Media and telecommunications services - tax obligation in 2014

The New Year's amendment to tax laws introduced many changes important for taxpayers - primarily in the field of VAT. Not only the general rules for settling this levy have been thoroughly rebuilt - the detailed rules have also changed, including in the field of broadly understood media and telecommunications services.

Media and telecommunications services until the end of 2013

While until the end of 2013, invoices were extremely important for the emergence of a tax obligation in terms of general principles, for the media and telecommunications services this document was slightly less important.

Pursuant to the regulations in force at that time, in the case of telecommunications and radiocommunication services, the supply of electricity, heat or cooling, gas or water, sewage disposal - that is, widely understood utilities - the tax obligation arose in accordance with the payment deadline. Moreover, the dates of payment of such costs should also be agreed on in separate agreements.

Thus, even if the supplier issued an invoice, e.g. on January 20, but the payment deadline was February 10, the tax obligation in VAT did not arise only in February.

How is it now? Media in 2014

From the beginning of 2014, the rules governing the emergence of a VAT obligation have changed dramatically. The general rules have completely abandoned the invoice as a point of reference - the tax obligation is now dependent on the time of delivery of the goods or performance of the service.

What about media and telecommunications services? On the contrary - here the texture takes on a lot of meaning. Pursuant to Art. 19a paragraph. 5 point 4 of the VAT Act, the tax obligation arises at the time of issuing an invoice documenting the delivery of such services. The payment deadline is no longer so important, although it is not entirely unimportant - the supplier should issue an invoice on that day at the latest. Moreover, if he does not fulfill this obligation, the necessity to pay VAT on that date will arise anyway.

This can be easily illustrated by an example - the contract between the supplier and the recipient states that the invoice is due for payment on the 10th of each month for the previous month. The payment date for the delivery of telecommunications services for January will therefore fall on February 10 - so far the supplier should issue an invoice. However, regardless of whether he fulfills this obligation or not, he will still be obliged to settle VAT in the period in which the payment deadline expired, i.e. in February.

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It is also worth noting that in the case of the delivery of utilities and telecommunications services, the recipient may pay for services in advance, without accelerating the emergence of a tax obligation. Why? Indeed, receiving part or all of the payment (advance payments, prepayments, etc.) automatically generates a tax obligation on that date, but with the exception of utilities and the supply of telecommunications services. This rule is set out in Art. 19a paragraph. 8 of the Act.

Media and telecommunications services and the right to deduct VAT

The tax obligation and the moment when it arises are one side of the coin, important for suppliers of media and telecommunications services. But what about their recipients, who after all have the right to deduct VAT on the purchase of this type of services?

In this case, the general rule should be indicated, which says that from the beginning of 2014, the taxpayer has the right to deduct input VAT in the period in which the tax obligation arose with the seller and in which he received the invoice, or in two subsequent ones.

In order to be entitled to a VAT deduction, the taxpayer must therefore have an invoice and know that the issuer has already established a tax obligation. In the case of telecommunications and media services, for which the obligation arises at the time of issuing the invoice, the entrepreneur who received it from the seller can be sure that the obligation has arisen. Therefore, relying on such a document, he can confidently deduct the input VAT.

However, if a tax obligation arises at the supplier, despite the fact that the invoice has not been issued - because the payment deadline for the service has expired - the VAT recipient will not be able to deduct it. The right to arise only upon receipt of the invoice.