When to deduct VAT on the purchase of commercial goods?

Service-Tax

Entrepreneurs who are active VAT payers must settle VAT with the tax office. In order to be able to pay properly, they must keep records of purchases and sales. Find out when to deduct VAT on the purchase of commercial goods?

When to deduct VAT on the purchase of commercial goods?

The entrepreneur is entitled to deduct VAT on purchases under Art. 86 point 1 of the VAT Act. According to the regulation, the taxpayer may reduce the amount of output tax by the amount of input tax. As a rule, this right is granted to the extent to which the goods and services are used by the entrepreneur to perform taxable activities.

Important!

The amount of input tax should be the sum of the tax amounts resulting from purchase invoices received by the taxpayer for the purchase of goods and services, for partial or full payment prior to the purchase of goods or the provision of a service.

It should also be remembered that in the case of importing goods, the basis for deduction of VAT is the customs document.

When to deduct VAT on the purchase of commercial goods - the moment when the tax obligation arises

The taxpayer acquires the right to reduce VAT on purchases when the tax obligation arises, not earlier than in the settlement for the period in which he received the invoice or customs document.

The moment when the tax obligation arises is considered:

  • the moment of delivery of goods and performance of the service,

  • the moment of making the payment (in whole or in part) for the received goods or the service provided.

If the taxpayer fails to deduct VAT on time, it is possible to deduct the tax in the declaration submitted for one of the next two accounting periods.

It is also worth remembering that the purchase of commercial goods may be recognized by the taxpayer in the revenue and expense ledger as a tax deductible cost, even if the goods are not sold.

Deduction of VAT on commercial goods by examples

Example 1.

In January 2017, the entrepreneur received an invoice for the purchase of commercial goods, but did not deduct VAT from the expense incurred in the current billing period because he forgot. In such a situation, what should the taxpayer do, assuming that he submits VAT returns monthly?

In this situation, the taxpayer has the right to deduct VAT from the expenditure in one of the two subsequent accounting periods, i.e. in February or March.

Example 2.

The taxpayer purchased commercial goods from the company, and therefore received an invoice with the issue date 19.01.2017 and the date of completion of the delivery of goods on 01.02.2017. The document was received by the entrepreneur on the day of delivery of the goods. Therefore, when can an entrepreneur deduct VAT from the expenditure incurred?

The taxpayer has the right to deduct VAT in February, i.e. in the settlement period when he received the accounting document. If he fails to do so, he will be entitled to deduct for two more tax periods, i.e. in March or April.

Example 3.

The monthly taxpayer forgot to settle invoices for the purchase of commercial goods that he received in January 2017. Can he therefore deduct VAT in the current period for May 2017?

The taxpayer cannot deduct VAT in the current declaration for May 2017 from the invoice received in January 2017, because according to the law, he can only do so for three billing periods from the moment of receiving the document. In these circumstances, the taxpayer may deduct VAT from the invoice by correcting the VAT-7 declaration for January 2017.

Posting the purchase of commercial goods in the wfirma.pl system

Invoices for the purchase of commercial goods are posted in the wfirma.pl system using the tab: EXPENSES »ADD EXPENSES» VAT INVOICE or INVOICE (WITHOUT VAT) »PURCHASE OF COMMERCIAL GOODS AND BASIC MATERIALS. Purchasing documents can be posted by entering:

  1. invoice summary (Rates tab) or

  2. by entering all items of the invoice (Items tab). The second method updates the product catalog.

After saving the expenditure for the purchase of goods or materials, it will be entered in col. 10 of the Book of Income and Expenditure - purchase of commercial goods and materials and in the VAT Purchase Register in order to deduct VAT.