The buyer is the issuer of the document in the import of services art. 28b

Service-Tax

Entrepreneurs who are used to a high level of bureaucracy, not only in contacts with offices, but also in business transactions, often forget that in some cases they do not have to wait for an invoice, because they should settle the transaction themselves. Such situations occur in the case of the import of services.

Problem getting an invoice for importing services

It happens notoriously that foreign entrepreneurs are reluctant to issue invoices to buyers from abroad. Due to technological development, a significant part of the purchased services are those performed electronically. As a result, direct contact with the seller is often difficult, and it is even impossible to obtain an invoice. It does not mean, however, that the entrepreneur who imports the services does not settle the transaction.

Import of services - the taxpayer of the service recipient

When importing services, the taxpayer is the customer, which results from the very definition of this type of transaction contained in the act of art. 2 point 9: “Whenever we refer to the import of services - it is understood as the provision of services for the performance of which the taxpayer is the recipient of services referred to in Art. 17 sec. 1 point 4 ". In order to conclude that the import of services has taken place, the following conditions should be met:

1.the seller (service provider) is a taxpayer (regardless of whether he is exempt from VAT or is an active taxpayer) who does not have a registered office or a permanent place of business in the territory of the country,

2.service recipient is:

  • in the case of services to which Art. 28B-the taxpayer referred to in art. 15 or a non-taxable legal person referred to in art. 15, registered or obliged to register in accordance with art. 97 sec. 4,
  • in other cases - the taxpayer referred to in art. 15, having a registered office or a permanent place of business in the territory of the country or a non-taxable legal person referred to in art. 15, established in the territory of the country and registered or obliged to register in accordance with art. 97 sec. 4.

The place of provision of the service purchased from a foreign entrepreneur, to which the general rules apply, is specified in Art. 28b. Pursuant to the provision cited, the place where the service is provided, and thus the place of taxation, is the place where the buyer has his registered office. Therefore, entrepreneurs purchasing services from foreign entities should always remember that regardless of whether the service provider issued an invoice or not, the buyer should tax this event.

Tax obligation when importing services

When importing services, the tax obligation (which, as has been said, rests with the buyer) arises when the service is provided or payment is made (when the buyer pays all or part of the payment before the service is performed). This moment of the tax obligation is also determined by the amended VAT Act, the provisions of which will enter into force on January 1, 2014 (Article 19a (1) and (8)). In this case, therefore, the moment of issuing the invoice does not matter.

For the import of services, the Act does not provide for separate provisions on the emergence of a tax obligation, therefore, with regard to partially accepted services, such a service is also considered performed in the case of the performance of its part for which payment has been specified. On the other hand, a service for which, in connection with its provision, consecutive payment or settlement dates are established, shall be deemed to have been performed at the end of each period to which these payments or settlements relate, until the provision of this service is completed. Therefore, if the entrepreneur uses the services of a foreign company regarding the maintenance of the website and, in accordance with the contract, it was specified that the payment for a given month takes place by the 10th of the following month - the performance of the service, and thus also the tax obligation to settle the import of services, arises at the end of each month.

If the service is provided in a continuous manner for a period longer than one year, and there are no payment or settlement deadlines specified in a given year, it is deemed to have been performed at the end of each tax year until the provision of this service is completed.

Buyer, document the import of the services yourself

With the transactions referred to in Art. 28b, the buyer is required to document and settle the tax. In this situation, it is him, and not the service provider, who is obliged to draw up an invoice, because he is obliged to show the tax on purchase for the period in which the service was performed. Therefore, on the basis of the payment confirmation (transfer), the entrepreneur shows that the import of services took place in a given month. For this purpose, he may use an internal document, in which he will add VAT to the price paid for the service, according to the national tax rate, appropriate for the nature of the service purchased. Correspondence with the service provider may also be an additional confirmation of the service.

Import of services in the VAT declaration

Buyer - active taxpayer

The buyer is obliged to settle the import of services. If he is an active VAT payer, he shows the transaction in the VAT-7 (VAT-7K) declaration submitted for the period in which the tax obligation arose - the service was performed. On the basis of an internally created document, which is charged according to the national VAT rate on the purchased service, the entrepreneur makes an entry in boxes 27 and 28 respectively (and 29 and 30 if the import of services pursuant to Article 28b from the European Union countries). By making the entry, the entrepreneur fulfills the obligation to tax the purchased service by showing the output VAT (which usually occurs during the sale and not the purchase).

To the extent that the purchased services are used to perform taxable activities, an active VAT payer has the right to reduce the amount of tax due by the amount of input tax. When importing services for which the customer is the taxpayer, the amount of input tax is the amount of the output tax (Article 86 (2) (4a)).

When importing services, the entrepreneur is entitled to deduct VAT for the services purchased, also if the imported services relate to:

  • the provision of services by the taxpayer outside the territory of the country, if these amounts could be deducted if these activities were performed in the territory of the country, and the taxpayer has documents showing the relationship of the deducted tax with these activities,
  • activities exempt from tax pursuant to art. 43 sec. 1 point 7 and points 37-41, performed in the territory of the country, where the place of provision of these services in accordance with art. 28b or article. 28l is the territory of a third country or when the services relate directly to exported goods, provided that the taxpayer has documents that show the relationship of the tax deducted with these activities.

The right to reduce the amount of tax due by the amount of input tax arises in the settlement for the period in which the tax obligation arose in relation to the services purchased or imported by the taxpayer. Therefore, the taxpayer may show input tax in the same VAT declaration as the tax due on import of services (fields 41 and 42 respectively).

Thus, the transaction of importing services with an active VAT payer is a VAT neutral transaction (mirror effect - the transaction is recorded on the side of output and input tax).

Buyer - VAT taxpayer exempt

The obligation to tax the import of services also applies to taxpayers who are exempt from VAT. This transaction will not be tax neutral for them. Since, as taxpayers exempt from VAT, they are not required to submit periodic VAT-7 declarations, they indicate the import of services on a specially designed VAT-9M declaration (declaration for value added tax on the import of services or supplies for which the buyer is the taxpayer) .

VAT taxpayers benefiting from the exemption (up to the limit of PLN 150,000) cannot deduct VAT on the purchased services or goods. This also applies to situations in which they are obliged to tax the import of services. They are required to prove the tax due, but are no longer entitled to deduct it. Apart from the obligation to submit the VAT-9M declaration, they are also obliged to pay the VAT on the import of services resulting therefrom. The levy paid will be at the expense of the entrepreneur, however, it should be noted that due to VAT, the transaction is no longer neutral, as in the case of active taxpayers.

When buying from abroad, we do not always import services

Imports of services occur in the case of VAT taxpayers (both active and exempt) purchasing services to which Art. 28b of the VAT Act or Art. 28c - Article 28o, provided that it results from the fact that the purchaser of the service is the taxable person. Therefore, not every purchase of a service from a foreign contractor will constitute an import of services. Transactions that do not meet 3 conditions in total:

  • the service recipient is a taxpayer (Article 15 of the VAT Act) or a person who is not a taxable person but registered for VAT-EU purposes,
  • the service provider is a foreign taxpayer who does not have a registered office or a permanent place of business in the territory of the country (Poland),
  • the place of provision (place where the tax obligation arises) of the service purchased by the customer is the territory of the country (Poland) - services for which Art.28b of the VAT Act or other acts where, on the basis of regulations, the country where the service is provided is the country in which the customer has his registered office or place of permanent business,

they will not constitute an import of services for the buyer.