Applicable regulations
Under current Polish regulations, not every entrepreneur is required to be a VAT payer. Some business owners can afford to choose – to pay VAT or not, although they must meet certain conditions to do so. Of course, there are situations in which a business person is required to become a VAT payer. For example, when transactions are made for goods such as coins or various types of jewelry. This includes any goods subject to excise taxes. However, if the entrepreneur in question runs a company whose annual revenue does not exceed 200,000. PLN, he has every right not to be a VAT payer.
When is it worth considering a VAT exemption?
While in many cases being a VAT payer is profitable, there are situations in which it is worth considering not paying VAT. Here are some of them:
- the vast majority of customers also don’t pay VAT – individual customers can’t deduct VAT anyway, so they don’t care about being able to get a VAT invoice,
- the company is run on a small scale and is accounted for in a simplified form (lump sum),
- the entrepreneur cares about reducing paperwork – when running the company alone or with a small team, this can be useful, as it will reduce accounting costs, for example.
However, it is important to note that those who are not VAT payers cannot deduct certain amounts from tax, and will therefore pay the full gross amount for business purchases. VAT taxpayers can reduce the amount paid by the value of VAT (usually 23%).
Another big disadvantage is that many companies require their contractors to be able to issue a VAT invoice. When this is not possible, for example, because the entrepreneur in question is not a VAT payer, there is a high risk that a potential customer will not decide to cooperate. However, there are situations in which large companies take advantage of small entrepreneurs who do not pay VAT. What does such a settlement look like?
Issuing an invoice from a non-taxpayer to a vatpayer – is it possible?
A businessman who is not a VAT payer has, of course, the possibility (and in some situations even the obligation, about which more later) to issue an invoice. However, there is no information on such documents about the rate and amount of VAT. Instead, the customer will find a mention that the company in question is not a VAT payer. From the perspective of a company that pays VAT, such a document can be very problematic. Let’s see what the circumstances of a non-vat invoice may look like.
In Art. 106b para. 3 Law on Value Added Tax there is a provision according to which a VAT-exempt entrepreneur is obliged to issue an invoice to the purchaser of goods or services, if the request for its issuance was made within 3 months, counting from the end of the month in which the goods were delivered, the service was performed or the payment was received (in full or in part)
What should such an invoice contain?
An invoice from a non-vaxpayer to a vatpayer must contain the following information:
- date of the invoice,
- a number to uniquely identify the document,
- information about each party, such as company name, name or address, tax ID number,
- the name of the good or service that is the subject of the transaction,
- the measure and number of goods delivered or the extent of services rendered,
- the unit price of the good or service,
- the amount of total receivables.
In addition, an invoice from a non-vaxpayer to a vatpayer must indicate the legal basis that entitles the issuer to be exempt from VAT. It can be:
- the provision of the law or an act issued pursuant to the law under which the invoice issuer applies the tax exemption. As a rule, it will be Art. 113 of the Value Added Tax Law. According to this law, sales made by taxpayers whose sales value did not exceed a total of PLN 200,000 in the previous fiscal year are exempt from tax,
- the content of Directive 2006/112/EC, which exempts a given supply of goods or services from tax,
any other legal basis that clearly indicates that the supplier of goods or the company providing services enjoys VAT exemption.
Important!
An invoice from a non-vat for a vatmaker does not contain several pieces of information. You won’t find on it the tax rate, the sum of net sales, or the amount of tax on the sum of net sales.
Is it possible to deduct VAT when the issuer is not a vatovator?
At this point we come to the point, because this is by far the most important issue for VAT payers who receive an invoice from a non-VAT. As a rule, entrepreneurs making business-related purchases deduct VAT on the basis of a VAT invoice. In the case of an invoice from a non-taxpayer to a taxpayer, the issue is somewhat different. This is because there is no information on the rate and amount of VAT on the document.
Important!
The purchaser can book such an invoice, but cannot put it in the VAT purchase register. Such an invoice does not allow VAT deduction. The invoice recipient can therefore only deduct the cost in the income and expense ledger.
Invoice from a non-vat for a vatmaker – summary
Although for entrepreneurs whose revenue does not exceed 200,000. PLN per year, opting out of being a VAT payer can be a beneficial solution on a daily basis, it is important to be aware of certain risks. In the case of an invoice from a non-vatvat holder to a vat holder, such a document does not allow the recipient to deduct VAT. This, in turn, translates into a final higher cost of buying goods or using services. This is the most important of the reasons why many companies, when looking for a contractor, are primarily guided by whether the entrepreneur selling the goods or providing the service has the ability to issue a VAT invoice.
On the other hand, opting out of being a vatovator works well when the majority of customers are also non-vatovators. For example, if an entrepreneur retails or makes goods to order for individual customers. Thus, all the advantages and disadvantages of each solution should be well considered.
