Import of services - definition and examples

Service-Tax

Pursuant to Art. 2 point 9 of the VAT Act, the import of services consists in the provision of services for which the taxpayer is the recipient referred to in art. 17 section 1 point 4. The taxpayer for this type of transactions provided by taxpayers who do not have a registered office or a fixed place of business in Poland is therefore the service recipient.

The main issue in determining the import of services is the status of the recipient. Pursuant to Article 17 (1) (4):

  • in the case of services to which Art. 28b - the taxpayer is a legal person, an organizational unit without legal personality and a natural person who independently conducts business activity or a legal person that is not a taxpayer, registered or obliged to register as an EU VAT taxpayer;

  • in other cases, the service recipient is the taxpayer referred to in art. 15, who has a registered office or a permanent place of business in the territory of the country or a non-taxable legal person referred to in art. 15 based in the territory of the country and registered or obliged to register as an EU VAT taxpayer.

The service provider is a taxpayer who does not have a registered office or a permanent place of business in the territory of the country, and in the case of real estate services - this taxpayer is not registered as an EU VAT taxpayer.

Accounting for import of services

The foreign supplier is obliged to issue an invoice in a net amount, in a foreign currency and language, in accordance with the rules in force in the country in which it is established. The correct VAT rate to be used in this case is "eg". In addition, the invoice should contain information that the VAT is settled by the buyer. In the case of a Polish buyer - such an invoice should be settled in accordance with the applicable Polish rates. The recipient has the right to issue an internal invoice for the received purchase document. This right is only available until the end of 2013, while from 1 January 2014 it will be abolished.

The entrepreneur is obliged to independently calculate the VAT on a given transaction. Important information is that the taxpayer can also settle the import on the basis of other available documents.

If the invoice is issued in a foreign currency, the value must be converted into the domestic currency, according to the average exchange rate of the National Bank of Poland as of the day preceding the invoice, and then the VAT should be calculated on the amount obtained.

Imports of services should be included in the VAT-7 or VAT-7K declaration in boxes 27 and 28. In the case of purchase of services to which Art. 28b of the Act - additionally in item 29 and 30. However, in boxes 41 and 42 of the relevant declaration, input tax should be shown. The VAT settlement takes place by the 25th day of the month following the period in which the tax obligation arose. The need to submit a declaration also applies to an entity that is not a VAT payer. In the case of importing services, he is obliged to submit a VAT-9M declaration. Settlement of the tax on goods and services also takes place by the 25th day of a given month. At the same time, the entity is obliged to pay the VAT due resulting from the VAT-9M declaration to the account of the tax office. The tax paid is a tax deductible cost on the date of payment (only for persons who settle their accounts on the basis of the KPiR).

It is worth noting that the transaction of importing services does not require the submission of VAT-EU summary information.

Pursuant to Art. 19 paragraph 19 of the VAT Act, the tax obligation arises upon the performance of the service. If the transaction needs to be documented with an invoice, the moment when the tax obligation arises is determined upon its issuance, but not later than on the 7th day from the provision of the service. In the event of receipt of a payment (e.g. prepayment, advance payment) prior to the performance of the service, the tax obligation arises upon its receipt.

Example 1.

The Polish company purchased forwarding services from a foreign contractor, an advance payment of 20% was paid in March. The company received the invoice in July. When does the tax obligation arise?

In the above case, the date of receipt of the invoice does not affect the moment when the tax obligation arises. Pursuant to Art. 19 paragraph 13 point 2, in the case of the provision of forwarding and reloading services, the tax obligation arises upon receipt of all or part of the payment, but not later than on the 30th day from the date of the service. Therefore, the purchase should be included in the March VAT declaration, as it was then that the advance was paid. Showing the purchase in the VAT return at a later date, e.g. the date of receipt of the invoice, will result in a tax arrears.

To sum up, qualification for import of services requires the fulfillment of 3 conditions:

  1. the service is provided on the territory of Poland,

  2. the service recipient is a taxpayer (may be a legal person, an organizational unit without legal personality or a natural person) having a registered office, permanent place of business or permanent residence in Poland,

  3. the service provider is a taxpayer who does not have a registered office or a fixed place of business in the territory of the country.

For determining the import of services, it does not matter whether the contractor is from the countries belonging to the European Union or from outside the Community.