VAT deduction when the invoice is issued to two buyers

Service-Tax

Is it possible to identify more than one buyer on the invoice? Is the VAT shown on the invoice deductible? If so, how? In this article you will find answers to all your questions.

Invoice issued to two buyers

Let us assume that taxpayer X, who is an active VAT taxpayer, purchased a fixed asset (asphalt compactor) with taxpayer Y. They concluded a machine use agreement between themselves, in which they specify that the purchased fixed asset will be used in both activities at 50%. The purchase invoice contains the data of both co-owners. The purchased fixed asset will be used solely for business purposes. In this situation, are both taxpayer X and taxpayer Y entitled to deduct the VAT resulting from the purchase invoice? If so, should the deductions be made on a 50/50 basis according to the rules of use of the equipment?

When considering the correctness of the data contained in the invoice, you should take into account Art. 106e paragraph. 1 point 3 of the Act on tax on goods and services (hereinafter: the VAT Act). According to it, the invoice should contain, inter alia, first and last names or names of the taxpayer and buyer of goods or services and their addresses. There are no separate provisions in the VAT Act regarding the issue of invoices for more than one buyer.

Deduction of VAT on an invoice issued to two buyers

As regards the deduction of input VAT from an invoice documenting the purchase of a fixed asset issued to two buyers, it is necessary to take into account art. 86 of the VAT Act. It follows from its content that the right to deduct VAT applies to the extent to which goods and services are used to perform taxable activities. The amount of input tax includes, among others, sums of tax amounts included in invoices for the purchase of goods or services.

Therefore, when referring to the situation in which the invoice contains the data of taxpayer X and taxpayer Y, it should be assumed that both of them have the right to deduct the input VAT resulting from the purchase invoice of the compactor. This is possible as long as their purchase was related to the taxable services they provided. The tax should be deducted in accordance with the share in the use of the machine specified in the contract (i.e. 50%).

Deduction of VAT on an invoice for two buyers - the position of the offices

The above approach to the problem is confirmed by the individual interpretation of the Director of the Tax Chamber in Poznań of May 16, 2014 (no. ILPP2 / 443-238 / 14-3 / AKr). The tax authority found that:

“(...) one invoice may be issued for several entities, with each buyer being entitled to a copy of the invoice, however, only one of the buyers will receive the original. At the same time, in the case of the purchase of the same thing or service by several buyers, the invoice must include the names, surnames or names of each of the buyers and their addresses, as well as the tax identification number of each buyer ”.

"Therefore, issuing an invoice to two or more entities who jointly acquired the same goods does not prevent each of them from reducing the tax due by a part of the amount of input tax charged on the purchase of the goods corresponding to the share in the joint ownership."