Positive invoice correction - when to show VAT?

Service-Tax

Entrepreneurs know very well that in business practice, sales invoices are often corrected. The vast majority of such documents are corrective invoices reducing the tax base, often referred to as "in minus". However, there are also reasons the consequence of which is an increase in the price. How, then, should the invoice correction in plus be recorded in the seller's VAT records (increasing the tax base, the so-called “in plus”)? We explain below.

Invoice correction is a plus - ambiguous position of the authorities

When analyzing the tax interpretations issued so far, one can encounter various positions as to the method of settling invoice corrections “in plus”. The main problem of taxpayers is determining the correct date of inclusion of an invoice in the VAT sales register

Director of the Tax Chamber in Bydgoszcz in the tax interpretation of February 1, 2013, ref. No. ITPP1 / 443-1364 / 12 / MN stated:

"Taking into account the facts of the case described in the application and the legal status referred to above, it should be stated that the circumstances indicated by the Applicant, the occurrence of which causes the necessity to correct the invoice in plus in terms of the tax base and the amount of tax due, cannot, in the opinion of the authority , be considered unforeseeable at the time of issuing invoices documenting the delivery of goods by the Applicant. The presented facts show that after the sale, the Applicant is aware that there may be reasons causing a change in remuneration (...). In this case, therefore, it cannot be considered that the reason for issuing corrective invoices will be additional circumstances that could not be foreseen on the date of issuing the original invoice, and which occurred after the initial sale, because both parties to the transaction were aware of the possibility of changing the price as a result of carrying out the analyzes. - in connection with this fact - issuing a correcting invoice by the Applicant after obtaining information in this regard from the buyer.

In the light of the above, it should be stated that the output tax resulting from the correction of the invoice increasing the remuneration for the delivery of goods should be shown in the settlement period in which the original invoices were settled. "

A completely different position (favorable for taxpayers) was presented by the Director of the Tax Chamber in Warsaw in the interpretation of September 4, 2013, ref. No. IPPP1 / 443-1599 / 11 / 13-5 / S / EK, stating that:

“The applicant will be obliged to settle the issued correcting invoices increasing the price in the settlement for the period in which they are issued. The reason for the correction arose after issuing the original invoices, and the fact of increasing the price was not known at the time of issuing these invoices, i.e. when the contractor does not meet the terms of the contract and does not send the specified number of shipments, which increases the price of shipments. Thus, the tax obligation for issuing a correcting invoice will arise in the settlement for the period in which the correcting invoice will be issued. The applicant, in such presented facts, will not be obliged to settle the correcting invoice increasing the price in the month in which he showed the original tax obligation for the provision of the described service. (...) ".

The issue of recording corrections of invoices plus invoices was also referred to by the Provincial Administrative Court in Poznań in its judgment of October 12, 2011, ref. No. Act I SA / Po 606/11, in which he stated: “when there is a change in the tax base, the taxpayer does not correct the tax return >> backward, but does it in the settlement for the period in which he obtained confirmation of receipt of the corrective invoice by the buyer of the goods or services. In turn, from the wording of Art. 29 sec. 4c of the VAT Act, it follows that the rule referred to above is applicable in the event of a mistake in the tax amount on the invoice and the issuance of an invoice correction to the invoice, which shows the tax amount higher than the due amount. At the same time, in Art. 86 sec. 10a of the VAT Act, the principle was adopted that in the event that the buyer of goods or services received an invoice correction referred to in Art. 29 sec. 4a or 4c, he is obliged to reduce the amount of input tax in the settlement for the period in which the invoice correction was received. If the taxpayer has not reduced the amount of input tax by the amount of the input tax specified in the invoice to which the correction applies, and the right to such a reduction is entitled to him, the reduction in the amount of input tax shall be included in the settlement for the period in which the taxpayer makes this reduction. On the other hand, in § 14 sec. 1 of the Regulation of 2008, it is generally said that >> a correction invoice is also issued when the price has been increased after the invoice has been issued or in the event of a mistake in the price, rate or amount of tax or in any other item of the invoices <<. of provisions means that the legislator allows for the possibility of correcting the tax base and settling the correction in a different settlement period than the period in which the tax obligation arose.

In the opinion of the Court, the provisions should be interpreted in such a way that the date of settlement by the seller of corrective invoices increasing the amount of VAT due depends on the circumstances causing the need to correct the original invoices. In the case at hand, the reason for the correction was an addition to the prices of goods, paid on the basis of an additional agreement between the parties. This event undoubtedly took place after the original invoice was issued and was not known at the time of issuing it, therefore there were no grounds to correct the declaration "back", since the original invoice and VAT declaration were correct ”.

How to record "in plus" invoice corrections in the seller's records?

If an invoice correction increasing the tax base was issued in connection with the cause arising after the original invoice was issued (impossible to predict at the time of issuing the original invoice), then the entrepreneur may decide to include it in the VAT sales register in the settlement period in which it was issued.

However, in a situation where the reason for the correction is foreseeable already at the time of issuing the original invoice (i.e., for example, there was a simple mistake or the price increase results from the contract), you should go back to the period in which the original invoice was settled.