Correction of an invoice with a reverse charge on sales with VAT
The sale of certain products and the provision of services such as construction works, sale of steel products, scrap metal or some computer units are subject to the reverse charge mechanism. Then the VAT is settled not by the seller, but by the buyer. If the VAT was incorrectly calculated on the issued invoice, the seller should correct it. However, does the revision of an invoice with a reverse charge result in the obligation to settle the tax due to the seller? Let's check it out!
Reverse charge - what is it?
Under the reverse charge mechanism, the obligation to settle the output VAT on the taxable activities performed rests with the buyer, not the seller, as is the case in most transactions. The list of transactions subject to the reverse charge is listed in the VAT Act: in Annex 11 - referring to goods and in Annex 14 - referring to services.
The sales under the reverse charge should be shown not only in the VAT return, but also in the summary information for the domestic VAT-27 turnover. From 2017, this information should be submitted on a monthly basis, only in electronic form.
You can read more about the reverse charge in the article: Reverse charge in the light of the amendment to the VAT Act.
Invoice correction with reverse charge
It happens that the seller incorrectly issues an invoice as a result of an error or mistake, thus causing a change in the value of the transaction. Then it is obliged to prepare a correcting invoice that will show the correct value of the transaction, i.e. it will increase or decrease the value resulting from the original invoice.
Correction of invoices with a reverse charge is often caused by:
incorrectly classified goods or services according to PKWiU,
exceptions in construction services - the reverse charge in construction works applies only when the taxpayer provides services as a subcontractor (the contractor is not always well informed about this fact).
If VAT was incorrectly calculated on sales subject to the reverse charge, an invoice correction should be prepared, which will usually reduce the value of the transaction by previously incorrectly charged VAT.
One of the conditions for applying the reverse charge is when both the invoice issuer and the buyer are active VAT payers.
As a rule, the seller may reduce the VAT due upon confirmation of receipt of the correcting invoice by the buyer, in accordance with Art. 29a paragraph. 13 of the VAT Act. The invoice correction with the reverse charge does not require a receipt.
The correction of the tax settlement resulting from an error or mistake in the invoice with a reverse charge should be made in the period in which the sales tax obligation arose, i.e. in the month in which the goods were delivered or the service was rendered, as confirmed by the Director of the Tax Chamber in Bydgoszcz in the interpretation individual dated June 10, 2016, ITPP3 / 4512-191 / 16 / MD. The requirement for the seller to have a confirmation of receipt of the correcting invoice by the buyer in this case does not apply.
If, after issuing a VAT invoice (on general terms), it turned out that the buyer acted as a VAT payer and should receive an invoice with a reverse charge, the seller should:
check the tax status of the buyer, e.g. using the taxpayer database available on-line (www.portalpodatkowy.mf.gov.pl) or by the head of the tax office,
issue a corrective invoice (pursuant to Art. 106a-106n of the VAT Act), in which it will apply the reverse charge procedure, if the buyer is an active VAT payer,
return the paid VAT to the buyer.
An active VAT taxpayer sold scrap in April 2017, for which he received an invoice with an incorrectly included 23% VAT rate. A month later, he received from the seller the correction of the original invoice with the applied reverse charge mechanism.
Correcting the invoice will change the tax base. As a result of lowering the tax base, the correction of the output tax should be shown in the period in which the original invoice was issued.
In addition to showing a higher output tax, the buyer will be required to increase the input tax and show it in the same period in which he settled the original invoice.
An active VAT taxpayer received an invoice with a reverse charge in February 2017. In the same period, the service under sale was provided. As a result of an incorrectly classified service, the reverse charge procedure was applied.
As a result of an incorrect VAT rate due to the requirement to apply the reverse charge procedure in a given transaction, an adjustment of the output tax for the period in which the original invoice was issued should be shown.
Correcting an invoice in the wFirma.pl system
WFirma.pl system users can easily correct the VAT invoice, which should be issued with the annotation "reverse charge".
First, an invoice should be issued correcting the invoice items to zero, and then a new invoice should be issued using the reverse charge. In order to issue a correction, go to the tab: REVENUES »SALE, then find the invoice to be corrected and select the option from the CORRECT» INVOICE ITEMS menu.
In the ADVANCED tab, deselect the do not post option.
After saving, the invoice will not be included in the records, so in the next step you need to show the correction of the income by the tab REVENUE »OTHER REVENUE» ADD OTHER REVENUE »SALE, in the ADVANCED tab, check the field ADJUSTMENT.
In the revenue adding window, enter negative amounts from the correcting invoice, then the entry will be correctly entered in the VAT sales register and the KPiR. The invoice must be corrected within the period of issuing the original invoice.
Then, a new invoice should be issued with the reverse charge via the tab REVENUES »SALE» EXHIBITION »ISSUE AN INVOICE, where you must enter the correct data and select the VAT rate, the buyer settles. The invoice should contain the date of sale falling within the period of issuing the original invoice.
For construction services, in the ADVANCED tab, in the ACCOUNTING SCHEME field, the Construction services - reverse charge option should be selected.
After saving, the invoice will be posted to the KPiR and to the VAT sales register. The printed invoice will contain the annotation "reverse charge".