Purchase from a flat-rate farmer and VAT settlement

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In most cases, the seller is obliged to document the transaction, and for this purpose, he issues an invoice. There are, however, exceptions to this rule. The most popular of them include purchases from flat-rate farmers. Find out how the purchase from a flat-rate farmer should be documented!

Who is a flat-rate farmer?

Pursuant to Art. 2 clause 19 of the Value Added Tax Act by a flat-rate farmer should be understood as a farmer supplying agricultural products from his own agricultural activity or providing agricultural services, who benefits from VAT exemption pursuant to Art. 43 sec. 1 point 3. A farmer obliged under other regulations to keep accounting books is not a flat-rate farmer.

Lump sum as a form of taxation of a flat-rate farmer

A flat-rate farmer is entitled to a lump-sum tax refund. This amount is paid by the buyer of agricultural products. The flat-rate tax until the end of 2016 is 7% (later 6.5%).

What about the invoice?

Pursuant to Art. 116 sec. 1 of the VAT Act, in a situation where the buyer of agricultural products is an active VAT payer, he is obliged to issue an invoice for this circumstance. It should be prepared in duplicate, and the original must be handed over to the seller.

What data should such a document contain?

The invoice documenting the purchase of agricultural products should be marked as "VAT RR invoice" and should contain at least:

  1. name and surname or name or short name of the supplier and buyer and their addresses;
  2. tax identification number or PESEL number of the supplier and buyer;
  3. the number of the supplier's identity card or other document confirming his identity, the date of issue of this document and the name of the authority that issued the document, if the flat-rate farmer delivering agricultural products is a natural person;
  4. the date of purchase as well as the date of issue and the sequence number of the invoice;
  5. the names of the agricultural products purchased;
  6. unit of measure and quantity of agricultural products purchased and indication (description) of the class or quality of these products;
  7. unit price of the purchased agricultural product without the amount of the flat-rate tax refund;
  8. value of purchased agricultural products without the amount of the flat-rate tax refund;
  9. flat rate tax refund;
  10. the amount of the flat-rate tax reimbursement on the value of purchased agricultural products;
  11. value of purchased agricultural products with the amount of the flat-rate tax refund;
  12. the total amount due together with the flat-rate tax refund, expressed digitally and in words;
  13. legible signatures of persons authorized to issue and receive invoices or signatures as well as the names and surnames of these persons.

In addition, a necessary element of the invoice is the flat-rate farmer's declaration, which should read: “I declare that I am a flat-rate farmer exempt from tax on goods and services pursuant to Art. 43 sec. 1 point 3 of the Act on tax on goods and services. ".

Purchase from a flat-rate farmer and invoice settlement by the buyer

The issue of deducting VAT by the buyer of agricultural products from the VAT-RR invoice depends on whether the liability in this respect has been settled by bank transfer or cash.

Pursuant to Art. 116 sec. 6 of the act on tax on goods and services, a flat-rate tax refund increases the amount of input tax for the purchaser of agricultural products in the settlement for the settlement period in which the payment was made, provided that:

  • the acquisition of agricultural products is related to a taxable supply;
  • the payment of amounts due for agricultural products, including the amount of the flat-rate tax refund, was made to the bank account of the flat-rate farmer no later than on the 14th day from the date of purchase, except when the farmer concluded an agreement with an entity purchasing agricultural products specifying a longer payment term;
  • the document confirming the payment of amounts due for agricultural products will include the number and date of issuing the invoice confirming the purchase of these products, or the invoice confirming the purchase of agricultural products provides the identification data of the document confirming the payment.

It is worth emphasizing that the date of payment is the date of issuing the bank instruction to transfer funds to the bank account of the flat-rate farmer, if the instruction has been fulfilled.

To sum up, in a situation where the liability is settled in cash, an active VAT payer cannot deduct the flat-rate tax.

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What if the buyer of agricultural products is not registered as an active VAT payer?

The provisions of the act on tax on goods and services do not apply to the case when the purchaser of agricultural produce from a flat-rate farmer is an entity exempt from VAT. Certainly, the recipient is not entitled to issue a VAT-RR invoice. How then should the purchase be documented?

The Tax Ordinance does not oblige flat-rate farmers to issue invoices. But it also does not prohibit them from doing so. Therefore, in order to document the sale of agricultural products to the entity benefiting from the VAT exemption, the flat-rate farmer may issue an invoice containing the following data:

  • account number;
  • the date of its issue;
  • date of sale,
  • farmer and buyer data,
  • type and quantity of agricultural products sold,
  • unit price,
  • the total amount payable for the sale, both numerically and in words.

Important!

Pursuant to Art. 87 par. 2 of the Tax Ordinance, the obligation to issue an invoice is the responsibility of the flat-rate farmer who sells his products in separate, permanent places of sale, outside the area of ​​cultivation or breeding.

In a situation where the farmer does not want to or cannot issue an invoice to document the cost, the taxpayer, in accordance with the Regulation of the Minister of Finance on keeping the tax book of revenues and expenses, may issue an internal document. In accordance with par. 14 (1) with internal evidence can be documented, inter alia:

  • purchase, directly from a domestic producer or breeder, of plant and animal products, not processed industrially or processed industrially, if the processing involves ensiling plant products or milk processing, or slaughtering slaughter animals and post-slaughter treatment of these animals;
  • purchase from the public, classified in the Polish Classification of Products and Services (PKWiU), raw materials of herbal plants and wild forest herbs, berries, forest fruits and forest mushrooms (PKWiU ex 02.30.40.0);
  • the value of plant and animal products from the taxpayer's own cultivation or breeding.

Internal evidence must be accompanied by:

  • the date;
  • the name of the goods;
  • quantity of purchased goods;
  • the unit price of the goods;
  • value;
  • signatures of those who made the expenses directly.

In a situation where these products were purchased for resale, the taxpayer should record the internal document in col. 10 of the KPiR - purchase of commercial goods and basic materials. The list of purchased products with prices should be attached to the prepared DW.