Proforma invoice and deduction of VAT

Service-Tax

Not all documents in the course of trade give the right to deduct VAT. This right is certainly made possible by a VAT invoice. How is proforma? What kind of document is a proforma and what about the VAT deduction?

What documents entitle to VAT deduction?

The right to deduct input VAT is allowed only by selected documents containing the data required by the law.

VAT

The basic document that allows taxpayers to deduct VAT is the VAT invoice. The right to deduct VAT, closely related to this document, results in a number of requirements that an invoice must meet in order to be considered correct. Pursuant to Art. 106e of the VAT Act should include, first of all, elements such as:

  • invoice number,

  • date of issue,

  • the date of making or completing the delivery of goods or the performance of the service, if this date is different from the date of issue of the invoice,

  • names and surnames or names of the seller and buyer, their addresses and tax identification numbers,

  • name of the goods sold or the service performed,

  • the number of goods sold or the scope of services provided,

  • the net unit price of a good or service,

  • the total net value of the goods or services rendered,

  • tax rates,

  • the sum of the net sales value with the division into sales subject to individual tax rates and sales exempt from tax,

  • the amount of tax on the sum of the net sales value of goods (services), broken down into amounts related to individual tax rates,

  • the total amount due.

Additionally, the document may include:

  • date and method of payment,

  • rebates, if any,

  • notes to the document.

Attention!

You should remember about the advance invoice, which has consequences only in terms of VAT and does not have any effects in terms of PIT. The issuance of an advance invoice obliges the seller to charge the output VAT, i.e. to enter the entry in the VAT Sales Register. On the other hand, on the counterparty's side, receiving it gives the right to enter VAT in the VAT purchase register, i.e. deduction of input VAT.

Receipts for tolls on the motorway

However, a VAT invoice is not the only document that allows VAT to be deducted. Another document entitling to deduct VAT are receipts of payment for toll motorways - including non-fiscal receipts. To do this, they should contain specific data, which are:

  • name of the seller and his tax identification number;

  • sequence number and date of issue;

  • information enabling the identification of the type of service, in particular the name of the motorway for which the toll is charged;

  • amount due with tax;

  • the amount of tax.

Customs SAD or PZC documents

Based on the SAD or PZC document, purchases of goods from contractors are settled with the so-called third countries, i.e. from outside the European Union. The SAD (Single Administrative Document) document is the basis for VAT settlement, if the customs declaration is submitted in paper form, while the PZC (Certified Customs Declaration) is the appropriate document for the settlement of the electronic declaration.

What is a proforma invoice?

Pro forma (Latin) means "for formality, for the sake of appearances, decency". From the translation itself, it can be concluded that a document with this name should, in principle, have no consequences. And it really is.

A proforma invoice is only a commercial document that often serves the purpose of presenting an offer to a contractor. However, it is not an accounting document that obliges the seller or the buyer, which was confirmed by the Minister of Finance, and therefore is not subject to record either on the basis of income tax or VAT. Moreover, it cannot be the basis for the payment of VAT by the seller or its deduction by the contractor.

Proforma invoice in the explanations of the Minister of Finance

Doubts about the proforma were dispelled by the Ministry of Finance by publishing an explanation on its website. It explicitly states that a proforma is a document issued mainly to confirm the submission of an offer or acceptance of an order for execution and its issuance does not have any VAT consequences.

Explanations by the Ministry of Finance - A document called a proforma invoice is not an accounting document. It is a document issued in business transactions and its purpose may be, for example, to confirm the submission of an offer or acceptance of an order for execution. Clear marking of this document with the words proforma means that it cannot be assigned the value of an invoice within the meaning of VAT regulations, as the entity issuing such a document clearly indicates that it is not an invoice. Therefore, the issuance of this document does not have any VAT implications, i.e. the obligation to pay the tax indicated in this document, and does not constitute a basis for the contractor to deduct the VAT shown in this document.