VAT deduction from utilities


Special solutions in the Value Added Tax Act define the moment when the tax obligation arises and the rules for deducting VAT from utility invoices. Although this is a segment of very universal services, it is worth knowing what exceptional regulations they are subject to.

The media include, among others:

  • electricity, heat, cooling, gas,
  • telecommunication services,
  • water treatment and supply via water supply networks,
  • sewage disposal and treatment,
  • garbage sweeping and snow removal.

Contracts and invoices for the supply of utilities, as well as the provision of services in this area, contain a specific payment date, with which the moment of tax obligation arises. Pursuant to the VAT Act, the tax obligation arises upon the expiry of the payment deadline from the invoice, which should additionally contain information about the settlement period it relates to.This is not the same as actually making the payment.

In practice, it often happens that invoices for media are issued for several periods, the so-called collective invoices. However, the taxpayer cannot deduct input tax at one time. If a separate payment date has been indicated for each settlement period, the value of VAT should be accounted for separately in each period. Accordingly, the VAT deduction in this case is not affected by the invoice issuance date or the date of the actual liability payment.

It is also worth recalling that in a situation where the tax has not been deducted by the specified date, the taxpayer has the option of using this option in two consecutive accounting periods. With monthly settlement - in two consecutive months, and quarterly - in two consecutive quarters.