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The farmer's obligation to document the sale - rules

The VAT Act obliges most taxpayers to properly document their sales transactions. An important exception in this case is the flat-rate farmer, who has a wide range of exemptions from obligations, including the obligation to document. In the context of the tax situation of a flat-rate farmer, it is worth considering what documents such entity issues in the case of sales to natural persons. Read the article and find out what is the farmer's obligation to document sales!

Flat-rate farmer exemption from the obligation to issue an invoice

Pursuant to Art. 43 sec. 1 point 3 of the VAT Act, the supply of agricultural products from own agricultural activity by a flat-rate farmer and the provision of agricultural services by a flat-rate farmer are exempt from tax.

As we indicated in the introduction, there are many restrictions on tax obligations for the flat-rate farmer. As we can read in Art. 117 of the VAT Act, a flat-rate farmer, in the scope of his agricultural activity, supplying agricultural products is exempt from the obligation to:

issuing invoices;
keeping records of deliveries and purchases of goods and services;
submitting to the tax office the tax declaration referred to in art. 99 sec. 1;
submitting the registration application referred to in Art. 96.

In a situation where a transaction with a flat-rate farmer is made by a taxpayer running a business, the obligation to issue an invoice rests with the buyer. This specific rule results from Art. 116 sec. 1 of the VAT Act, where we can read that a taxpayer registered as an active VAT payer who purchases agricultural products from a flat-rate farmer issues an invoice in two copies documenting the purchase of these products. The original invoice is handed over to the supplier. This type of invoice will be marked as "VAT RR INVOICE". Should contain:

name and surname or name or short name of the supplier and buyer and their addresses;
tax identification number or PESEL number of the supplier and buyer;
(repealed);
the date of purchase as well as the date of issue and the sequence number of the invoice;
the names of the agricultural products purchased;
unit of measure and quantity of agricultural products purchased and indication (description) of the class or quality of these products;
unit price of the purchased agricultural product without the amount of the flat-rate tax refund;
value of purchased agricultural products without the amount of the flat-rate tax refund;
flat rate tax refund;
the amount of the flat-rate tax reimbursement on the value of purchased agricultural products;
value of purchased agricultural products with the amount of the flat-rate tax refund;
the total amount due together with the flat-rate tax refund, expressed digitally and in words;
legible signatures of persons authorized to issue and receive invoices or signatures as well as the names and surnames of these persons.

The VAT RR invoice should also contain the declaration of the supplier of agricultural products as follows: "I declare that I am a flat-rate farmer exempt from tax on goods and services pursuant to Art. 43 sec. 1 point 3 of the Act on tax on goods and services ”.

However, please note that the above provision does not apply to a situation where the buyer of the goods is a natural person who does not conduct business activity. If the goods from a flat-rate farmer are purchased by a natural person who does not run a business, he does not issue a VAT RR invoice. The flat-rate farmer is also not required to issue an invoice as he is legally exempt from this obligation. It should also be emphasized that pursuant to Art. 106b paragraph. 3 point 2 of the VAT Act, at the request of the buyer of goods or services, the taxpayer is obliged to issue an invoice documenting the exempt sale referred to in art. 43 sec. 1, art. 113 paragraph. 1 and 9 of the Act, if the request for its issue was made within 3 months from the end of the month in which the goods were delivered or the service was performed, or the whole or part of the payment was received.

Importantly, however, the above takes place subject to Art. 117 point 1 of the VAT Act, which means that this rule does not apply to a flat-rate farmer.

Flat-rate farmer and the obligation to issue a fiscal receipt

Pursuant to Art. 111 sec. 1 of the VAT Act, taxpayers who sell to natural persons who do not conduct business activity are required to keep records of sales using cash registers.

Consequently, the first thing to consider is whether a flat-rate farmer is required to issue a receipt when selling to a non-business consumer.

In order to answer this question, please refer to the Regulation of the Minister of Finance of December 28, 2018 on exemptions from the obligation to keep records using cash registers.

As stated in § 2 sec. 1 of the regulation, exempt from the obligation to record in a given tax year, but no longer than until December 31, 2021, the activities listed in the annex to the regulation.

In item 46 of the abovementioned annex, it is indicated that flat-rate farmers delivering agricultural products from their own agricultural activity or providing agricultural services, benefiting from tax exemption under Art. 43 sec. 1 point 3 of the Act. A flat-rate farmer is exempt from the obligation to have a cash register, which means that he does not have to issue a receipt when selling goods to natural persons who do not conduct business activity.

Flat-rate farmer and the bill

It is worth noting that in certain circumstances taxpayers may be required to issue an invoice. According to Art. 87 of the Tax Ordinance, if separate provisions do not indicate an obligation to issue an invoice, taxpayers running a business are required to issue an invoice at the request of the buyer or service recipient, confirming the sale or provision of a service.

The obligation to issue an invoice does not apply to farmers selling plant and animal products from their own cultivation, breeding or breeding, unprocessed or unprocessed by industrial means, unless the sale is made at their separate, permanent sales points outside the area of cultivation, breeding or rearing. except for sale at marketplaces.

As a consequence, if a flat-rate farmer sells his own agricultural products to natural persons at separate, permanent points of sale, outside the cultivation or breeding area, such sale should be documented by an invoice. On the other hand, the sale of goods at the place of cultivation or breeding carried out by the flat-rate farmer does not require invoicing. A flat-rate farmer does not have to issue an invoice when he sells his products at the place of production.

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Obligation to document the sale by the flat-rate farmer

In the context of the presented considerations, we can indicate that a flat-rate farmer in the case of selling products to natural persons who do not conduct business activity is not obliged to issue a receipt, invoice or bill.

It should be pointed out that a flat-rate farmer has no statutory obligation to issue an invoice, however, there is nothing to prevent him from issuing such a document voluntarily. The transaction can also be documented with a sales contract within the meaning of the Civil Code.

This is also indicated by the Head of the Tax Office in Nowy Sącz in the interpretation of July 7, 2005, No. PP / 443-125 / 05:

“Bearing the above in mind, it should be stated that if you, as a flat-rate farmer, sell your own agricultural products to natural persons in separate, permanent places of sale, outside the area of cultivation or breeding, it should be documented by an invoice.

On the other hand, if you sell your own agricultural products outside of separate permanent places of sale, sell your own agricultural products, which are not processed in an industrial way and come from your own production, you cannot issue a VAT invoice or a bill to document the transaction. In such a case, the transaction must be documented with a sale and purchase contract, on the terms specified in the provisions (Art. 535 – Art. 555) of the Act of 23 April 1964 Civil Code ”.

Therefore, answering the question posed in the title, we can indicate that a flat-rate farmer selling products to natural persons who are not entrepreneurs is released from most of the obligations related to documenting transactions. This means that documentation can be done with the help of a classic sales contract.