Cash method - small taxpayer invoice
When making a transaction as part of a business, it may happen that the entrepreneur receives an invoice from the counterparty, which will include the phrase "cash method". What does it mean and how should this type of document be accounted for?
Invoices with the obligatory phrase "cash method" are issued by small taxpayers who have opted for the cash method of accounting. These are entrepreneurs whose sales value, including the tax amount, did not exceed EUR 1,200,000 in the previous tax year. In 2013, this value in PLN is PLN 4,922,000. The cash-based method may also be chosen by taxpayers who run a brokerage house, manage investment funds, who are agents, contractors or other persons who provide services of a similar nature. In such a case, the amount of commission or remuneration for the services rendered may not exceed EUR 45,000.
In practice, an invoice from a small tax payer does not differ from classic invoices, with the exception of the phrase "cash method". However, you should know that such documents are accepted slightly differently than those received from taxpayers using the accrual method.
The difference here is the settlement of input VAT. This tax may be deducted only when the taxpayer pays the amount due for a specific invoice. Similarly, if the sum has been paid only in part, it is possible to deduct that part of the VAT that is attributable to the settled amount.
Similarly, a small taxpayer using the cash method is settled in a slightly different way when it comes to output VAT. In this case, the entrepreneur is also not obliged to pay the tax until the moment when he does not receive the payment for the invoice issued. The only exception is the sale to passive VAT payers - in such a situation, a small taxpayer must settle the output tax within 180 days.
As you can see, the "cash method" invoice does not differ in practice from classic invoices. It will not be a problem for an entrepreneur who pays all debts on time. However, the problem may arise with an unreliable contractor - then it is worth remembering that without paying the invoice, it is not possible to settle VAT.