Google AdWords services - how to properly book?


Along with technological development, invoices documenting the purchase of programs, applications or other IT services from abroad are more and more often encountered. One of the most common is the invoice for Google AdWords services from the branch in Ireland. This application allows companies to reach a strictly defined group of recipients who are looking for products or services offered by them on the web. Therefore, on the part of entrepreneurs, there is a question of how to book an invoice for Google AdWords services. Check, you will find the answer in the article!

Google AdWords services - formal obligations and method of settlement

The invoice documenting the purchase of the Google AdWords service is treated as an import of services, in accordance with art. 28b of the VAT Act. Thus, the buyer is obliged to settle VAT. An entrepreneur carrying out this type of transaction is required to register as an EU taxpayer. Please note that VAT-EU registration is also necessary for "non-VAT". To do this, complete the VAT-R form part C. 3.

If an entrepreneur who is an active VAT taxpayer uses the services of Google AdWords, the invoice amount will constitute the basis for taxation for him with the VAT rate applicable in Poland for this type of transaction, i.e. 23%. The transaction must be included in both the purchase VAT register and the sales VAT register (the so-called mirror image). Thus, the transaction for VAT will be neutral.

Entrepreneurs that are exempt from VAT, similar to VAT payers, add 23% of VAT to the invoice amount received from Google. However, they cannot settle the tax on purchases, so they have to pay the added VAT to the competent tax office. They are also required to submit a VAT-9M declaration.

Google AdWords services in the VAT declaration

As mentioned earlier, the invoice for the purchase of the Google AdWords service is treated as an import of services under Art. 28b of the VAT Act. Therefore, this transaction must be included in the VAT-7 declaration (monthly settlement), VAT-7K (quarterly settlement) or in the case of non-VAT in the VAT-9M declaration.

Contrary to appearances, the transaction is not shown in the VAT-EU summary information. The VAT-EU declaration shows only transactions of the type: sale of services in the EU, intra-community acquisition of goods (intra-community supply of goods) and intra-community supply of goods (intra-community supply of goods).

A correctly booked invoice documenting the import of services within the European Union should, as a rule, be shown: in the VAT purchase register, in the VAT sales register and in the amount from the invoice received in column 13 of the tax revenue and expense ledger. As mentioned above, due to the entry of the transaction in both VAT registers (sales and purchase), the transaction is neutral for the taxpayer in terms of VAT.

When posting an invoice for Google AdWords services, it is also worth paying attention to whether the prepayments shown on the invoice coincide with the value of the services actually provided.

In the case of payments to Google, a common situation is the settlement of the transaction only at the time of its actual occurrence. Therefore, the amount that can be included in the VAT registers and the amount that can be included in the KPiR may be different.

An invoice for Google AdWords services on an example

As mentioned before, it is possible that the value of prepayments differs from the value of the services actually shown.

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On the invoice you can find items such as:

  • prepayment for Google AdWords - this value generates a tax obligation under VAT, which means that it should be shown in the register of VAT sales and VAT purchases,

  • Google AdWords - the value of actually performed services, this value should be included in the KPiR,

  • Prepayment funds for Google AdWords - information on the amount of the advance payment settlement, not subject to posting.

Example 1.

Mr. Claudius, who runs a sole proprietorship and is an active VAT taxpayer, received an invoice from Google AdWords from its seat in Ireland, containing the following values:

Due to this situation, the entrepreneur asked how to settle the invoice received.

To the amount of PLN 600 (prepayment), you should add VAT (PLN 600 x 0.23 = PLN 138 VAT) and enter the tax in the VAT register both on the sale and purchase side.

The value corresponding to Google AdWords in the amount of PLN 503.29 should be posted to KPiR.

The value of prepaid funds for Google AdWords is not subject to posting to VAT registers or to the KPiR.