VAT records - how to keep it correctly?

Service-Tax

Accurate determination of the amount of tax on goods and services due is possible thanks to properly kept records. Also, the amount of input tax is determined on the basis of VAT records. In the light of the above, it can be seen how important it is for active VAT payers the obligation to make entries in the relevant register in a reliable and faultless manner. Moreover, the Act on tax on goods and services provides for the necessity to keep records also for categories of entities other than the above-mentioned. active VAT payers. Who is the VAT register for?

VAT records of active taxpayers

Taxpayers who are obliged to pay the tax due on the sale and have the right to deduct input tax (the so-called active VAT taxpayers) are obliged to keep full records for the purposes of VAT. As it results directly from the content of Art. 109 paragraph. 3 of the VAT Act of the above-mentioned taxpayers are required to keep records containing the data necessary for the correct preparation of the tax return and summary information. The said provision also specifies mandatory elements that should be included in every record. Such a document should contain, in particular, the data necessary to determine the subject and base of taxation, the amount of tax due, adjustments of output tax, the amount of input tax reducing the amount of output tax, adjustments of input tax, the amount of tax to be paid to the tax office or refunded from this office, and also other data used to identify individual transactions, including the number by means of which the counterparty is identified for the purposes of tax or value added tax.

It is worth adding that under the amending act, from January 1, 2018, a new Art. 109 paragraph. 8a, which provides that the above VAT register is to be obligatorily kept in electronic form with the use of computer programs. This change was introduced due to the need to send the tax authorities the Uniform VAT Control Files, which take an electronic form. This is directly stated in Art. 82 § 1b of the Tax Ordinance. This regulation states that legal persons, organizational units without legal personality and natural persons keeping tax books with the use of computer programs are obliged, without calling the tax authority, to provide the Head of the National Revenue Administration with information about the kept records, by means of electronic communication, about referred to in Art. 109 paragraph. 3 of the VAT Act, for monthly periods by the 25th day of the month following each subsequent month, indicating the month to which this information relates.

VAT records of exempt taxpayers

The obligation to keep records for VAT purposes also applies to entities benefiting from the subjective VAT exemption. Pursuant to Art.113 of the VAT Act, this exemption is available to taxpayers whose sales value did not exceed PLN 200,000 in total in the previous tax year. Although the entities covered by the above regulation do not have to pay the tax due on the sale, however, pursuant to Art. 109 paragraph. 1 of the VAT Act, are required to keep a sales record for a given day, but not later than before the sale on the next day. The main purpose of introducing this obligation is to determine the moment at which the value of sales entitling to tax exemption may be exceeded.

Unlike in the case of the register of active VAT payers, the provisions of the Act do not specify detailed requirements as to the structure and principles of keeping the register of exempt sales. Consequently, any form of record is allowed as long as the date and volume of the sale can be determined on its basis. Additionally, due to the fact that taxpayers exempt from VAT are not obliged to send SAF-T, the register does not have to be kept in electronic form.

Incidentally, it is worth emphasizing that taxpayers who are subjectively exempt from VAT do not have to keep records of the purchased goods and services. Such a register is unnecessary as they are legally deprived of the right to deduct input tax.

The second group of taxpayers who do not have to pay the output tax on account of the sale are entities exempt from VAT. The objective exemption described in Art. 43 and art. 82 of the VAT Act, due to the performance of specific activities that were excluded from the scope of taxation under the Act. The objective exemptions do not depend on the turnover, which means that for this category of taxpayers it is not necessary to keep VAT records. The exclusion from the need to keep relevant records results directly from the content of Art. 109 paragraph. 3 of the VAT Act.

VAT records in the case of intra-Community acquisition of goods

A special type of exemption is described in Art. 10 sec. 1 point 2 of the VAT Act. The activity of intra-Community acquisition of goods carried out by:

  • flat-rate farmers for their agricultural activities,

  • taxpayers who only perform activities other than those subject to tax and who are not entitled to reduce the amount of tax due by the amount of input tax on the purchase of goods and services,

  • taxpayers exempt from tax,

  • legal persons that are not taxpayers.

The above exemption applies only to the intra-community value of up to PLN 50,000 during the tax year. As a result, exceeding the indicated limit causes the necessity to pay VAT on intra-Community acquisition of goods, even if the taxpayer benefits from tax exemption. This results in the necessity to monitor the value of goods purchased under the Intra-Community Investigation Framework. This obligation is referred to in Art. 109 paragraph. 11 of the VAT Act, which stipulates that entities exempt from VAT and at the same time performing intra-Community acquisition of goods should keep records on the basis of which the value of goods purchased by them from other Member States can be determined. The VAT register should be kept in such a way as to ensure that the date on which the value of goods purchased by these entities from other Member States exceeds PLN 50,000 is indicated.

Sales records with the cash register

As the analysis of the provisions of Art. 111 sec. 1 of the VAT Act, taxpayers selling to natural persons who do not conduct business activity and flat-rate farmers are required to keep records of turnover and amounts of tax due using cash registers. The rules for keeping these records, using the relief for the purchase of a cash register and the exemption of certain groups of taxpayers from the obligation to use cash registers are regulated both by the provisions of the VAT Act and the Regulation of the Minister of Development and Finance on exemptions from the obligation to keep records using cash registers and on cash registers .

Finally, it is worth noting that pursuant to Art. 112 of the VAT Act, all taxpayers, both active and VAT exempt, keep records and all documents helpful in tax settlements until the tax liability expires.