RR invoice corrections - the most important information!

Service-Tax

RR invoice corrections always cause numerous problems for taxpayers. They still have problems with settling taxes resulting from corrective invoices. Invoices for flat-rate farmers are specific documents that we settle differently than traditional VAT invoices. Thus, many taxpayers purchasing from flat-rate farmers have problems with issuing corrective invoices.

The tax base

Based on Article. 29a paragraph. 1 of the VAT Act, the taxable amount is everything that is the payment that the supplier of goods or service provider has received or is to receive from the buyer, recipient or a third party, including received subsidies, subsidies and other surcharges of a similar nature, having a direct impact on the price of goods or services provided by the taxpayer.

The tax base includes:

  1. taxes, duties, fees and other charges of a similar nature, except for the amount of tax;

  2. ancillary costs, such as commission, packaging, transport and insurance costs, charged by the supplier or service provider to the buyer or recipient.

Correcting invoices

Above, we have described in detail what constitutes the basis for VAT taxation. In economic practice, however, taxpayers, wanting to maintain good relations with taxpayers, grant rebates, discounts, etc.

The above price reductions do not constitute the taxable amount. Therefore, the tax base does not include the following amounts:

  1. constituting a price reduction in the form of an early payment discount;

  2. price discounts and rebates granted to the buyer or recipient, taken into account at the time of sale;

  3. received from the buyer or recipient as a reimbursement of documented expenses incurred on behalf of and for the benefit of the buyer or recipient and recognized temporarily by the taxpayer in the records kept by him for tax purposes.

Thus, the taxpayer should reduce the tax base in the event of:

  1. discounts and price reductions granted after the sale;

  2. the value of the returned goods and packaging, subject to paragraph 11 and 12;

  3. return to the buyer all or part of the payment received prior to the sale, if it did not take place;

  4. the value of the returned amounts of subsidies, subsidies and other payments of a similar nature, referred to in paragraph 1.

Example 1.

The taxpayer runs an RTV warehouse. He sold eight televisions for an elementary school. Among them, two turned out to be inoperative. They could not be repaired. The wholesaler picked up the faulty TV sets and reimbursed the school for them. At the same time, he pledged to deliver new, functional TV sets within a month. Should a corrective invoice be issued in this case?

Let us remind you that the taxpayer, after issuing the invoice, when events affecting its content occur or it turns out that the issued invoice contains errors, issues a correcting invoice in such a case. This is done, for example, in the event of a mistake in the price, rate or amount of tax or any other item in the invoice. Therefore, as a rule, the content of the originally issued invoice should be corrected by issuing a correcting invoice by the seller. It is issued in order to provide proper, correct and factually correct amounts as well as other data determining the reliability of the issued document. Thus, the essence of corrective invoices is the correction of original invoices so that they document the actual course of economic events.

In our case, the goods were returned. The taxpayer also returned the funds for the purchased TV sets. In this case, it is irrelevant that the wholesaler undertakes to supply new TV sets. The original transaction decreased as a result of the return of the goods and should be corrected. Therefore, the taxpayer should issue a corrective invoice that will document the final sales volume.

Documenting purchases from flat-rate farmers

Let us recall that a flat-rate farmer is a farmer who supplies agricultural products from his own agricultural activity or provides agricultural services, benefiting from tax exemption under Art. 43 sec. 1, point 3, with the exception of a farmer who is obliged under separate provisions to keep books of accounts. A flat-rate farmer supplying agricultural products to a taxpayer who settles this tax is entitled to a flat-rate tax refund for the acquisition of certain means of production for agriculture subject to this tax. The amount of the flat-rate tax refund is paid to the flat-rate farmer by the buyer of agricultural products (Article 115 (1) of the VAT Act).

A flat-rate farmer, in the scope of his agricultural activity, supplying agricultural products is exempt from the obligation to:

  1. issuing invoices;

  2. keeping records of deliveries and purchases of goods and services;

  3. submitting a VAT declaration to the tax office;

  4. filing a VAT registration application.

Example 2.

A flat-rate farmer sold corn for purchase. The taxpayer conducting the purchase is an active VAT payer. How should the person conducting the purchase document the purchase?

Pursuant to Art. 116 sec. 1 of the VAT Act, a taxpayer registered as an active VAT payer who purchases agricultural products from a flat-rate farmer shall issue an invoice in two copies documenting the purchase of these products. The original invoice is handed over to the supplier. The elements that should be included in the VAT RR invoice are specified in Art. 116 sec. 2 of the VAT Act. It is the taxpayer who should therefore issue an invoice and provide one of them to the flat-rate farmer.

The above shows that the regulations on issuing invoices do not apply to VAT RR invoices. This means that the provisions on issuing corrective invoices will also not apply.

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RR invoice corrections

It should be emphasized that invoices are documents confirming actual economic transactions made by the taxpayer. They play a special evidential role in the correct assessment of VAT, therefore it is extremely important to correctly mark all elements of the invoice, in particular in the part concerning the obligatory data placed on it.

Importantly, the VAT Act does not contain premises indicating that the trade in goods conducted by a VAT payer with flat-rate farmers should be deprived of the possibility of correcting VAT RR invoices.

Example 3.

In March 2021, an active VAT payer purchased agricultural products (wheat) from a flat-rate farmer. Due to the poor quality, he returned them to the farmer. Does the taxpayer issue a correcting invoice in connection with the return of agricultural products to the flat-rate farmer?

At the outset, it should be stated that the taxpayer should correct the purchase. As VAT RR invoices are issued by buyers of agricultural products and agricultural services, they are also obliged to issue correcting VAT RR invoices.

We issue corrective invoices in the same way as RR invoices. Therefore, VAT RR correction invoices should be issued in two copies, one of which is handed over to the flat-rate farmer. We may, with the consent of the supplier (consent to issue, sign and send invoices in electronic form), also issue a corrective invoice. The method of settling the correction invoices depends on whether they refer to an increase or decrease in the tax amount.

To sum up, in the case of correction invoices issued to RR farmers, we settle them in the same way as normal correction invoices. We issue corrective invoices for flat-rate farmers in the same cases as for other taxpayers. However, they must be issued by the buyer. Thus, taxpayers can correct RR invoices and settle them.