Settlement of corrective invoices in minus due to overpriced - settlement at the seller

As of January 1, there have been significant changes to the rules of settling in minus correction invoices by the seller. One of the biggest of them is the fact that the condition for obtaining confirmation of delivery of the correction invoice to the buyer has been abandoned. The above, of course, does not mean complete freedom when it comes to settling negative invoices.

Tax base reduction

Recall that the taxable amount is everything that is the payment that the supplier of goods or the service provider has received or is to receive from a buyer, recipient or a third party, including received subsidies, subsidies and other similar surcharges having a direct impact on the price goods or services provided by the taxpayer.

The tax base is reduced by:

• amounts of discounts and price reductions granted after the sale;
• value of returned goods and packaging;
• all or part of the payment returned to the buyer received before the sale, if it did not take place;
• value of the returned amounts of grants, subsidies and other payments of a similar nature.

Amendment of the Act on Corrections

Based on Article. 29a paragraph. 13 of the VAT Act in the cases referred to in sec. 10 points 1-3, the reduction of the tax base in relation to the basis specified in the invoice with the indicated tax shall be made for the accounting period in which the taxpayer issued a correcting invoice, provided that the documentation he has shows that he has agreed with the buyer of the goods or the customer, the conditions for lowering the tax base for the supply of goods or services specified in the correcting invoice and these conditions have been met, and the invoice is consistent with the documentation held.

The taxpayer may therefore reduce the tax base and the VAT due already at the time of issuing the corrective invoice in minus under the following conditions:

1. the documentation held by the taxpayer shows that he has agreed with the buyer of the goods or the service recipient the conditions for lowering the tax base for the supply of these goods or the provision of these services;
2. the documentation also shows that these conditions were met when the taxpayer corrects the output tax;
3. the corrective invoice is consistent with the documentation in the scope of arrangements with the buyer of the goods or the service recipient.

If the taxpayer, in the period in which he issued the correcting invoice, does not have documentation, he shall reduce the tax base or the tax due only for the accounting period in which he will have the relevant documentation.

What does the term 'reconciliation terms' mean?

In tax regulations, the legislator did not specify the understanding of the terms of the adjustment made between the seller and the buyer.

To explain the above, we can use the tax clarifications regarding the SLIM VAT package issued by the Ministry of Finance. According to their content, the agreement on the terms of the reduction of the tax base or the output tax shall mean, in particular, the determination by the parties of the reduction of the original remuneration indicated on the invoice.

If the invoice contains an incorrect price, the seller is obliged to correct it. Therefore, it may be unreasonable to make additional arrangements or conclude agreements between contractors.

Example 1.

On June 10, 2021, the taxpayer issued an invoice for the sale of shoes. After the transaction, he noticed that the price of the goods had been significantly inflated. The taxpayer entered PLN 10,000 on the invoice, and the shoes cost PLN 1,000. After noticing the mistake, on June 15, 2021, he issued a corrective invoice. He wonders if he can include the corrective invoice in the settlement for June 2021. Should he request any statement from the buyer that he has received the invoice?

In our case, the reason for issuing the corrective invoice in minus was the overstatement of the price of the goods on the original invoice. Thus, already at the moment of finding a mistake, the conditions for reducing the tax base and the VAT due are met.

The above is also confirmed by the Ministry of Finance in its explanations: "[...] due to the fact that the basis for reducing the tax base is an error in the price indicated on the original invoice, the fulfillment of the conditions for the correction is the very finding of a price error”.

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What does it mean to have documentation that confirms that the arrangements have been made?

In our case, however, in order to settle the tax, the taxpayer must have documentation confirming the arrangements.

In this case, the legislator did not regulate how to document the confirmation of making the arrangements.

The explanations of the Ministry of Finance show that the documentation confirming the agreement on the terms of the reduction of the tax base and output VAT may be, for example:

• e-mail correspondence,
• an annex to the contract or
• another commercial document confirming that the new terms of the transaction have been agreed.

The above list does not mean that this is a closed catalog and the taxpayer may confirm the reconciliation in another way.

In the case of issuing a negative correction due to an error in the price, such documentation may be, for example, a confirmation of its receipt by the buyer.

The above is confirmed by the explanations of the Ministry of Finance:

„In some cases, the only form of communication regarding the agreement of the terms of the reduction of the tax base or the amount of tax between the parties is the issue and delivery of a correcting invoice to the buyer. [...] to meet these agreed conditions and to obtain documentation confirming the existence of the agreement / fulfillment of the conditions - a document confirming that the buyer has knowledge of the tax base reduction would be required, e.g. confirmation of receipt of a corrective invoice in any form”.

To sum up, the taxpayer in our example making the adjustment will be able to reduce the output tax, provided that it has documentation confirming the agreement and meeting the conditions for the reduction of output tax. The confirmation will most likely be the confirmation of receipt of the correcting invoice.