National System of e-Invoices - entry into force

On June 10^th, 2022, the Council of the European Union (hereinafter: the EU Council) published a draft of the derogation decision, which authorizes Poland to introduce the obligation to issue invoices in a structured form. The draft document has been made available on the website of the official database of European Union legal acts EUR-Lex.

The draft document shows that the mandatory use of the National System of e-Invoices (hereinafter: KSeF) and structured invoices will be possible in Poland from January 1^st, 2024 to December 31^st, 2026. The use of the KSEF and structured invoices would be voluntary.

As a reminder, KSeF is an ICT system (managed by the National Revenue Administration) used to issue and share the so-called structured invoices. The main assumption of structured invoices is to issue them according to a set pattern, based on the logical structure provided by the Ministry of Finance. Structured invoices are stored and processed in a centralized ICT system, enabling access to documents to entities participating in settlements (after providing appropriate data). We wrote about the basic principles of the KSeF operation in the article that can be found at: https://www.pkfpolska.pl/krajowy-system-e-faktur-5309 (please let us know its English version would be helpful).

According to the draft implementing decision, the consent of the EU Council to obligatory structured invoices in Poland is to be valid for 3 years, ie until the end of 2026. After this period, the consent may be extended. To this end, Poland will have to prove that the obligatory settlements with the use of e-invoices contributed to the fight against VAT fraud and abuse and resulted in the simplification of the VAT collection system. It should be noted that the consent of the EU authorities is required because the KSeF has the status of the so-called a special measure, which is an exception to the rules provided for in the so-called VAT directive.

The draft states that: „Poland maintains that the special measure will contribute to a better fight against value added tax (VAT) fraud and VAT evasion. The special measure, combined with the provision of additional transaction data, will significantly improve the analytical capacity of the Polish tax administration, allowing it to automatically verify the consistency between declared and paid VAT and increasing the accuracy of the verification of VAT refund claims submitted by taxpayers. In addition, it will complement other measures to combat VAT fraud and evasion and to modernize the VAT system, such as the VAT Single Audit File, Split Payment Mechanism, Electronic Cash Flow Analysis and Online Cash Register System used to monitor the retail sector”.

Regarding the application of the KSeF after 2026, the draft notes that if Poland deems it necessary to extend the duration of a special measure (it concerns the KSeF and structured invoices), it should submit a report to the European Commission assessing the effectiveness of its application in terms of combating fraud related to VAT, VAT evasion and the simplification of VAT collection.

It is also worth noting that the draft decision of the EU Council contains information that the obligatory use of the KSeF will be limited to entities having their registered office in Poland. Thus, as a rule, the KSeF should not cover e.g. foreign entities registered in Poland for VAT purposes (the content of the decision suggests that these entities will be able to issue and receive invoices outside the KSeF, although we are curiously awaiting the solutions proposed in this regard by Ministry of Finance).

To enter into force, the decision still has to be published in the EU's Official Journal. In previous publications of the Ministry of Finance, there were announcements that the KSEF would be obligatory from April 2023. The term introduced in the draft decision means that Polish entrepreneurs gained additional time to prepare for the implementation of the system. It should also be noted that the introduction of the obligatory KSEF will require appropriate legislative changes in Poland.

Nevertheless, in our opinion, due to the complexity of the entire process, taxpayers should already start work on preparing for settlements under the KSEF. The implementation of the system in question will require a number of measures to adapt the enterprise to the functioning of the KSEF (this is both in the area of ​​financial and accounting processes and in the technological area). More about the challenges and potential benefits of settlements under the KSeF can be found at: https://www.pkfpolska.pl/krajowy-system-e-faktur-wyzwanie-i-potencjaalne-korzysci-dla-przedsiebiorcow-5318 (please let us know its English version would be helpful).

Finally, it is worth adding that when applying for KSeF approval, Poland presented a justification indicating the positive impact of this solution. The EU Council presented them as follows: „Poland believes that the special measure will provide a number of simplification measures to make it easier for taxpayers to fulfil their obligations, such as the initial completion of VAT returns and summary information or faster VAT refunds. A special measure will bring benefits to taxpayers, such as the invoice storage and archiving services provided by the administration and the automation of accounting processes. According to Poland, the costs to taxpayers to adapt their systems to a specific measure are not expected to be significant, especially when compared to the benefits they will obtain from the specific measure. To assist with these adjustments, Poland introduced voluntary electronic invoicing prior to the imposition of a special measure. In addition, free compliance tools will be made available and an extensive information campaign will be launched to educate taxpayers about the new VAT rules on the special measure”.

Downloads

• PKF Alert - National System of e-Invoices - entry into force.pdf [PDF]