Backward VAT registration in practical situations (part 1)

Service-Tax

For various reasons, taxpayers are late in registering their activity for VAT purposes. The reasons for the failure to complete the formalities as well as the circumstances vary. In the event of being late, the taxpayer may still be entitled to deduct VAT from pre-registration invoices documenting the acquisition. The taxpayer should, however, bear in mind that each case should be considered individually. So when is it possible to register for VAT backwards? We answer!

Failure to register for VAT on time

Taxpayer starting business activity on February 1, 2021. he forgot to submit the VAT-R notification due to the resignation from the subjective VAT exemption from the beginning of the business. In May 2020. issued sales invoices, the total turnover of which has exceeded PLN 200,000 since the beginning of the year. The taxpayer was not obliged to register the activity for VAT from the beginning, so he decided that he would submit a VAT declaration before exceeding in May 2020. turnover of PLN 200,000.

It is worth quoting Art. 113 paragraph.4 of the VAT Act, which states that taxpayers who are subjectively exempt from VAT may waive this exemption provided that a written notification of this intention to the head of the tax office before the beginning of the month in which they resign from the exemption, and in the case of taxpayers who start performing taxable activities during the tax year VAT, who want to withdraw from the exemption from the first performed activity - before the day of performing this activity.

Moreover, if the actual value of sales exempt from tax in proportion to the period of business activity exceeds the amount of PLN 200,000 during the tax year, the exemption loses its effect from the first sale that resulted in exceeding this amount.

Registration for VAT purposes backwards - transfer of VAT-R to the Tax Office

The taxpayer exempt from VAT subjectively issued a sales invoice in March 2020. including VAT. The taxpayer acted like a VAT payer, but forgot to register. In turn, he submitted the application as an active VAT payer in May 2020. with effect from June 1, 2020. The taxpayer chose the monthly method of VAT settlement. Also in June 2020. paid the amount of VAT due resulting from the sales invoice issued in March 2020. The taxpayer doubted whether he acted correctly and what about the sales reported in March 2020?

In this case, the taxpayer should want to organize VAT settlements starting from March 2020. update the VAT-R notification with the date from March 1, 2020. It should also be mentioned that submitting a VAT-R update declaration, which includes the obligation of prior VAT notification, would require the submission of an active regret. On the other hand, the taxpayer should bear in mind that the active regret will be ineffective because the tax office will have documented that no retroactive registration for VAT purposes has been made.

It is worth noting here that the taxpayer does not lose the right to deduct VAT from invoices documenting the purchase and issued and received by the taxpayer before the date of registration for VAT purposes backwards.

Taking into account the output VAT, in accordance with Art. 108 sec. 1 if a legal person, an organizational unit without legal personality or a natural person issues an invoice in which it shows the amount of tax, it is obliged to pay it. Therefore, the taxpayer did the right thing. However, there may still be an obligation to pay default interest.

In addition, the taxpayer should submit overdue monthly VAT declarations and JPK_VAT files starting from the declaration for March 2020.

A taxpayer without registration for VAT operated as an active VAT payer

The taxpayer conducting business activity submitted the VAT-R form reporting him as a VAT taxpayer active from January 1, 2020. The billing period he chose is a month. The taxpayer issued sales VAT invoices and made the purchase. Deducted input VAT on purchases. The time has come to submit the first VAT declaration and JPK VAT file for January 2020. It turned out then that the taxpayer is not registered for VAT at all. However, the reasons for this event have not been clarified. The taxpayer submitted the registration application with a retrospective date, taking into account the period from January 1, 2020.

In this case, the taxpayer, by making a retroactive declaration in VAT-R, resigned from the VAT exemption with effect from January 1, 2020.

It should be emphasized that the taxpayer from the beginning of 2020. behaved like a person running a business who is an active VAT payer. He issued sales invoices, made purchases in connection with sales subject to VAT. He submitted a VAT declaration for January 2020. However, it was not his fault that the VAT registration was not made in due time.

Therefore, the taxpayer has the right to deduct VAT from invoices documenting the acquisition, but to exercise this right, he had to submit a VAT-R registration application and indicate the period in which the first taxable activity took place.

The taxpayer has already submitted a VAT declaration with correctly indicated amounts. Due to the registration for VAT backwards, the amounts will not change.

In case of doubts on the part of the tax authority, the taxpayer should prove that he actually behaved like a VAT payer, i.e .:

  1. performed sales activities,
  2. issued sales invoices with output VAT,
  3. made purchases intended for activities subject to VAT,
  4. has previously attempted to submit a VAT registration declaration, and
  5. submitted a VAT declaration for January 2020 to the competent tax authority. i.e. for the month in which the activities subject to VAT occurred for the first time and which the taxpayer indicated in the original VAT-R registration application.