Invoice for a foreign company – what do we need to know?
In order to correctly issue a sales document and save yourself the unpleasantness of correcting the documents you send (which may be especially difficult in future years, once the National e-Invoice System is up and running), or even having to ask lawyers for help, it is worth answering a few questions.
- Inwhat situation do we issue an invoice to a foreign counterparty? Whenever we enter into a transaction with a foreign company. Keep in mind, however, that a foreign invoice is different from a standard VAT invoice and is affected by many elements.
- By what date should a foreign invoice be issued? The rule is the same as for sales to a domestic customer: no later than the 15th of the month following the month of service. If necessary, the VAT invoice can also be issued in advance – at the earliest 30 days before the service.
- Where to find the regulations governing the issuance of invoices to foreign customers? All the information you need can be found in the VAT Law – you can read it here.
Reading the entire law and finding the most relevant information in it would obviously be an unnecessary task, so we have singled out a few elements to keep in mind when invoicing abroad. The first is the place of service provision.
Place of supply of services versus a sales invoice to a foreign contractor
Proper designation of the place of supply of services (i.e., the place of taxation) is necessary to properly account for the VAT due. The general rule for transactions between EU counterparties is that the place of supply of services is the same as the location of the counterparty. This and other cases are described in Art. 28b ww. VAT Law. This article is the equivalent of Art. 44 of the EU VAT directive. This is because the regulations in Polish law are based on Directive 2006/112/EC, which regulates, among other things. issues of taxation (and therefore invoicing) of transactions between entities based in different EU countries.
Important!
The aforementioned general rule does not work in every case. Exceptional situations are explained further in Art. 28 of the VAT Law (Articles 28b (2-4), 28d, 28e, 28f (1, 1a, 2 and 3), 28g (1 and 2), 28i, 28j (1 and 2), 28n).
The issue of the place of supply of services is particularly relevant (and often goes beyond the general rules) for the transportation, real estate, tourism, sports, cultural and education industries, as discussed in the regulations mentioned in the box above.
The most common exceptions to the general rule:
- if the recipient has a fixed place of business other than the place of business, the place of service will be the fixed place of business.
- if the recipient of the service does not have an establishment or a fixed place of business, the place of service will be the permanent place of residence or domicile.
In a telegraphic nutshell: a service provided by a businessman from Poland to a counterparty from another EU country will be taxed in the buyer’s country of residence. This means that the Polish seller does not have to calculate the amount of tax, and is only required to prove in the VAT-7 return that he provides taxable services outside Poland.
Is it necessary to register for EU VAT?
Yes, currently (in 2024), any business that intends to conduct cross-border business with counterparties from European Union countries must register for EU VAT. Importantly, this obligation also applies to VAT-exempt entities. After completing the VAT-R form, your company will receive an EU TIN. This is what allows you to do business with companies that are based in the European Union.
Important!
If you run a small business and meet the conditions for VAT exemption, from 2025 you only need to register for VAT in the country where your business is based and file quarterly turnover reports.
How to issue a VAT invoice for a foreign customer?
Every transaction must be evidenced by a sales document – in the case of transactions with a foreign counterparty, there is no exception to this rule, but there are some differences that must be taken into account.
- Invoice language – if we have the option, we can issue the document in the language of the buyer. However, it is much more common for an invoice to be written in English. It is important to note that the Polish tax authorities may require invoices in Polish, so you should prepare the equivalent of English-language documents in case of an inspection from the tax office.
- Currency of the transaction – in a situation where we issue an invoice in euros or another foreign currency (based on arrangements with the buyer), we must remember to include in the Revenue and Expense Ledger (if we have one) the relevant amounts expressed in zlotys, converted according to the exchange rate of the National Bank of Poland.
Important!
How to convert the rate? If the invoice is issued before the service is rendered, the average exchange rate of the currency in question announced by the National Bank of Poland on the day before the invoice is issued is adopted. If we issue the document after the service is performed, we take into account the exchange rate announced the day before the service was performed.
What data does an EU VAT invoice contain?
- The name or company name of the contractor,
- address of residence, registered office or permanent place of business,
- VAT or PESEL number,
- EU VAT number,
- invoice date,
- service/commodity description,
- The price of the service performed/sold goods.
We can easily verify the VAT number mentioned above using the VIES database. Simply enter the country in which the company operates and its VAT number to get a result that allows us to verify the contractor. The VAT number finder is available here.
Important!
If the purchaser of the goods or services is a businessman, the invoice should include net rates and the words “reverse charging “(reverse charge in English), indicating that it is an invoice without VAT for the foreign company – VAT settlement is done by the service recipient in this situation.
However, if you sell to an individual, issue an ordinary invoice and itemize the net and gross amounts and the rate of output tax in accordance with Polish law.
Invoice for a foreign contractor from outside the EU
Many entrepreneurs are looking for an answer to the question: what is the difference between an invoice for a customer from the European Union and one issued to a contractor from outside the EU. In practice, these documents look overwhelmingly the same – as the same regulations apply as for documenting transactions with entities operating in the European Union.
However, there are some differences that can occur between an invoice for a non-EU company and an invoice for a company established in an EU member state. These are mentioned in Art. 106e para. 5(2) of the VAT Act. Such an invoice, therefore, may not include an EU VAT number or any other number that allows identification for tax or value-added tax purposes.
Also, the parties to the transaction do not have to specify the tax rate or the sum of net sales with a split between tax-exempt and taxable sales. Finally, it is worth remembering that an invoice issued to a non-EU company should be marked “reverse charging.”
Invoices to foreign customers vs KSeF
The National e-Invoicing System, although postponed, will seriously affect the process of issuing invoices to foreign customers. Entrepreneurs will be required to issue foreign invoices in KSeF (this is stated in Article 106ga (1) of the VAT Law), but there are several exceptions to this rule, outlined in the next paragraph.
According to the already published regulations, which will come into effect in 2026, transactions such as sales under the VAT OSS, sales covered by the procedures discussed in Chapters 7, 7a and 9 of the VAT Law, or sales to non-business individuals will not have to be documented in the KSeF. Such invoices should be sent to contractors in electronic or paper form.
What next for an invoice issued in KSeF?
The document that a Polish taxpayer issues to a foreign recipient in KSeF will not automatically go to the counterparty. It is the Polish entrepreneur’s responsibility to transmit the invoice in electronic form (e.g. a .pdf file), in traditional form (sending a paper invoice) or in the form of a QR code placed on the invoice. The said code should lead to the invoice in KSeF and allow the contractor to access the document and verify the data.
