When does the buyer issue an invoice documenting the sale transaction?
The general rule is that a business entity selling to another company is required to document the transaction by issuing an invoice. However, there are situations in which it is not the seller who issues the invoice, but the buyer himself. When does the buyer issue an invoice? What conditions must be met for this to be possible?
Self-billing - what is it?
In the case of self-invoicing, the obligation to issue an invoice changes - the seller no longer has it, because it is transferred to the buyer of a given service or good. Self-billing is not a standard situation and there are a number of conditions that must be met in order to do so.
When the buyer issues an invoice - conditions to be met
Pursuant to Art. 106d paragraph. 1 of the VAT Act, in order to be able to use self-invoicing, it is necessary to conclude an agreement between the seller and the buyer. The contract should include the conditions for documenting the transaction and the method of approving the invoices issued by the seller. The approval of the issued invoice does not have to be done by signing it. How the seller approves the invoice, the parties should specify in the contract and have full freedom in this matter. This means that the confirmation may be e.g.email or phone message, and silent approval.
Confirmation of the above is the individual interpretation of the Director of the National Tax Information of October 3, 2018, ref. No. 0112-KDIL1-3.4012.473.2018.2.KB, in which we read that:
„[…] Since no provision in the field of VAT specifies in what form the approval of invoices issued in the self-invoicing system is to be made, nor indicates any unacceptable forms of approval, it should be assumed that each form of invoice approval specified by the parties to the self-invoicing agreement - including acceptance of invoices - is admissible, correct and meets the conditions of art. 106d paragraph. 1 of the VAT Act”. Self-billing contractors opting for "tacit invoice acceptance" should set a date within which the vendor may raise objections to the invoice. If, after this period, the seller does not raise any objections, then it is assumed that the invoice has been accepted and the buyer is entitled to deduct the input tax from this invoice. Example 1.
Mr. Grzegorz runs a sole proprietorship. Prepared a self-billing agreement with the buyer of services, in which it was agreed that the invoice would be accepted by the seller in the form of an e-mail. 30 days have passed since the invoice was issued, and the buyer has not received information about the acceptance. So it concluded that the seller had no objections and deducted the VAT from the invoice. Did he do the right thing?
No, if the self-invoicing agreement stipulates that the seller will give approval by e-mail, the buyer should obtain such confirmation before deducting VAT.
Mrs. Agata, who runs a wholesaler of cosmetic accessories, concluded a self-billing agreement with her regular client. The contract states that the approval of the invoice will be "silent". Agata has 30 days from receiving the invoice to raise objections. Did the buyer act correctly, deducting VAT after 30 days from the delivery of the invoice?
Yes, due to the fact that the contract contains information that the invoice will be accepted in a silent form, after the agreed period, the buyer has the right to recognize that the invoice has been accepted and to deduct the input VAT.
The buyer issues an invoice documenting the sale when the following conditions are met:
- a self-billing agreement has been concluded between the buyer and the seller,
- The contract contains information on how the seller approves
The buyer issues an invoice - what are the deadlines for issuing documents?
As a rule, the taxpayer making the sale is obliged to issue a sales invoice by the 15th day of the month following the month of sale. Therefore, if the delivery of goods or the provision of a service takes place, for example, in May 2020, then the invoice should be issued by June 15 of the same year.
The same regulations apply when the issuing entity is the buyer. Nothing changes in this regard. Therefore, if the delivery of goods or the provision of services takes place, for example, in May, then in the case of self-invoicing, the buyer issues an invoice by 15 June.
Art. 106i sec. 1 of the VAT Act:
„The invoice shall be issued no later than on the 15th day of the month following the month in which the goods were delivered or the service was performed, subject to paragraph 2-9 ".
Additional invoice annotation
The information that should be included in the sales invoice is specified in Art. 106e of the VAT Act. In the event of self-billing, the buyer should follow the same rules. Additionally, it is obligatory to include the annotation "Self-invoicing" on the invoice issued. Start a free 30-day trial period with no strings attached!
Numbering series when the buyer issues an invoice
Sales invoices should have their own numbering series. Invoice numbers within it should be assigned sequentially and clearly identify the invoice. In the case of self-billing, it may happen that the invoices have a different numbering series than the sales invoices issued by the seller. It is possible to use several numbering series, but it is important that consecutive numbers are assigned within a given numbering. If the person responsible for issuing the invoice is the buyer, then the buyer is obliged to issue an invoice with a sequential number within the numbering series used, so that the so-called numbering gap.
The buyer issues an invoice in the wFirma.pl system
In the wFirma.pl system, it is possible to invoice the sale by the seller. However, in order to take advantage of the buyer's self-invoicing option, the following steps would have to be performed.
In the first instance, the taxpayer should add a new, separate numbering series for self-billing. To do this, go to the tab: SETTINGS »INVOICES» NUMBERING SERIES »ADD SERIES.
For details on adding a numbering series, see the help article: Selecting a Document Numbering Series.
Then, issue an invoice using the tab: REVENUE »SALES» EXHIBITION »INVOICE, where in the window that appears, complete the required fields and select the one for self-billing in the SERIES field.
Additionally, in the DESCRIPTION field you should include an additional annotation SELF-INVOICING.
Then go to the ACCOUNTING tab and in the field ACCOUNTING EFFECT select the option DO NOT ACCOUNT - then the document will not be included in any records.
After the invoice is issued, it should be generated and handed over to the seller.
After receiving the invoice approval from the seller, it should be booked in tax costs.
To do this, go to the tab: EXPENDITURE »ACCOUNTING» ADD »VAT INVOICE / INVOICE WITHOUT VAT, where you must select the appropriate type of expenditure and fill in the required fields of the form with the data from the invoice.
The entry will be included in the KPiR column corresponding to the type of expenditure and in the VAT register of purchases.