VAT deduction possible up to 5 years back!


An entrepreneur who is an active VAT taxpayer has the option of reducing the value of output tax by the input tax. In order to use it, it should first of all control the deadlines - VAT deduction is possible only in fixed periods.

Basic principles of VAT deduction

To determine how and when input VAT can be deducted, the entrepreneur should refer to Art. 86 of the Act on tax on goods and services. The entrepreneur will be entitled to deduct VAT when he uses the purchased goods and services for taxable activities.

How much can you deduct? The entrepreneur has the right to reduce the output tax by the value of the input tax resulting from invoices documenting the purchase of goods or services by the taxpayer, or to make all or part of the payment before the purchase.

When can you deduct? According to the basic principle, VAT deduction can be made in the period in which the tax obligation for individual goods or services arose. Similarly, this rule should be applied to a part or all of the payment made prior to the acquisition. At the same time, however, the entrepreneur cannot deduct VAT earlier than in the period in which he received the invoice (or customs document).

To sum up, in order for an entrepreneur to be able to deduct VAT, two facts must occur - there must be a tax obligation in relation to the goods or services; and an invoice or price document must be received.

The good news is that if the entrepreneur - for various reasons - fails to deduct VAT on the indicated date, he has the right to do so in one of the two subsequent settlement periods. For taxpayers who settle VAT on a quarterly basis, this means even an additional six months for VAT deduction!

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Have you missed the deadline? You can still deduct VAT!

Despite the relatively long time for VAT deduction, it may turn out that the entrepreneur has not exercised his right. However, even in such a situation, the case is not entirely a loser - VAT deduction can be made by correcting the declaration.

To use this option, the entrepreneur should generate a correction of the VAT declaration for the first period in which he gained the right to deduct VAT (in other words, in this case, he cannot select one of the two consecutive periods). Here, too, there is a certain time limit - adjustments can be made no later than 5 years, counting from the beginning of the year in which the right to tax reduction took place.

It is worth remembering that along with the correction of the declaration, you must write a justification of the reasons for the correction.

Did you know there are invoices that you cannot deduct VAT from? Check what documents are concerned!