VAT tax obligation - does it depend on the moment of issuing the invoice?

In accordance with the applicable provisions of the VAT Act, in terms of determining the moment of the tax obligation, it should be noted that it does not depend on the date of issue of the sales invoice. This does not mean, however, that there is no need to issue invoices. Check whether the VAT tax obligation depends on the invoice issuance date and when exactly it arises!

VAT tax obligation and the invoice issue date

The VAT obligation is important for both the seller and the buyer. The sellers want to avoid tax arrears and show the tax due in the correct period, while the customer wants to deduct VAT on purchases. The correct determination of the moment when the VAT obligation arises will largely depend on the dates of the transactions performed, which in turn will affect the date of issuing the invoice.

The obligation to issue an invoice is imposed on taxpayers by the provisions of art. 106i of the VAT Act. In some cases, the legislator explicitly specified the dates of issuing the invoice. According to the provisions, the invoice should be issued no later than:

• On the 30th day from the date of performance of services - in the case of construction and construction and assembly services,
• 60th day from the date of issue of goods - for the delivery of printed books (excluding maps and leaflets) as well as newspapers, magazines and magazines,
• 90th day from the day of performing the activities - in the case of performing activities consisting in printing books (excluding maps and leaflets), newspapers, magazines and magazines as well as deliveries covered by the import of services in accordance with art. 28b,
• upon the expiry of the payment deadline - in the case of delivery, among others electricity and heat as well as the provision of telecommunications services, rental or permanent legal services referred to in art. 19a paragraph. 5 point 4.

In other cases, invoices should be issued no later than on the 15th day of the month following the month in which the service or delivery was performed (Article 106i (1) of the VAT Act). In the situation indicated above, if the entrepreneur does not issue an invoice by the 15th day of the following month or issues it late, there is no exemption from the VAT obligation. In terms of the invoice issue date, pursuant to Art. 106i paragraph. 7 of the VAT Act, an invoice may be issued no earlier than 30 days before the actual delivery of goods, performance of the service, and also before receiving the payment in whole or in part. If the invoice is issued 30 days before the planned delivery, if the transaction is not actually made, the issued invoice may be considered a blank invoice, which results in penal and fiscal sanctions on the seller's side. To protect yourself from the consequences, it is worth canceling the invoice (if it has not entered legal circulation) or correcting it to "zero".

VAT tax obligation - general rules

As indicated above, based on general principles, the VAT obligation arises at the time of delivery of goods or performance of a service. In the case of partial services, the service is considered to be performed when the part for which the payment is specified is performed, while the continuous services are considered to be performed at the end of each period specified in the contract to which the payments relate, respectively to the moment of its provision. If continuous services are provided at the turn of the year, then the service is considered to be performed at the end of each tax year until its completion. A partial service may be a renovation and construction service, provided for a longer period, for which the stages of implementation have been specified and the remuneration for each stage has been agreed, along with the payment date.

The general rule indicated above does not apply to the delivery of goods on the basis of, inter alia, lease, rental or leasing contracts, if the contract provides that upon payment of the last installment, the ownership of the subject of the contract will be transferred.

Example 1.

Mr. Wiesław will make custom-made office furniture. The expected date of completion of the order, i.e. furniture production, is estimated at 3 December. Mr. Wiesław decided to issue an invoice for the client on November 25. On what date does the VAT obligation arise?

In this case, the tax obligation will arise on December 3, on the date the service is provided.

The VAT obligation also arises on the date of full or partial payment, if it took place before the delivery or the performance of the service.

VAT tax obligation and the invoice issue date - special rules

The moment when the tax obligation arises in most cases arises on general principles, which is not related to the date of issuing the invoice. However, the VAT Act also provides for special cases for which a different point of tax liability is indicated. Pursuant to Art. 19a paragraph. 5 point 1 of the VAT Act, the VAT obligation arises upon receipt of all or part of the payment for:

1. the goods are released by the commissioner to the commission agent on the basis of a commission agreement;
2. the transfer of ownership of the goods by order of a public authority or of an entity acting on behalf of such authority in return for compensation;
3. the delivery of goods carried out in the course of execution, referred to in art. 18;
4. providing, on the basis of separate provisions, at the request of common, administrative and military courts or the public prosecutor's office, services related to court or preparatory proceedings, with the exception of services to which art. 28B, which are the import of services;
5. the provision of tax-exempt services in accordance with Art. 43 sec. 1 points 37-41.

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Example 2.

On November 8, 2020, the commissioning party handed over the car to a commission agent for further resale. On December 6, the car was sold. The payment for the car was made on December 7. The received cash was handed over to the commissioner on December 10 by the commissioner. On what date does the VAT obligation arise with the principal and commission agent?

The tax obligation arises with the principal on December 10, i.e. on the date of receipt of the payment, while the tax liability with the commission agent will arise on general terms, i.e. on the date of delivery of the car, i.e. December 6.

A special moment when the tax obligation arises has also been established for:

• providing construction or construction and assembly services,
• delivery of printed books (excluding maps and leaflets) as well as newspapers, magazines and printed magazines,
• activities consisting in printing books (excluding maps and leaflets) as well as newspapers, magazines and magazines (except for services to which Article 28b applies, constituting import of services).

According to Art. 19a paragraph. 5 point 3 of the VAT Act, for the above-mentioned services, the tax obligation arises on the date of issuing the invoice. Therefore, persons providing one of the above-mentioned services should pay special attention to the invoice issue date.

The VAT obligation on the date of issue also arises in relation to:

• supply of electricity, heat or cooling as well as line gas,
• provision of services:

• telecommunications,
• listed in item 24-37, 50 and 51 of Annex 3 to the Act,
• rental, lease, leasing or services of a similar nature,
• protection of persons and services of security, supervision and storage of property,
• permanent legal and office services,
• distribution of electricity, heat or cooling as well as line gas,

- with the exception of services to which Art. 28B, which are the import of services.

If, pursuant to Art. 19a paragraph. 7 of the VAT Act, the invoice will not be issued on time, the VAT obligation will arise on the expiry of this deadline, no later than on the date of expiry of the payment deadline. In the case of an intra-Community supply or intra-Community acquisition of goods, the tax obligation arises at the time of issuing the invoice, but not later than on the 15th day of the month following the month in which the goods were delivered. As indicated above, determining the moment when a tax obligation arises depends on the type and subject of the transaction. Correctly defining the transaction may indicate the appropriate determination of this moment and showing the tax in the correct period. Therefore, the VAT tax obligation should be considered each time individually, the more so as there are cases in which the date of issuing the invoice is important and those in which the tax obligation arises regardless of the issued document.