VAT deduction from invoices for utilities and internet

Changes in the settlements of invoices for utilities and the Internet affect not only sellers, but also buyers. Until the end of 2013, entrepreneurs who are active VAT taxpayers remembered about the special moment of deducting input tax on invoices documenting the purchase of telecommunications services or utilities. Until now, the payment deadline was an important element of the invoice received from the service provider. How to make deductions in 2014? What to pay attention to when invoicing for utilities?

What are media and telecommunications services?

The VAT Act, when determining the moment when the tax obligation arises, distinguished and still distinguishes:

• telecommunications (including the Internet) and radiocommunication services;

• supply and distribution of electricity, heat or cooling energy and line gas;

• broadly understood media, which include:

  • services related to the treatment and supply of water through water supply networks,

  • sewage disposal and treatment services,

  • services related to the collection of non-hazardous waste suitable for recycling,

  • non-recyclable non-hazardous waste collection services,

  • services related to infrastructure intended for the shipment of non-hazardous waste,

  • services related to the collection of hazardous waste,

  • services related to infrastructure intended for the shipment of hazardous waste suitable for recycling,

  • services related to the treatment of non-hazardous waste for final disposal,

  • services related to the disposal of non-hazardous waste,

  • services related to the processing of other hazardous waste,

  • services related to the disposal of radioactive waste and other hazardous waste, excluding radioactive waste management services (reprocessing of fuels and waste) (PKWiU ex 38.22.21.0),

  • decontamination and cleaning services,

  • other reclamation services and specialized pollution control services,

  • garbage sweeping and snow removal services,

  • other sanitary services.

Deduction of VAT from utility invoices until the end of 2013

Until the end of 2013, for sellers of telecommunications services and media, the tax obligation arose upon the expiry of the payment deadline, if it was specified in the contract or invoice. At the same time, buyers of the aforementioned services were entitled to a VAT deduction at the earliest in the period in which the payment was due. Thus, it was not important when the payment was made and what date of issue or sale appears on the invoice received. The payment date indicated by the seller was always counted.

VAT deduction from utility invoices from January 2014

At the beginning of January 2014, the provisions of the amended VAT Act entered into force. The changes included, among others providing and purchasing telecommunications and media services. The provisions of the act still distinguish the mentioned type of services as special. However, the moment when the tax obligation arose has changed, and so has the moment of deducting VAT from the received utility invoice.

Currently, the tax obligation for the delivery of utilities will depend primarily on the date of issuing the invoice. Therefore, the payment date specified in the invoice will not be relevant for the purposes of VAT settlements. The change also translates into the date of VAT deduction. The buyer no longer has to wait with a VAT deduction for the period in which the payment is due. In principle, the deduction is now in principle upon receipt of the invoice.

As stipulated in the new regulations, the right to deduct VAT on purchased utilities or telecommunications services arises in the period in which the tax obligation arose in relation to the goods and services purchased or imported by the taxpayer. However, here the regulations impose an additional condition: not earlier than in the settlement for the period in which the taxpayer received the invoice. In practice, this means that, as a rule, the utility vendor has a tax liability on the date of issuing the invoice, and therefore the buyer could deduct VAT on this date. However, for the buyer to be entitled to a deduction, he must have an invoice, so the right to deduct VAT will arise in the period in which the taxpayer receives the invoice.