No annotation on the invoice "cash method" - what then?

Service-Tax

Small taxpayers can choose the cash method of VAT settlement. In this situation, the VAT settlement will depend on the moment of receipt of all or part of the receivables from the contractor. Read the article and check what elements an invoice issued with this method should contain and what are the consequences of not using the "cash method" annotation.

Checkout method in VAT - basic information

Settlement with the cash method consists in paying VAT, as a rule, only when the payment is received from the recipient of the goods or service. However, it should be remembered that in such a situation, an appropriate notification should be made to the competent head of the tax office. Pursuant to the provisions of the VAT Act, small taxpayers are entities:

  • in which the value of sales did not exceed the amount expressed in PLN in the previous tax year, corresponding to the equivalent of EUR 1,200,000,
  • running a brokerage company, managing investment funds, being an agent, commissioner or other person providing services of a similar nature, with the exception of a commission commission - if the amount of commission or other forms of remuneration for the services rendered (including the tax amount) did not exceed in the previous tax year expressed in PLN the amount corresponding to the equivalent of EUR 45,000

- the conversion of amounts expressed in euro is made according to the average euro exchange rate announced by the National Bank of Poland on the first business day of October of the previous tax year, rounded up to PLN 1,000.

In 2020, the limit is rounded to PLN 5,248,000, in the case of taxpayers conducting brokerage activities - PLN 197,000 The tax obligation for small cash-based taxpayers arises:

  • on the day of receiving all or part of the payment - when goods are delivered or services are provided to a taxpayer registered as an active VAT taxpayer;

  • on the date of receipt of all or part of the payment, but not later than 180 days from the date of delivery of the goods or performance of the service - if they relate to a different entity (an entrepreneur exempt from VAT or a private person).

What data on the invoice for the VAT checkout method?

Pursuant to Article 106e of the VAT Act, the invoice should contain elements such as:

  • date of issue;

  • sequential number from one or more series that uniquely identifies the invoice;

  • the first and last names or names of the taxpayer and the buyer of the goods or services and their addresses;

  • the number by which the taxpayer is identified for tax purposes;

  • the number by which the buyer of goods or services is identified for the purposes of tax or value added tax;

  • the date of the delivery or completion of the delivery of the goods or the performance of the service or the date of receipt of payment, if specified and different from the date of the invoice;

  • name (type) of goods or services;

  • measure and quantity (number) of goods delivered or scope of services rendered;

  • the unit price of a good or service without the tax amount (net unit price);

  • the amount of any price rebates or reductions, including in the form of an early payment rebate, provided that they are not included in the net unit price;

  • value of the goods delivered or services performed, covered by the transaction, excluding the tax amount (net sales value);

  • tax rate;

  • the sum of the net sales value, with the division into sales subject to individual tax rates and sales exempt from tax;

  • the amount of tax on the sum of the net sales value, broken down into amounts related to individual tax rates;

  • total amount due

Additionally, it should be emphasized that pursuant to Art. 106e (1) (16), in the case of taxpayers settling using the cash method, the invoice should additionally include the annotation "cash method".

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No annotation on the invoice "cash method"

Entrepreneurs may have doubts about what to do if they forget to include the information on the cash method on their invoice. It should be noted that such an obligation arises directly from the provisions of the VAT Act. In addition, it is worth emphasizing that such a marking is also an indication for the buyer as to the method of deducting VAT. The right to deduct VAT from invoices containing the indication "cash method" arises in the settlement for the period in which the supplier arose the tax obligation, i.e. upon receipt of all or part of the payment, and not earlier than in the settlement for the period in which the taxpayer received the invoice . In such a situation, the entrepreneur will be obliged to issue a correcting invoice, on the basis of which a note about the cash method should be added. To confirm this position, the individual interpretation of the director of the Tax Chamber in Warsaw of January 12, 2016, ref. No. IPPP1 / 4512-1151 / 15-5 / AS, which stated:

(...) the provisions of the act clearly indicate in which cases the taxpayer is obliged to issue a corrective invoice and what elements should be included in the correcting invoice. If a mistake is found in any item of the invoice, the taxpayer is obliged to correct the original VAT invoice. The annotation "cash method" is based on Art. 106e paragraph. 1 point 16 of the Act, a necessary element on the invoice in the case of delivery of goods or services, in relation to which the tax obligation arises in accordance with art. 19a paragraph. 5 paragraph 1 or article. 21 sec. 1 of the Act, therefore, the lack of this annotation causes the invoice to be erroneous, resulting in the need to issue a correcting invoice.

Therefore, it should be stated that entrepreneurs settling using the cash method in VAT are obliged to include in the invoice the information "cash method". The lack of such information results in the necessity to issue a correcting invoice, by means of which the entrepreneur will complete the necessary information.