Settlement of VAT by the issuer of the correcting invoice

Service-Tax

Among the correcting documents used by taxpayers, two basic ones should be mentioned: a correction note and a correction invoice. Notes may only be prepared by the recipients of the invoice, and the corrective invoice only and exclusively by the issuer of the original invoice. The article will be devoted to the latter.

When can an entrepreneur issue a corrective invoice?

The issue of correcting invoices has been regulated in Art. 106j of the amended Act on tax on goods and services. The first paragraph of this article specifies in which situations it is possible for the seller to issue a corrective invoice. This obligation occurs when, after issuing the original invoice:

  • a price reduction was granted in the form of a discount,
  • discounts and price reductions were granted,
  • goods and packaging were returned to the taxpayer,
  • the buyer has been reimbursed in whole or in part,
  • the price has been increased or there has been an error in the price, rate, tax amount or any other item in the invoice.

What elements should a credit note contain from 2014?

The data that should be included in the correcting invoice are specified in Art. 106j paragraph. 2 of the VAT Act. According to its content, it is obligatory to indicate:

  • the words "CORRECTING INVOICE" or the word "CORRECTION";

  • the sequence number and the date of issue;

  • data contained in the invoice to which the corrective invoice relates:

    • the date of issue;

    • a sequential number from one or more series that uniquely identifies the invoice;

    • the first and last names or names of the taxpayer and the buyer of goods or services and their addresses;

    • the number by which the taxpayer is identified for tax purposes;

    • the number by which the buyer of goods or services is identified for the purposes of tax or value added tax under which he received the goods or services;

    • the date on which the delivery of the goods or the service was completed or completed or the payment received (if such a date is specified and differs from the invoice issue date);

    • the names (type) of goods or services subject to correction;

  • the reasons for the correction;

  • if the correction affects a change in the tax base or the amount of tax due - the amount of the correction of the tax base or the amount of the correction of output tax, respectively, broken down into amounts relating to individual tax rates and tax-exempt sales;

  • in cases other than those indicated in the above point (formal errors) - the correct content of the corrected items.

Collective credit note

According to Art. 106j paragraph. 3, the taxpayer may issue a collective correcting invoice in the event that it grants a discount or price reduction on all supplies of goods or services made / provided to one recipient in a given period. Then the invoice must additionally indicate the period to which the discount or reduction is granted. Importantly, it may not include:

  • the number by which the buyer of goods or services is identified for the purposes of tax or value added tax under which he received the goods or services;
  • the date on which the delivery of goods or the service was performed or completed, or the date of receipt of payment;
  • the name (type) of the goods or services covered by the correction.

Correction invoice "in minus"

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In order for the entrepreneur-seller to be able to reduce the tax base and thus the output VAT (on sale), it is necessary to have a confirmation of receipt of the correction by the buyer.

The regulations do not directly regulate what this form of confirmation should be, and the tax authorities do not limit themselves to signing only. It may be sufficient to confirm receipt of a registered letter, e-mail, fax of the invoice with a signature, a scan of the invoice with a signature.

Art. 29a sec. 13 of the Act clearly indicates that the taxpayer may reduce the tax base in the settlement for a given period, provided that he has a confirmation of receipt of a correcting invoice. Importantly, if this confirmation is obtained before submitting the declaration for a given period, then the reduction of the basis is made in this declaration. However, when this confirmation is obtained after the deadline for submitting the declaration, the reduction is made in the declaration for the period in which the confirmation was received.

Art. 29a sec. 13

In the cases referred to in para. 10 points 1-3, the reduction of the tax base in relation to the base specified in the invoice with the indicated tax shall be made provided that the taxpayer has, before the deadline for submitting a tax declaration for a given tax period, in which the buyer of the goods or the service recipient has received correcting invoice, confirmation of receipt of the correcting invoice by the buyer of the goods or the service recipient for whom the invoice was issued. Obtaining confirmation of receipt by the buyer of the goods or the service recipient of the correcting invoice after the deadline for submitting the tax declaration for a given accounting period entitles the taxpayer to take into account the correcting invoice for the accounting period in which this confirmation was obtained.

A confirmation of receipt is also required in the event of a mistake in the tax amount on the invoice and issuing a correcting invoice to the invoice, which shows the tax amount higher than the due amount (Article 29a (14) of the Act).

Importantly, the taxpayer will not always be required to have a "in minus" confirmation of receipt of the correcting invoice. This obligation does not apply to taxpayers who perform:

  • export of goods and intra-community supply of goods;
  • supplies of goods and services for which the place of taxation is outside the territory of the country;
  • sale of: electricity, heat or cooling energy, line gas, telecommunications and radiocommunication services and services listed in item 140-153, 174 and 175 of Annex 3 to the VAT Act.

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The reduction of the tax base can also be made in a situation where the entrepreneur has not obtained confirmation despite the documented attempt to deliver the corrective invoice and the documentation in it shows that the buyer of the goods or the service recipient knows that the transaction was carried out in accordance with the conditions specified in the correcting invoice. The taxpayer will reduce the tax base not earlier than in the tax return submitted for the tax period in which these conditions are jointly met.

Example 1.

The seller issued a sales invoice on January 12, 2014.On February 5, the buyer returned the goods, therefore, in February, a corrective invoice was issued "in minus". The buyer signed the correction on the same day. When can a taxpayer (supplier) reduce the tax base?

The taxpayer reduces the tax base in the VAT declaration for February.

Example 2.

The seller issued a sales invoice on January 12, 2014. On February 5, the buyer returned the goods, and therefore a corrective invoice was issued "in minus". Confirmation of receipt of the correcting invoice was obtained on March 13. When can a taxpayer (supplier) reduce the tax base?

Due to the fact that the deadline for submitting the declaration for February has not yet passed (March 25), the taxpayer reduces the tax base in the VAT declaration for February, i.e. for the period in which the adjustments were made.

Correcting invoice "in plus"

In economic practice, it is not uncommon to issue an invoice that contains errors that lower the tax base. Then the entrepreneur is obliged to issue a corrective increasing invoice, i.e. "In plus".

Importantly, in this case the taxpayer does not have to wait for confirmation of receipt of the correcting invoice by the buyer, as is the case with “in minus” correcting invoices. As a rule, this adjustment should be accounted for in the period in which the tax obligation for the original invoice arose.

In certain situations, the tax authorities allow for the possibility of including the "in plus" correction in the declaration in the period in which it was issued, and which does not necessarily coincide with the one in which the original invoice was issued. Such a position results, among others, from from the individual ruling IPPP1 / 443-1599 / 11 / 13-5 / S / EK of the Director of the Tax Chamber in Warsaw of September 4, 2013, which states that such a solution is acceptable when the circumstances increasing the tax base were unknown at the time of issuing the invoice.