing with the import of services?

We deal with the import of services when the transaction meets 4 conditions at the same time:

1. the place of provision of services within the meaning of the VAT Act is the territory of Poland,

2. the service provider has its seat, place of residence or stay outside the territory of Poland,

3. the service recipient is a legal person, a natural person with a seat or place of residence or stay in the territory of Poland or it is an organizational unit without legal personality and these entities are obliged to settle accounts with the Polish tax office,

4. services are provided against payment.

As a rule, the entity obliged to settle VAT is the buyer of the service.

Thus, an entrepreneur who has imported services is obliged to tax the transaction at the national rate applicable for a given type of transaction. As a rule, in Poland it is 23%.

Import of services and the moment when the tax obligation arises

The tax obligation for the import of services arises basically on the same dates as in the case of services provided by domestic entities, i.e. when the service is rendered. If the service is accepted in part and payment is specified for each part, it is deemed to have been performed, which means that a tax liability arises on that part. If the buyer pays an advance payment (prepayment, installment, etc.) before the service is performed, the tax obligation arises upon its payment.

In a situation where the service is provided in a continuous manner for a period longer than one year, and in a given year the deadlines for the completion of the service or payment deadlines do not expire, the transaction is considered to have been made at the end of each tax year. If an advance payment or a down payment etc. is made before the end of the service, a tax obligation arises upon its payment.

In accordance with the above, the date of issuing the invoice does not have any significance for the moment when the tax obligation in the import of services arises.

Example 1.

The Polish company purchased a graphic design for an advertising campaign from a German contractor. The service was performed on July 28, the invoice was issued on August 1, and the payment was made on August 20. On the part of the entrepreneur, the question arose when the tax obligation would arise in such a situation.

In this situation, the tax obligation arises upon the performance of the service, ie on July 28.

Showing the import of services and the lack of an invoice

In a situation where the entrepreneur does not have an invoice documenting the import of services, due to the fact that the transaction must be shown (despite the lack of this document), the entrepreneur is obliged to create his own document certifying the import of services. The document should contain data such as:

• the payment amount for a given transaction - based on the payment confirmation, it is shown as a net amount,

• the calculated amount of VAT,

• The gross amount,

• if the payment was in a foreign currency, it is necessary to make conversions and take into account the calculated values ​​on the document.

No purchase invoice when importing services - VAT

When importing services, the tax obligation arises when the service is provided, regardless of whether the service provider has issued an invoice to us or not. In this case, we are obliged to charge VAT at the rate applicable to a given service in Poland. This should be done on the internal invoice. If the entrepreneur is a VAT payer, he will have the right to reduce the tax due by the input tax on the import of services. As a result, this transaction will be neutral for the entrepreneur in terms of VAT.

In the case of a tax-exempt entrepreneur, he is also obliged to prove the import of services, i.e. he should issue an internal invoice, charge VAT on it at the rate applicable in Poland. Nievatowiec will have to pay VAT to the tax office on the basis of an internal invoice and submit a VAT-9M declaration. He will be able to include this amount as operating costs on the date the tax is paid.

To sum up, in the case of a transaction considered as an import of services, the recipient is, as a rule, obliged to settle VAT.

No purchase invoice when importing services and income tax

With regard to income tax, the situation is different than in the case of VAT. The lack of an invoice documenting the import of services does not entitle the expense to be recognized in the KPiR, and therefore the expense will not be recognized as costs and will not be able to reduce the value of the income tax payable.

Often, entrepreneurs print various types of transaction confirmations and attach them to payment receipts, and decide to classify such a transaction as tax costs, despite the lack of an invoice from the contractor. This is a risky activity, because the transaction confirmations do not contain the required data entitling to include the expense as costs, and thus do not constitute an accounting document. The invoice / bill entitles the expense to be included in costs in relation to income tax.

In accordance with par. 12 point 3 of the Regulation of the Minister of Finance on keeping KPIR, the basis for entries in the book of revenues and expenditures are:

• invoices, bills and customs documents called invoices, issued in accordance with applicable regulations,

• other evidence listed in par. 12 and 13 of this Regulation, stating that a business transaction was performed in accordance with its actual course (e.g. proofs of postage, bank, court or notary fees, accounting notes, etc.)

Summary Import of services in the absence of an invoice documenting the conclusion of the transaction should be shown for VAT purposes on the basis of a document created for this purpose. However, the created document and any confirmations of the transaction (except for the invoice) do not entitle to include the import of services as costs for income tax purposes. Such actions will be questioned during the audit.