At what point should a taxpayer register as an active VAT payer?

Service-Tax

When starting a business, entrepreneurs often ask themselves whether to register as an active VAT payer or not. Apart from the profitability aspect, entrepreneurs often make various necessary purchases for their company in the periods between the start of their activity and registration for VAT. When is the right moment when the entrepreneur becomes an active VAT payer after registration and in this case can he deduct VAT after registration for VAT?

Active VAT payer - basic registration rules

Entrepreneurs whose sales value did not exceed the total amount of PLN 200,000 in the previous tax year or they want to resign from the subject exemption from VAT or intend to perform activities for which they must obligatorily become active VAT payers, are required to register for VAT by submitting a VAT form R to the competent tax office.

In addition, apart from entities that are immediately obliged to register for VAT or voluntarily join the registration, other entities for which the value of tax-exempt sales exceeds PLN 200,000, lose the given VAT exemption starting from the first transaction that was exceeded.

Not all transactions should be taken into account when determining whether the VAT exemption limit has been exceeded

When starting the activities of determining the volume of turnover in the scope of analyzing whether the taxpayer has exceeded the sales value limit in the amount of PLN 200,000, it should be remembered that the sales value does not include:

  1. intra-Community supply of goods and mail order sales from the territory of the country and mail order sales within the territory of the country,

  2. for the supply of goods against payment and for the provision of services exempt from VAT, except for:

  1. real estate transactions,

  2. transactions, including brokerage, in currency, bank notes and coins used as legal tender, excluding collector notes and coins,

  3. management services for funds and investment portfolios, insurance capital funds, open-ended pension funds, employee pension programs and a compulsory compensation scheme, as well as a settlement fund established under the provisions of the law on public trading in securities,

  4. credit or cash loan services and intermediation services in the provision of credit or cash loan services, as well as credit or cash loan management by a lender or lender,

  5. services in the field of granting sureties, guarantees and any other security for financial and insurance transactions as well as intermediary services in the provision of these services, as well as the management of credit guarantees by a lender or a lender,

  6. cash deposit services, cash account maintenance, all kinds of payment transactions, money orders and transfers, debts, checks and bills of exchange and brokerage services in the provision of these services,

  7. services related to financial instruments,

  8. insurance services

- if these activities are not ancillary transactions,

  1. the paid delivery of fixed assets and intangible assets subject to depreciation.

Voluntary and obligatory resignation from the subjective exemption from VAT

Taxpayers who want to voluntarily resign from the subject exemption from VAT are obliged to send a written notification in the form of a VAT-R form to the head of the tax office competent for the place of residence before the beginning of the month in which they resign from the exemption.

On the other hand, in the case of taxpayers starting during the tax year, performing activities such as:

  1. paid delivery of goods and paid services within the territory of the country,

  2. export of goods,

  3. import of goods into the territory of the country,

  4. intra-Community acquisition of goods for remuneration within the territory of the country,

  5. intra-Community supply of goods.

- they must resign from the dismissal from the first performed activity - before the day of performing this activity.

Formal VAT registration and the moment of acquiring the status of an active VAT payer

A taxpayer who registers to be an active VAT payer sends a VAT-R registration form to the competent tax office according to his place of residence. It should be noted that from January 1, 2017. the tax office analyzes the entity submitting the VAT declaration and may not register the entity as a VAT taxpayer. As a consequence, it will send the notification to the notifying entity in the event that:

  1. the data provided in the registration application is false or

  2. this entity does not exist, or

  3. despite the documented attempts made, it is not possible to contact this entity or its representative, or

  4. the entity or its representative does not appear at the summons of the head of the tax office.

It is therefore clear that the moment when the entrepreneur becomes an active VAT payer may be shifted. It should be noted that the mere fact of sending the VAT-R registration form does not automatically result in the acquisition of the status of an active VAT payer. In the provisions of the VAT Act, it is also in vain to find the exact moment when the entrepreneur becomes an active VAT payer. Therefore, the date of entry into the register of active VAT payers, made by the competent tax authority, seems to be the closest.

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Lack of the status of an active VAT payer and the right to deduct VAT

A taxpayer who is not an active VAT payer concluded in September 2015 two lease contracts. In the same month, he received two invoices for the initial lease payment and deducted VAT from the invoices in question. Taxpayer October 1, 2015 obtained the status of an active VAT payer.

The director of the Tax Chamber stated that it is obligatory to distinguish between the moment when the right to deduct arises and the moment when this right is exercised.

The right to reduce the output tax by input tax arises with all taxpayers, provided that they prove that the purchases were related to the current or future taxable activity, and the registration condition is necessary only for the taxpayer to exercise the right to reduce the output tax.

The right to deduct is exercised by submitting a tax declaration expressing the taxpayer's willingness to exercise the right to deduct and in order to effectively exercise the right, the taxpayer must remove - at the latest before exercising this right - all negative premises, including the lack of registration, which makes it impossible to identify him as taxpayer.

Moreover, it also stated that the VAT Act does not deprive a taxpayer of the right to deduct VAT on purchases made before registration, provided that the goods and services purchased prior to VAT registration will be used for the current (or future) taxable activity (and possibly meet other conditions set out in the provisions of the Value Added Tax Act), i.e. the purchase of vehicles must be related only to the performance of activities subject to VAT. However, in order to be able to exercise this right, the taxpayer must fulfill the obligation to register as an active VAT payer.

The above-mentioned positions are confirmed by:

  1. Director of the Tax Chamber in Bydgoszcz in the individual interpretation of 09/12/2014. with reference number ITPP2 / 443-1221 / 14 / AW,

  2. Director of the Tax Chamber in Bydgoszcz in the individual interpretation of 10.07.2014. with reference number IPPP2 / 443-409 / 14-2 / ​​KOM,

  3. Director of the Tax Chamber in Bydgoszcz in the individual interpretation of March 25, 2016. with reference number IPPP2 / 4512-1277 / 15-4 / MMa.