VAT settlement in two consecutive periods

Taxpayers had some time to get used to the changes in the tax on goods and services that appeared with the amendment to the VAT Act on January 1, 2014. They affected, inter alia, the moment of tax deduction, which raised taxpayers' doubts as to the possibility of reducing the output VAT by the amount charged in two consecutive accounting periods in a situation where the tax obligation arose in a different month than the one in which the invoice was issued.

When is the right to deduct VAT?

The amended provisions of Art. 86 sec. 10 of the VAT Act indicate that the taxpayer may reduce the tax on goods and services by input tax in the settlement for the period in which the tax obligation arose in relation to the goods and services purchased or imported by the taxpayer. This is the new general rule.

Attention! Pursuant to the new regulations, the tax obligation arises in principle when the goods are delivered or the service is provided. It is usually tantamount to the physical release of a given good / goods to the taxpayer (or a person authorized by him).

Let us remind you that until the end of 2013, taxpayers, as a rule, could deduct VAT in the settlement period in which they received the invoice and in two subsequent periods.

The legislator in Art. 86 sec. 10b point 1 of the amended VAT Act, however, also specified an additional condition for the deduction of input tax - this right arises not earlier than in the settlement for the period in which the taxpayer received an invoice or a customs document. This means that the moment of receipt of the invoice is still important.

To sum up, the right to deduct tax on goods and services is due if:

• a tax obligation has arisen in relation to the purchased goods or services,
• they were acquired,
• the taxpayer received an invoice for this transaction.

Importantly, all these conditions must be met together.

Not always the right to deduct VAT in two consecutive periods?

Moreover, also in the current wording of the VAT Act, entrepreneurs have the right to deduct the tax in two consecutive settlement periods. This is indicated by Art. 86 (11) of the above-mentioned legal act.

Art. 86 sec. 11 If the taxpayer has not reduced the amount of tax due within the time limits referred to in paragraph 1. 10, 10d and 10e, may reduce the amount of tax due in the tax return for one of the next two tax periods.

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As can be seen, in the quoted article there is a reference to other provisions of the Act. Points 10d and 10e concern tax deduction in special situations, such as import settlement and the use of the cash method. However, art. 86 sec. 10 (concerning the aforementioned general principle of the deduction of VAT at the moment of the tax obligation arisen), which should be supplemented by Art. 86 sec. 10b point 1 (indicating the moment of receipt of the invoice or customs document). However, in the quoted excerpt there is no reference to section 10b (1), which may mean that when the taxpayer receives an invoice in a period other than that the seller's tax obligation arises (and in the current legal state it may be a common practice), the deduction of VAT in two subsequent billing periods will not be possible.

Attention! From January 2014, taxpayers can issue an invoice by the 15th day of the month following the month in which the goods were delivered or the service was performed.

Thus, the provisions stipulate directly that the exercise of the right to deduct VAT in two consecutive periods will be possible if the period of receipt of the invoice by the buyer coincides with the period when the tax obligation in the tax due on the seller's side.

Example. 1

Mr. Jan, who is an active VAT payer who settles this tax every month, purchased the goods on February 23, 2014. He received the invoice in the next month, ie on March 2 (the seller has until March 15 to issue invoices). In this situation, the taxpayer will be able to deduct VAT in the settlement for March (month of receipt of the invoice) or in one of the next two (April, May).

Example 2.

Mr. Jan purchased a different product from a different supplier also on February 23, 2014. However, he received the invoice for this transaction on the next day, ie on February 24. In this case, the entrepreneur will be entitled to deduct VAT on this transaction in the month of purchase (February) or in the next two (March or April).