Fuel cost re-invoicing - check if it is possible
In the case of large commercial contracts or projects, it is possible to conclude an agreement under which the entrepreneur incurs costs, and after the completion of the contract or project, he counts the expenses incurred and transfers them to the contractor. These activities are called re-invoicing costs. Is it possible to re-invoice fuel costs?
The concept of re-invoicing does not appear in the provisions of tax law, but it has been shaped in economic practice and basically refers to services. In the case of re-invoicing, we are dealing with a situation where one entity purchases a service, which it then resells to another entity, but the seller is not a direct service provider.
Due to the fact that the tax regulations do not clearly indicate how re-invoicing should proceed, it should be assumed that we are dealing with it when the following circumstances occur:
the subject of re-invoicing are services,
resale is made at purchase price without adding a margin
the service is used by the final recipient, not the entity for which the proof of purchase has been issued,
re-invoicing is based on the contract concluded between the parties,
Fuel cost re-invoicing
Due to the fact that re-invoicing in principle concerns services, the costs incurred for the purchase of fuel should be treated as the delivery of goods. This does not mean, however, that fuel costs cannot be transferred to another entity.
Pursuant to Art. 7 sec. 1 of the VAT Act, the delivery of goods (...) is understood as the transfer of the right to dispose of the goods as the owner. The transaction of passing on the fuel costs should therefore be accounted for according to the general rules that were provided for the supply of goods, taxed at the domestic VAT rate (23%) and an invoice should be issued.
This procedure is consistent with the interpretation with reference number ILPP2 / 443-875 / 09-2 / MN issued by the Tax Chamber in Poznań on September 29, 2009, as well as with the individual interpretation with reference number IPPP2 / 443-1272 / 13-2 / KBr issued by the director of the Tax Chamber in Warsaw on February 3, 2014, it is possible to re-invoice fuel costs on the basis of a fuel card.
The opposite position can be found in the individual interpretation of July 13, 2010 with reference number ILPP2 / 443-588 / 10-3 / MN issued by the director of the Tax Chamber in Poznań, where we read: fuel purchase costs should be included in the tax base for the service provided, and the entire service due (...) should be documented by issuing a VAT invoice, using the tax rate corresponding to the service provided. As a consequence, it should be stated that (...) it cannot re-invoice the fuel purchase costs incurred by its contractors to clients with whom it has signed legal service contracts.
Re-invoicing has not been legally regulated, therefore there is no clear answer to the question of whether it is allowed or not. In this situation, entrepreneurs themselves choose the interpretation on which they base or resign from re-invoicing.
Pursuant to the provisions of the Energy Law (Article 32 (1) (4)), a license is required to trade in fuels. However, it is possible to trade in solid and gaseous fuels if the annual turnover value does not exceed EUR 100,000.
Re-invoicing of fuel costs - recognition in the KPiR
However, if a taxpayer decides to re-invoice fuel costs, invoices documenting fuel purchases should be posted to KPIR in column 13, assuming that fuel trade is not entered in its PKD activity. These expenses can be directly included in the costs on the date they are incurred or the invoice is issued.
Re-invoicing in practice
One of the outstanding issues is attaching to the re-invoice the scans of invoices documenting the incurred expenses. This should be regulated in the contract - if it provides for attaching these documents, the re-invoicing entity is obliged to attach them, while if the contract does not require such activities, their attachment is unnecessary.
Another contractual issue between contractors is the frequency of re-invoicing. Re-invoices can be issued with each re-invoiced purchase or collectively on designated dates, e.g. at the end of the month.
There is also a frequently asked question: how to re-invoice fuel costs from an invoice, where taxpayers are entitled to a 50% VAT deduction for mixed use of vehicles. In this case, the issued invoice should contain the full value of VAT - just like on the purchase invoice. It is irrelevant for the contractor who receives the re-invoice whether the entrepreneur is entitled to 100% VAT deduction or 50%.
Mr. Cezary, who runs a sole proprietorship and is an active VAT payer, in accordance with the contract concluded with the contractor, has the right to re-invoice fuel costs with each purchase. The fuel was purchased on June 6 for the gross amount of PLN 123. Due to the fact that Mr. Cezary uses the company's vehicles in a mixed manner, he is entitled to a 50% VAT deduction. When is it possible for him to re-invoice the fuel costs and for what amount should the re-invoice be issued?
The re-invoice should be issued on the day of purchasing the goods (fuel purchase) for the full amount, i.e. PLN 100 net, PLN 23 VAT and PLN 123 gross. For the contractor, the way Mr. Cezary uses the vehicle is not important.
Refaktura at wFirma.pl
In order to re-invoice costs in the wFirma.pl system, go to the tab REVENUE »EXHIBITION» EXIST AN INVOICE.
Complete the required data in the generated window. In the DESCRIPTION tab, you can put information about the invoice, e.g. re-invoicing of fuel costs.
The invoice issued in this way will be included in the column 7 of the KPiR - Sales of goods and services.
Due to the fact that the sale of fuel is not the primary purpose of running a business, it is necessary to transfer sales from column 7 to column 8 (other revenues) according to the scheme RECORDS »BOOK OF REVENUE AND EXPENDITURE» TAX BOOK OF INCOME AND EXPENDITURE »ADD ENTRY.
In the Sales Goods and Services field, enter the net amount from the invoice with a minus sign in front of it, and then enter the same amount as a positive value in the Remaining Revenue field.
As a rule, re-invoicing is associated with shifting the costs of services to another entity. Importantly, tax regulations do not directly prohibit fuel costs from being re-invoiced. The entity receiving the fuel re-invoice should, in principle, show it as other expenses in column 13 of the KPiR. On the other hand, the seller who re-invoices the revenue on this account shows in the column 8 KPiR - other revenues.