Correcting WNT invoice in the light of the provisions of the VAT Act
As part of the purchase of goods from EU contractors, there are events that result in the need to correct the tax base. The reasons for changing the tax base may be different. Taxpayers often have a problem with determining in which month the WNT correction invoice should be settled.
Tax base and corrective invoice WNT
We deal with intra-Community acquisition of goods (intra-community acquisition of goods) in the territory of the Republic of Poland, provided that the buyer of goods is a taxpayer of value added tax, the purchased goods are to be used for activities performed by him as a taxpayer, and the supplier of goods is a taxpayer of value added tax.
Pursuant to Art. 30a paragraph. 1 of the VAT Act, Art. 29a paragraph. 1, 6, 7, 10 and 11 of the VAT Act, including art. 29a paragraph. 10 point 2 of the VAT Act.
Pursuant to Art. 29a of the VAT Act, the tax base will be everything that is the payment that the supplier or service provider has received or is to receive from the buyer, service recipient or a third party, including received subsidies, subsidies and other surcharges of a similar nature, having a direct impact on the price of the goods or services provided by the taxpayer.
The tax base includes:
taxes, duties, fees and other charges of a similar nature, except for the amount of tax;
ancillary costs, such as commission, packaging, transport and insurance costs, charged by the supplier or service provider to the buyer or recipient.
However, the following amounts are not included in the tax base:
constituting a price reduction in the form of an early payment discount;
price discounts and rebates granted to the buyer or recipient, taken into account at the time of sale;
received from the buyer or customer as a reimbursement of documented expenses incurred on behalf of and for the benefit of the buyer or customer and recognized temporarily by the taxpayer in the records kept by him for tax purposes.
Pursuant to Art. 29a (10) of the VAT Act, the tax base is reduced by:
amounts of discounts and price reductions granted after the sale;
the value of the returned goods and packaging, subject to paragraph 11 and 12;
all or part of the payment returned to the buyer received before the sale, if it did not take place;
the value of the returned amounts of subsidies, subsidies and other payments of a similar nature, referred to in paragraph 1.
Below we present the most common problems related to the WNT correction invoice.
Correcting WNT invoice as proof of goods return
In the case of returning the goods, the corrective WNT invoice should be included in the declaration for the period in which the return was made. This means that in the month of the return, the taxable amount of the VAT should be reduced, and of course it must be accompanied by a reduction in the output tax and input tax, if the output tax has been deducted. This method of accounting is also confirmed by the tax authorities, an example of which is the individual interpretation of the Director of the Tax Chamber in Katowice of July 9, 2014, file ref. IBPP4 / 443-150 / 14 / PK, where it stated that:
(...) the method of settling the intra-Community acquisition of goods in the case of receiving corrective documents (invoices, notes) depends on the circumstances that caused its issue. Thus, when the goods were returned to the supplier, the reduction of the tax base due to intra-Community acquisition of goods should be made in the settlement for the period in which the goods were returned. To sum up, in the described situation, the adjustment of the turnover and the corresponding tax on intra-Community acquisition of goods should be included in the settlement for the period in which the Company returned the goods to the EU supplier (...).
The taxpayer conducted an Intra-Community Investigation (WNT) in February 2018. Some of the goods were returned in April 2018.
As a rule, the entrepreneur should correct the WNT in April 2018.
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Post-transaction discount and the corrective invoice
Granting a discount will be a new circumstance that arises after the original transaction has been made. Therefore, the corrective invoice should be settled on an ongoing basis. Also the tax authorities confirm this method of settling discounts, as an example, one can mention the letter of the Director of the Tax Chamber in Warsaw of August 25, 2016, ref. No. IPPP3 / 4512-389 / 16-2 / JF, where we can read:
(...) it should be stated that if the Applicant receives a discount / cash bonus for the performance of a specific turnover and the Applicant receives a correcting invoice documenting the granting of the discount / bonus, the Applicant will be obliged to reduce the amount of input tax in the settlement for the period in which he receives a correcting invoice in accordance with Art. 86 sec. 19a of the Act. (...)
It is worth noting here that if the invoice correcting intra-Community acquisition is related to the primary cause, it should be made in the month in which the intra-community tax obligation arose.
Correcting invoice WNT and conversion rate
Invoices documenting intra-Community acquisition of goods, including the corrective invoice, are most often issued in a foreign currency. This requires their conversion into the Polish currency. The rules for converting a foreign currency into Polish currency are set out in Art. 31a paragraph. 1 and 2 of the VAT Act. It follows from this provision that the conversion of the tax base expressed in a foreign currency into Polish zlotys should be based on the average exchange rate of the foreign currency announced by the National Bank of Poland:
on the last business day preceding the day when the tax obligation arises or
on the last business day preceding the date of issuing the invoice - if, in accordance with national VAT regulations, the taxpayer could issue an invoice before the tax obligation arises and issued it on time.
When settling the intra-Community Value Added Tax correction invoice, the original exchange rate should be used, i.e. the exchange rate used for the conversion of intra-Community assets to which the correction applies.
Such a position was confirmed by the Director of the Tax Chamber in Katowice in the individual ruling of July 9, 2014, file ref. IBPP4 / 443-150 / 14 / PK, where we can read that:
"(...) the appropriate rate - to convert amounts expressed in foreign currencies - is the rate on the last business day preceding the date of issuing the original invoice. This position results from the fact that correcting invoices change the amount of turnover and tax amounts shown in the original invoice (…) ”.
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WNT was made on October 28, but due to the return of goods, a corrective invoice was issued on November 15th.
In such a situation, the rate of October 27 should be corrected.