The right to deduct VAT on the basis of invoices received electronically in PDF format

INDIVIDUAL INTERPRETATION ILPP4 / 443-209 / 11-2 / PG 6.06.2011 Tax Chamber in Poznań

Based on Article. 14b § 1 and § 6 of the Act of August 29, 1997 - Tax Ordinance (consolidated text Journal of Laws of 2005, No. 8, item 60, as amended) and § 2 and § 6 of the Regulation of the Minister of Finance of June 20, 2007 on the authorization to issue interpretations of tax law (Journal of Laws No. 112, item 770, as amended). The Director of the Tax Chamber in Poznań, acting on behalf of the Minister of Finance, states that the position of the limited company responsibility, presented in the application of February 18, 2011 (received on March 7, 2011) for a written interpretation of the tax law regarding value added tax in the scope of the right to deduct VAT from invoices received electronically in PDF format - is correct.

JUSTIFICATION

On March 7, 2011, the above-mentioned application for a written interpretation of tax law in an individual case regarding value added tax in the scope of the right to deduct VAT from invoices received electronically in PDF format.

The following future event is presented in the present application:

The applicant (hereinafter: the Company) is interested in receiving VAT invoices from their contractors electronically in the form of a file - in PDF format, which will not be secured with either an electronic signature or a password. However, if necessary, he may enter the use of a password known to the contractor and the Company. The company, in accordance with the law, will consent to contractors to send invoices electronically. The invoices received by the Company in an electronic version in PDF format will then be printed and stored in paper form, constituting the basis for deducting VAT and posting tax deductible costs for CIT purposes.

In light of the above, the following questions were asked:

1. Do the VAT invoices received by the Company in electronic form in PDF format, which are not electronic invoices secured with an electronic signature or password, meet the condition of authenticity of origin and integrity of the content, and thus constitute the basis for the deduction of VAT.
2. If the tax authority gives a negative answer to question 1 - will the use of a password known to the contractor and the Company enable the Company to receive such invoices in electronic form - in PDF format.

In the opinion of the Applicant, in accordance with the law on sending invoices in electronic form:

• Legal status until December 31, 2010

Until the end of 2010, the issue of sending invoices by electronic means was the subject of numerous controversies and disputes under the applicable VAT Act and its implementing acts. First of all, it should be noted that the concept of electronic form was narrow and in practice it applied only to invoices certified with a certified electronic signature. In fact, it meant a complete lack of interest in using this form in relations between entrepreneurs. Tax authorities, striving to fully secure and maximize control over the transactions constituting the subject of tax proceedings, generally required that VAT invoices be stored and sent in paper form. In disputes relating to this issue, it was argued that these requirements exceeded the standards set out in Community law. More specifically, it is Directive 2006/112 / EC (hereinafter: Directive 112). Pursuant to Art. 226 of Directive 112, the authenticity of the origin and integrity of the content of the invoice, as well as their legibility, should be ensured throughout the storage period of invoices. The catalog of forms in which invoices are to be issued and stored has not been closed. However, the restriction was introduced in Polish law on the basis of the regulations of the Minister of Finance to the Act on tax on goods and services.

• Legal status after January 1, 2011

Taking into account the pace of market turnover, the progressive computerization of business relations and the digitization of entrepreneurs' activities focused on savings, it became necessary to re-regulate the discussed issue. In the first place, the changes were made at the level of Community law. Directive 112 was amended by Council Directive 2010/45 / EU of 13 July 2010, which aims, inter alia, to liberalize the standards for sending and storing electronic invoices and to equate electronic and paper invoices. The above changes were implemented in Polish law, including in the Regulation of the Minister of Finance of 17 December 2010 on sending invoices in electronic form, rules for their storage and the procedure for making them available to the tax authority or fiscal control authority (Journal of Laws No. 249, item 1661; hereinafter the new regulation).

The analysis of the new regulation shows that sending invoices by electronic means is acceptable under the following conditions:

1. The use of a form that ensures the authenticity of the origin and integrity of the content of the invoice when sending them (§ 4);
2. Obtaining consent from the contractor to send invoices by electronic means (§ 3 section 1).

Ad. 1. Authenticity of origin and integrity of content

For the purposes of the regulation, authenticity is understood as certainty as to the identity of the supplier of goods or service provider or the issuer of the invoice. Integrity, on the other hand, is the fact that the data contained in the invoice does not change. While the previous regulation was in force (Regulation of 14 July 2005, Journal of Laws No. 133, item 1119), the need to maintain the above-mentioned features was confirmed by the imposition of a closed catalog of forms in which electronic invoices may be sent. This concerned the institution of secure electronic signature and electronic data interchange (EDI). Currently, pursuant to § 2 para. 2 of the new regulation, the catalog has been opened and is not limited to the above solutions. The legislator uses the phrase "in particular" in this paragraph, which allows treating the secure electronic signature and EDI only as examples. Accordingly, the invoice may be sent and stored in any electronic format. This is also confirmed by the justification for the draft of the new regulation: "It should be emphasized that in the case of acceptance in electronic form, the existing requirements were abandoned in order to use a secure electronic signature, verified with a valid qualified certificate or electronic data interchange (EDI). (...) The indicated methods of ensuring the characteristics of invoices in question are only an exemplary calculation, which means that the taxpayer may apply any other means of ensuring the authenticity and integrity of the invoice. " It is debatable whether this justification can be treated as an authentic interpretation, nevertheless, when analyzing the current regulation, the intention of the legislator on the basis of it cannot be ignored. According to the rationale for the draft regulation in question, it has been correlated with the amendment to the regulation of the Minister of Finance of November 28, 2008 on tax refunds to certain taxpayers, issuing invoices, their storage and the list of goods and services to which the tax exemption does not apply. goods and services (Journal of Laws No. 212, item 1337, as amended). The above change in relation to the discussed case concerns mainly § 21 sec. 2. Until now, taxpayers were required to keep originals and copies of invoices and corrective invoices, as well as duplicates of these documents "in their original form". Currently, they can be stored "in any way" that ensures the authenticity of the origin and integrity of the content. Referring to the presented case, it should be noted that the PDF format used by the Company guarantees that the content of the invoice will remain unchanged and confirms the authenticity of the origin. This is because this format makes it impossible to make changes to the content of the file, and any attempts to interfere with its content leave traces that make it possible to determine the changes made. It should be pointed out that electronic invoices in the presented case have at least the same degree of authenticity and integrity of content as paper invoices. The authenticity of the origin of paper invoices was once assessed through handwriting research. However, such proofs cannot be produced on printed invoices common today. Hence, having at your disposal a paper invoice and an electronic invoice in PDF format, the latter gives a greater guarantee of authenticity, allows you to check data integrity and examine additional information on the origin of the file.

Ad. 2 Contractor's consent

The provisions of the new regulation, ie § 3 sec. 1 and 2, as well as the provisions of the 2005 Regulation, require that the process of sending invoices by electronic means in any format has been previously approved by the invoice recipient, and therefore in the presented case by the Company. Acceptance may be in writing or in electronic form.

As is clear from the description of the case, the Company, as the recipient of VAT invoices sent electronically, will give the contractors the consent referred to above.

In the opinion of the Company, the position presented above should be considered correct. Therefore, in accordance with the provisions of law, there are no obstacles for the Company, with its prior consent to contractors, to receive VAT invoices from these entities only electronically in PDF format, not secured with either an electronic signature or a password. Nevertheless, should the authority still recognize the necessity to use a password, it is ready to use it. The company derives its position from legal regulations, which clearly indicate an open catalog of forms in which VAT invoices can be sent. Open catalog does not mean that these forms are free. It is important that the authenticity of the origin and the integrity of the content are ensured, which, according to the Company, is ensured by a VAT invoice in PDF format. The consequence of considering the Company's position as correct is the possibility of deducting VAT on the basis of a VAT invoice received electronically in PDF format, then printed and stored in paper form.

In the light of the applicable legal status, the position of the Applicant regarding the legal assessment of the presented future event is considered correct.

Pursuant to Art. 86 sec. 1 of the Act of March 11, 2004 on tax on goods and services (Journal of Laws No. 54, item 535, as amended), hereinafter referred to as the Act, to the extent that goods and services are used to perform activities taxable, the taxpayer referred to in art. 15, has the right to reduce the amount of tax payable by the amount of the input tax, subject to article 22. 114, art. 119 paragraph. 4, art. 120 paragraph 17 and 19 and article. 124. Pursuant to Art. 86 sec. 2 point 1 lit. a) of the Act, the amount of input tax is the sum of the tax amounts specified in the invoices received by the taxpayer for the acquisition of goods and services, taking into account the discounts specified in art. 29 sec. 4. With the above-mentioned According to the regulations, the basis for deduction of input tax are VAT invoices received by the taxpayer, documenting the purchase of goods and services used to perform taxable activities.

Pursuant to Art. 106 sec. 1 of the Act, the taxpayers referred to in Art. 15, are required to issue an invoice stating, in particular, the sale, date of sale, unit price without tax, tax base, tax rate and amount, the amount of the duty and the data of the taxpayer and the buyer, subject to paragraph 2. 1a, 2, 4 and 5 and article. 119 paragraph. 10 and art. 120 paragraph 16.

Based on Article. 106 sec. 10 of the Act, the minister responsible for public finances, in consultation with the minister responsible for computerization, may specify, by way of a regulation, the method and conditions for issuing and sending invoices in electronic form, taking into account:

1. the need to properly document sales and identify activities performed by groups of taxpayers;
2. the need to ensure the control of the correctness of tax settlement;
3. the need to ensure unambiguous identification of the invoice issuer and the need to ensure security, reliability, non-repudiation and integrity of issued and sent invoices
4. techniques used in the field of issuing and sending documents in electronic form and data encoding in these documents.

On the other hand, Art. 106 sec. 11 of the Act states that the minister responsible for public finances, in consultation with the minister responsible for computerization, may specify, by way of a regulation, the rules of storage and the procedure for providing the tax authority or fiscal control authority with invoices sent electronically, taking into account the provisions of European Union law, the need to ensure the control of the correctness of tax settlements and the techniques used in the field of electronic data transmission and data encoding.

The description of the case shows that the Applicant is interested in receiving VAT invoices from their contractors electronically in the form of a file - in PDF format, which will not be secured with either an electronic signature or a password. The invoices received by him in an electronic version in PDF format will then be printed and stored in paper form, constituting the basis for the deduction of VAT.

As indicated by the Interested Party, he will consent to his contractors to send invoices electronically, and the format in which they will be sent guarantees the invoice content will remain unchanged and will confirm the authenticity of its origin (this format will prevent any changes to the content of the file).

From 1 January 2011, the issue of sending and storing invoices in electronic form is regulated by the Regulation of the Minister of Finance of 17 December 2010 on sending invoices in electronic form, rules for their storage and the procedure for making them available to the tax authority or tax inspection authority (Journal of Laws No. No. 249, item 1661), hereinafter referred to as the ordinance, issued on the basis of the delegation contained in art. 106 sec. 10 and 11 of the Act.

Pursuant to § 3 sec. 1 of the Regulation, invoices may be sent, including made available, in electronic form in any electronic format, subject to prior approval of this method of sending invoices by the recipient of the invoice, hereinafter referred to as "acceptance". Acceptance or its withdrawal may be expressed in writing or in electronic form (§ 3 (2) of the Regulation). The concept of the authenticity of the origin of an invoice - pursuant to § 2 para. 1 point 1 of the Regulation - it means certainty as to the identity of the person delivering the goods or the service provider or the issuer of the invoice. However, due to the integrity of the content of the invoice - pursuant to § 2 para. 1 point 2 of the Regulation - it shall be understood that the data that should be included in the invoice has not been changed in the invoice.

Pursuant to § 2 sec. 2 of the Regulation, the authenticity of the origin and integrity of the content of the invoice are preserved, in particular when using:

1. a secure electronic signature within the meaning of Art. 3 point 2 of the Act of 18 September 2001 on electronic signature (Journal of Laws No. 130, item 1450, as amended), verified with a valid qualified certificate, or
2. electronic data interchange (EDI) in accordance with the contract on the European Electronic Data Exchange Model, where the concluded contract relating to this exchange provides for the application of procedures guaranteeing the authenticity of the origin of the invoice and the integrity of its data.

The legislator defined what should be understood by the authenticity of the origin of the invoice and the integrity of the content of the invoice. As an example of systems ensuring the behavior of the above-mentioned the conditions were provided by a secure electronic signature and electronic data interchange (EDI). It is an open catalog and all other methods of sending invoices by electronic means are allowed, guaranteeing the authenticity of the origin of the invoice and the integrity of the invoice content.

It is therefore necessary to create methods that guarantee the fulfillment of the above requirements, which, however, is to be determined by the taxpayer himself. The regulation in question does not specify whether the authenticity of the origin and integrity of the content should be ensured by using IT solutions or properly described business solutions (e.g. procedures laid down in a contract).

It should be noted that the above changes were introduced in connection with the adoption of the Council Directive 2010/45 / EU of July 13, 2010 amending Directive 2006/112 / EC on the common system of value added tax with regard to the provisions on invoicing (Journal Urz. UE L No. 189), which was aimed at, inter alia, liberalizing the current standards for sending and storing electronic invoices so that paper invoices and electronic invoices are treated in the same way. New redaction of art. 233 of Directive 112 regulating the above-mentioned issues, has been made in such a way that the technical issues of issuing, sending and storing invoices are entirely left to the discretion of the taxpayer, limiting the role of the Member States only to the function of the verifier of procedures adopted by taxpayers enabling the control of the correctness of VAT settlement. The "correctness" of an invoice as evidence is to be assessed from the perspective of the "authenticity" of its origin, the preservation of the "content integrity" and its "legibility". The control of the invoice in this respect is to be ensured by the taxpayer himself, while Directive 112 tells the taxpayer that this effect can be achieved by any business controls that establish a reliable audit trail between the invoice and the delivery of goods or provision of services. Only as examples of this type of control systems are solutions based on a secure (advanced) electronic signature or electronic information exchange (EDI) system.

Pursuant to § 4 of the Regulation, invoices may be sent in electronic form, provided that the authenticity of the origin and integrity of the invoice content is ensured.

Pursuant to § 6 of the Regulation, invoices sent electronically are stored broken down into accounting periods in any way that ensures:

1. the authenticity of the origin, integrity of the content and legibility of these invoices from the time of their issuance until the expiry of the tax liability limitation period;
2. easy to find them;
3. the tax authority or the tax inspection authority upon request, in accordance with separate regulations, immediate access to invoices.

Pursuant to § 9 of the Regulation, the acceptance for issuing and sending invoices in electronic form, expressed on the basis of the existing provisions, remains valid for the purposes of applying § 3 para. 1.

In the light of the above, it should be concluded that an electronic invoice should be considered a document for which the identity of the issuer (seller) and the integrity of the content are ensured and was sent by electronic means after prior approval of the recipient (buyer) as to this form of sending invoices. It should be noted here that from April 1, 2011, the Regulation of the Minister of Finance of March 28, 2011 on tax refunds to certain taxpayers, issuing invoices, how to store them and the list of goods and services to which the exemption does not apply on tax on goods and services (Journal of Laws No. 68, item 360). Pursuant to § 19 para. 1 above regulations, invoices and corrective invoices are issued at least in two copies, the original is received by the buyer and the copy is kept by the seller. On the other hand, § 19 para. 2 of the quotation of the regulation indicates that the provisions of para. 1 does not apply to invoices and correction invoices sent in electronic form. In the case of these invoices, the seller sends them, including making them available, to the buyer, while keeping them in his records.

Pursuant to § 21 sec. 1 of this regulation, taxpayers are obliged to store invoices and corrective invoices, as well as duplicates of these documents, until the tax liability expires.

Pursuant to § 21 sec. 2 above regulations, taxpayers store invoices, corrective invoices, as well as duplicates of these documents, broken down into accounting periods, in any way that ensures:

1. the authenticity of the origin, integrity of the content and legibility of these invoices from the time of their issuance until the expiry of the tax liability limitation period;
2. easy to find them;
3. the tax authority or the tax inspection authority upon request, in accordance with separate regulations, immediate access to invoices, and in the case of invoices stored in electronic form, enabling these authorities also to process the data contained therein.

The authenticity of origin referred to in paragraph 2 point 1, it means certainty as to the identity of the person delivering the goods or the service provider or the invoice issuer - § 21 sec. 3 quoted in the Regulation. The integrity of the content referred to in paragraph 2 point 1 means that the data that should be included in the invoice has not been changed in the invoice (§ 21 (4) of the above-mentioned regulation).

The above provisions do not require the recipient to print invoices received electronically. Thus, the right to reduce the output tax by input tax resulting from these invoices is not conditional upon printing the received invoices in electronic form, although the legislator allows any method of storing invoices, including in paper form, subject to the conditions specified in the above-mentioned regulations.

Considering the above-mentioned legal provisions and the presented description of the case, it should be stated that the current legal regulations still allow the possibility of sending invoices in electronic form. Thus, the receipt of invoices in the form of a PDF file is equivalent in taxation to the receipt of invoices in paper form, provided that the authenticity of the origin and integrity of the content of the invoices in question are ensured, as referred to in the Regulation of the Minister of Finance of 17 December 2010.

To sum up, the VAT invoices received by the Interested Party electronically in PDF format, which will not be electronic invoices secured with an electronic signature or password, will constitute the basis for deduction of the tax on goods and services, to the extent to which the purchased goods and services will be used to perform taxable activities . At the same time, attention must be paid to the absolute legal requirement to ensure the authenticity of the origin and integrity of the content of these invoices.

Finally, it should be pointed out that the assessment of the correctness of the applied method (system) of sending invoices in electronic form and the fulfillment of the conditions for ensuring the authenticity of origin and integrity of the content of sent invoices requires specialist knowledge. Therefore, this assessment will be possible for the competent tax authority or the tax inspection authority in the course of a tax or fiscal inspection, because the procedure for issuing an individual interpretation, pursuant to Art. 14b § 1 of the Tax Ordinance Act, it is based solely on the interpretation of tax law. These provisions - as indicated above - do not specify specific technical requirements in this respect, so any technical solution, as long as it guarantees compliance with tax law requirements, will be correct. It is also emphasized that the hereby authority, when issuing interpretations, does not have the appropriate tools, including those specified in Section IV of the Act - Tax Ordinance, that would enable the conduct of proceedings, during which it could obtain specialist knowledge.

In connection with the positive answer to the first question, the second question regarding the use of a password known to the contractor and the Company, which enables it to receive such invoices in electronic form, has become redundant.

The interpretation concerns the future event presented by the Applicant and the legal status in force on the date of issuing the interpretation.