Changes in VAT settlements on rental, lease and leasing services in 2014
As of January this year, the amended VAT Act entered into force, which changed the regulations on the moment when the tax obligation arises when providing rental, leasing and rental services. Importantly, modifications also appeared in terms of the moments of emergence of the right to deduct tax on goods and services.
Tax obligation - old and new regulations
In the regulations in force until the end of last year, the tax obligation when providing (in Poland) rental, leasing and rental services arose when all or part of the payment was collected - the deadline for payment was the payment date specified in the contract or included in the invoice. The same principle also applied to personal protection services, supervision, property storage, permanent legal and office services, as well as insurance brokerage services.
Under the new regulations, the fact of receiving a payment loses its importance. Art. 19a paragraph. 5 4 lit. b indicates that the tax obligation arises at the time of issuing the invoice - with the exception of services constituting the import of services regulated by art. 28 of the said law. This means that when renting, lease or leasing, collecting the advance payment (or prepayment) does not have any legal consequences in terms of taxes.
The taxpayer provides the service of renting a business premises, where the tenant, in accordance with the agreement in force, should pay the rent for the second quarter of 2014 until May 10. The payment, however, was made on April 15th.
- if the invoice is issued together with the payment by the tenant - on April 15 - then the tax obligation will arise in the settlement period of the invoice;
- if the taxpayer does not issue an invoice by May 10, then the tax obligation arises upon the expiry of the payment deadline.
Article 19a (1) 7 says that in the event of a failure to issue an invoice or a delayed issuance, the tax obligation arises when the deadlines for its issuance specified in the act have passed. The latter have also changed - Art. 106i paragraph. 3 point 4 contains a provision that in the case of the provision of rental, leasing or lease services, the invoice documenting the transaction should be issued no later than on the date of expiry of the payment deadline.
When it comes to issuing an invoice before the service is provided or the payment of part or all of the amount due, there is a general rule that it cannot be done earlier than 30 days before the above-mentioned events. This rule does not apply to the discussed rental, leasing or rental services - there are no such restrictions here, as long as the issued invoice contains a provision about the settlement period to which it relates.
Provision of services for private individuals
Let us now discuss the case of providing such services to natural persons who do not conduct economic activity - i.e. consumer leasing.In this situation, there is no obligation to issue an invoice documenting the transactions, even if the buyer requests it - as stated in Art. 106b paragraph. 3 point 1 of the VAT Act. Then the tax obligation arises at the time of the expiry of the payment deadline. In turn, when the entrepreneur issues an invoice before its expiry (despite the lack of an obligation to do so), the tax obligation arises at the time of issuing it.
Input tax deduction
The buyer of these services (rental, leasing or lease) may deduct input tax if he uses them to carry out activities subject to VAT. Art. 86 sec. 10.
Art. 86 sec. 10 of the Act on tax on goods and services
The right to reduce the amount of tax due by the amount of input tax arises 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.
As already emphasized, the tax obligation for the services in question arises in the settlement period in which the invoice was issued. There is another issue to remember - you cannot deduct VAT on paid services without receiving an invoice from the contractor.
To sum up, the taxpayer may reduce the output tax by the amount charged in the settlement for the period in which the tax obligation arose (i.e. in which the invoice was issued), but not earlier than the date of receipt of the invoice.