Facilitations in corrective invoices thanks to SLIM VAT?

In the Act of November 27, 2020, the amendment to the act on taxable goods and services and some other acts (Journal of Laws of 2020, item 2419) were introduced, among others, by changes in the method of settling corrective invoices with a reduction in the tax base ("in minus" correction) and "in plus" corrective invoices not previously regulated by the Act, i.e. those with an increase in the VAT tax base.

ADDED PROVISIONS IN THE ACT

To art. 29a, paragraph 17 and 18 in the wording:

"17. If the tax base has increased, the correction of this base shall be made in the settlement for the tax period in which the cause of the increase in the tax base occurred.

18. In the case of the export of goods and the intra-Community supply of goods, the base increase taxation referred to in paragraph 1. 17, occurs not earlier than in the tax return submitted for the tax period in which these transactions were claimed”.

CHANGES "IN PLUS"

The entered record makes the assignment and settlement of the correcting invoice dependent on the identification of the date / period in which the reason for the correction occurred. Practically, this means that in the case of errors in the rate, amount, quantity of products that increase the tax base and were known / existed on the date of issuing the original invoice, the correcting invoice should also be settled in the period covered by the original invoice. If the reason for the correction occurred after the original invoice was issued, then it is settled in the period corresponding to the date of issuing the correction.

Corrections issued in the WNT are subject to the same rules (Article 30a, section 1). In the case of exports and intra-Community supplies, a reservation was introduced, which indicates the necessity showing the transaction in a period not earlier than the period of the original transaction.

Basically, the introduced provisions reflect the practice and case law. However, there are doubts as to the date of "the occurrence of a cause that increases the tax base". Failure to enter the explanation directly in the content of the act, but only in the justification to the draft, where it is not binding, leaves room for interpretation.

"IN MINUS" CHANGES

Changes introduced in Art. 29a paragraph. 13 of the Act release the taxpayer from the obligation to confirm receipt of the correcting invoice by the buyer of the goods or service and to settle it in accordance with that date. The new wording of the provision requires the settlement of a correcting invoice in the settlement period "in which the taxpayer issued a correction invoice, provided that the documentation held by that taxpayer shows that he agreed with the buyer of the goods or the service recipient 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”. If on the date of issuing the correcting invoice, these conditions are not met, the invoice accounting period must be consistent with the period in which the taxpayer obtained this documentation.

"IN MINUS IN PRACTICE" ADJUSTMENTS

While in practice it was difficult to obtain confirmation of receipt of a correcting invoice by the buyer, the use of the new solution may result in no lesser problems. It became necessary to have "documentation" agreed with the buyer, which is the basis for lowering the tax base, where the previously confirmed corrective invoice was sufficient. In order to include a correcting invoice during the issuing period, the new regulations require the seller to meet three conditions in total:

1. Possession of documentation confirming that it has agreed with the buyer the conditions for reducing the tax base and output tax,

2. Possessing documentation which shows that the conditions for the reduction have been fulfilled and

3.  The correction invoice complies with the two conditions above.

Therefore, taxpayers will be forced to collect and archive additional documentation in the form of e.g. commercial contracts and agreements, commercial correspondence with contractors, warehouse documents confirming the fulfillment of all three of the above-mentioned conditions.

The buyers are required to fulfill the first and second conditions jointly in order to be able to reduce the input tax. Moreover, if the above conditions are met after the original invoice has been settled, the buyer (e.g. in the case of errors in the original invoice) will be forced to correct the VAT settlement and include the correcting invoice in the settlement period in which the original invoice was settled, while according to the regulations in force so far, he could include the corrective invoice on an ongoing basis.

TRANSITIONAL PERIOD

The repealed provisions may be applied during the transitional period, i.e. until the end of 2021, after a written agreement between the parties, which must take place before the first corrective invoice is issued in 2021.

EFFECT OF CHANGES ON THE SETTLEMENT OF CORRECTING INVOICES

You can clearly confirm the fact of changes in the area of ​​settlement of correction invoices. The assessment of whether they are positive will most likely be individual for taxpayers. Depending on the industry, customer relationships, and other factors, they may be considered a facilitation or otherwise. Nevertheless, they have a significant impact on the ways companies operate and the daily work of accountants.

Downloads

• PKF Alert - Facilitations in corrective invoices thanks to SLIM VAT.pdf [PDF]