Normal VAT deduction period
Under standard circumstances, the provisions of the VAT Law apply. Art. 86 par. 10 of the said act stipulates that “The right to reduce the amount of output tax by the amount of input tax arises in the settlement for the period in which the tax obligation arose with respect to the goods and services purchased or imported by the taxpayer.” Moreover, the right to reduce tax arises no earlier than in the settlement for the period in which the taxpayer received the invoice (Article 86(10b)(1)).
Important!
A taxpayer may reduce the amount of tax (i.e., recognize the expense as an expense) only if the goods or services purchased are closely related to the work performed by the company. In other words: any such purchase must be justified and help the business.
So when is the deadline for VAT deduction? Beginning in 2021, the right to deduct VAT is available for as many as three monthly accounting periods or two quarterly accounting periods following the month, or quarter, in which the taxpayer received a VAT invoice.
When can I use quarterly VAT accounting?
Quarterly VAT accounting is available to any business that has the status of a small VAT taxpayer. How to get this status? It is enough to meet one key condition.
In the vast majority of cases, it is sufficient that the value of sales (including the amount of tax) did not exceed €2 million in the previous fiscal year. This amount is expressed in zlotys (in 2023 the limit is PLN 9,654,000).
However, there are exceptions to this rule. If you run a company providing brokerage services, manage investment funds as part of your business, or are an agent (or a person providing services of a similar nature), the limit for qualifying as a small VAT taxpayer will be much lower in your case, at only €45,000 (PLN 217,000).
Important!
New entrepreneurs cannot use quarterly accounting for the first 12 months after filing the VAT-7 return
I lost my invoice and what’s next?
Sometimes invoices – especially those in traditional paper form – get lost somewhere. In such a situation, VAT on the purchase is not deductible, but we can (and should) request a duplicate VAT invoice from the seller. Such a document for the purpose of VAT deduction works the same as the original, so if we receive it, we will be able to reduce the amount of output tax without hindrance – as long as we fit within the standard VAT deduction deadline.
Important!
In the case of a duplicate invoice that has reached the buyer, but has been lost or destroyed, the date of the original invoice counts.
What if the document is found after the deadline for deducting VAT from invoices has passed, or only then do we get a duplicate from the seller? There is a way that will allow us to regain the opportunity to reduce the amount of tax – this is the correction of the JPK_V7 file. This method is quite cumbersome, but if the amount of tax to be deducted is high, it is worth considering adjusting the single control file.
I did not receive an invoice from the seller – how to deduct tax?
If a businessman purchased goods or services, but did not receive a purchase invoice from the seller at all, he is entitled to deduct VAT from the date the duplicate was issued.
Important!
It is up to the buyer to prove that the original purchase invoice did not reach him. So if there is no conclusive evidence of this, it will be safest to try to settle the case within the usual timeframe. However, if you don’t make it, consider making corrections in the actual JPK_V7 file, just to be safe.
Ideal timing for VAT deduction
Some entrepreneurs assume that the sooner they handle all tax deduction matters, the better. Unfortunately, it doesn’t always work that way, and the reason is the distinction between the date of the purchase invoice and the date of its receipt. In accordance with the regulations, we can only deduct VAT when we receive the invoice.
Important!
Mr. Yaroslavl has purchased goods from a company where he regularly places orders. He was at the invoice and knows exactly how much tax he paid, and therefore in good faith he wants to deduct the tax as soon as possible and does so the very next day – a few days before the end of June. However, the seller collects several invoices from different orders and sends them all by registered mail, which does not reach Mr. Jaroslaw’s company until July. As a result, Mr. Yaroslav may face tax consequences because he deducted the amount of input tax from the amount of tax due from not that month.
So what is the ideal time to deduct VAT? This is the period from the date of receipt of the sales document, but no longer than the end of the third month following the month of receipt of the invoice or the end of the second quarter following the quarter in which the entrepreneur received the invoice.
Slim VAT 3 – what has changed in 2023?
Goods and services tax is not one of the simplest taxes in Poland. Entrepreneurs must be on guard against making costly mistakes, and handling VAT can often be problematic. The Slim VAT package, which aims to simplify VAT, was supposed to be the answer to entrepreneurs’ comments. Its latest iteration, Slim VAT 3, has been in operation since 2023. What changes did it make in the context of VAT deduction?
Higher limits for small VAT taxpayers
Earlier in the article, we talked about small VAT taxpayers and the conditions that must be met to qualify for quarterly VAT accounting. It was with the Slim VAT 3 package that the sales limit for small VAT taxpayers was increased (from €1.2 million to €2 million).
Exchange rates when adjusting an invoice
Also important in the context of deducting VAT from invoices is a change regarding the exchange rates taken into account when settling corrective invoices to invoices issued in foreign currency. If the invoice adjustment includes a change in the amounts on the document, the same exchange rate for the currency in question must be used as on the original invoice. However, if the situation involves a cumulative adjustment invoice, the average exchange rate of the currency in question on the last business day before the date of the adjustment invoice should be taken into account.
VAT on intra-community transactions
And another change caused by the introduction of the Slim VAT 3 package – before 2023, a VAT taxpayer had to be in possession of an invoice confirming the transaction no later than three months after declaring the VAT. If the taxpayer did not receive such an invoice on time, he had to deduct the amount of input tax for the period in which the deadline passed. As of 2023, it is no longer necessary to have an invoice to be able to deduct VAT on intra-Community acquisitions of goods.
There have been changes in the context of intra-Community delivery of goods. Until 2023, the WDT should have been included in the settlement, taking into account when the delivery was made (in the same period). After the changes introduced by Slim VAT 3, it is possible to settle WDT for the period of tax liability.
What should you do if you lack the funds to pay your taxes?
The so-called. “vaters” can deduct only part of the VAT. What should we do when we lack the funds to pay the amount of tax due? We have several options.
The first is to submit an application to the US to spread the installment payments. However, this procedure is time-consuming and involves numerous formalities, which makes relatively few entrepreneurs opt for it.
Another common solution is to take out a loan from a bank. Here, too, we will encounter numerous formalities. What’s more, banks are reluctant to lend to companies that have tax arrears. At this point, it is also worth mentioning loans and instant loans, which, as we all know, involve high costs and risks.
There is a solution available on the market that allows entrepreneurs to get the necessary funds to pay their taxes even in a few minutes. This service is PragmaGO tax financing. All you have to do is go to the application, which can be found here, and fill in the necessary data and then confirm your identity. You can gain funds to pay PIT, CIT, VAT or Social Security. The entire process is done online, and payment can be spread over up to 12 monthly installments. Remember, however, that each tax is a separate application.
Want to know more about the tax financing service? Check out the details of the offer.
