Deduction of VAT from invoices received from a small taxpayer

Who is a small taxpayer and what are the invoices issued by them?

According to Art. 2 clause 25 of the Act on Value Added Tax, a small taxpayer is a VAT taxpayer whose sales value (including the tax amount) did not exceed in the previous tax year an amount expressed in PLN corresponding to the equivalent of EUR 1,200,000 (conversion of amounts expressed in EUR is made according to the average the euro exchange rate announced by the National Bank of Poland on the first business day of October of the previous tax year, rounded to PLN 1,000).

An invoice issued by a small taxpayer using the cash method contains the same data as an ordinary invoice (specified in § 5 (1) of the Regulation of the Minister of Finance on invoices of March 28, 2011), additionally a description of the "cash method" and information about the due date specified in the invoice.

A small taxpayer is obliged to issue a sales invoice within 7 days from the date of delivery of the goods or performance of the service. However, if the taxpayer has received part or all of the amount due before the goods are released or the service is rendered, the invoice (also marked with the phrase "cash method") shall be issued no later than 7 days from the date on which part or all of the amounts due from the buyer have been received.

Pursuant to Art. 21 sec. 1 of the VAT Act, the tax obligation in the field of tax on goods and services arises not at the time of issuing the invoice, but as of:

• receipt of all or part of the payment - in the case of delivery of goods or services to entities conducting business activity, registered as active VAT taxpayers,
• receipt of all or part of the payment, no later than the 180th day from the date of delivery of the goods or performance of the service - in the case of delivery of goods or provision of services to entities not registered as active VAT taxpayers.

Deduction of VAT from invoices received from a small taxpayer

§ 18 of the Regulation of the Minister of Finance of April 4, 2011 on the implementation of certain provisions of the VAT Act indicates that the taxpayer may reduce the amount of tax due by the amount of input tax specified in this invoice "cash method", in the settlement for the settlement period in which:

• settled part of the receivables in favor of a small taxpayer using the cash method - in this part.
• fully paid the amount due to a small taxpayer using the cash method.

Important!!!
If the taxpayer has not deducted VAT in the period in which he made the payment for the "cash method" invoice, then he must return to that period and submit a corrective declaration. Neither art. 86 sec. 11 of the VAT Act or the regulation on amendments to the VAT Act.

Deduction of VAT from the correcting invoice "cash method" - reducing

In a situation where we have received a correction invoice from a small taxpayer, then Art. 86 sec. 10a.

In the event that the buyer of the goods or services has received an invoice correction referred to in Art. 29 sec. 4a or 4c, he is obliged to reduce the amount of input tax in the settlement for the period in which the invoice correction was received. If the taxpayer has not reduced the amount of input tax by the amount of the input tax specified in the invoice to which the correction applies, and the right to such a reduction is entitled to him, the reduction in the amount of input tax shall be included in the settlement for the period in which the taxpayer makes this reduction.

To sum up, when a taxpayer has received a correcting invoice from a small taxpayer using the cash method, and has already deducted the input tax from the invoice to which the correction applies, then he will be obliged to reduce the input tax in the settlement for the period in which he received the correction. However, in a situation where the taxpayer receives a correcting invoice before deducting the input tax from the invoice to which the correction applies, then the correction should be taken into account in the settlement for the period in which he will deduct the input tax resulting from the original invoice.

Deduction of VAT from the correcting invoice "cash method" - increasing

In the case of increasing correcting invoices, § 18 sec. 1 of the regulation, which means that the taxpayer will reduce the VAT due in the period in which he made the payment.

Deduction of VAT from the duplicate invoice "cash method"

In a situation where the original invoice or corrective invoice is damaged or lost, the seller, at the request of the buyer, should re-issue a duplicate of the invoice or corrective invoice, in accordance with the data contained in the copy of the document.

The payment is decisive for the deduction of input VAT contained in the invoice duplicate "cash method".

If, on the other hand, the deadline for deduction has already expired (due to early payment), the taxpayer may deduct the input tax by correcting the tax return for the period in which the right to deduct arose.