Application of the reverse charge mechanism and VAT 23%
The entry into force of the provisions introducing the application of the reverse charge mechanism caused many problems with regard to the correctness of VAT settlements with entrepreneurs. The effect of these problems is still manifested in the errors in the classification of the PKWiU goods and services sold. As a result, on the sales invoice, entrepreneurs list some goods or services with the NP rate appropriate for the application of the reverse charge mechanism, instead of, for example, 23% VAT. It is therefore worth taking a closer look at these types of problems.
The use of a reverse charge mechanism and a mistake in the invoice
In a situation where the seller incorrectly issues an invoice with the NP rate (use of the reverse charge mechanism), he is obliged to issue an invoice correcting the original invoice.
Obligation to issue a correcting invoice
In the event that after issuing the 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 was increased or a mistake in the price, rate, tax amount or was found
in any other invoice item
- the taxpayer issues a corrective invoice.
In turn, the corrective invoice should contain:
- the words "CORRECTING INVOICE" or the word "CORRECTION",
- sequential number and date of issue,
- data contained in the invoice to which the corrective invoice relates:
specified in art. 106e paragraph. 1 points 1-6,
name (type) of goods or services subject to correction,
- the reason for the correction,
if the correction affects a change in the tax base or the amount of tax due - the amount of the tax base correction or the amount of the correction of tax due, respectively, broken down into amounts relating to individual tax rates and tax-exempt sales,
in cases other than those indicated in point 5 - the correct content of the corrected items.
The essence of the correction when adding 23% VAT
The effects of issuing a correction invoice can be distinguished due to the changes that will result in:
decrease in turnover and the amount of tax due (applies to "in minus" correction),
opposite effects, i.e. as a result of their issuance, the value of turnover and the amount of tax due are increased (it concerns the "in plus" correction).
It is in vain to look for the provisions governing the recognition of "in plus" corrective invoices in the VAT Act, while the long-term jurisprudence has consolidated the approach to this type of corrections, as well as the moment of their recognition depending on the reason for issuing it.
Correcting invoices "in plus" should be settled depending on the event that underlies its issuance:
- if the reason for issuing the correcting invoice already existed at the time of issuing the original invoice, then the corrective invoice "in plus" should be settled in the month / quarter in which the original invoice was issued, both in the VAT register and in the PKPiR records,
if the reason for the correction arose after the original invoice was issued, and therefore took place at a later date, the correcting invoice "in plus" should be included on an ongoing basis, i.e. entered in the records of both PKPiR and the VAT sales register and included in the VAT declaration in the current period, i.e. in the month / quarter of issuing the correction.
It should also be emphasized that corrective invoices "in plus" do not require the seller to wait for a return confirmation of receipt by the buyer of receipt of the correcting invoice.
"In plus" adjustment when changing the reverse charge to the 23% VAT rate
Moreover, pursuant to Art. 29a paragraph. 1 of the VAT Act, the basis for VAT taxation is everything that is the payment that the supplier of goods or the service provider has received or is to receive for sale from the buyer, recipient or a third party, including received subsidies, subsidies and other payments of a similar nature having direct impact on the price of goods or services provided by the taxpayer.
The invoice issued by the seller using the reverse charge mechanism does not include VAT, and the net value resulting from this invoice is also the gross value. In turn, the VAT rate in this invoice is NP or the expression "OO". The amount resulting from the invoice with the reverse charge is the taxable amount, but not for the seller, but for the buyer, and it is the buyer who settles the VAT in the month of sale of the goods:
in the sales VAT register as output VAT,
in the purchase VAT register as input VAT (in the same month as the VAT due, provided that the invoice is received within 2 months from the end of the month in which the sale took place).
In the situation in which the seller issued an invoice using a reverse charge (NP rate - not subject to taxation at the supplier), where the VAT is settled by the buyer in the case of issuing a correcting invoice, he should make an "in plus" adjustment, i.e. treat the amount paid for the incorrect the original invoice as the basis for VAT taxation at the appropriate VAT rate, e.g. 23%. The seller should behave like this if:
received payment for the original invoice,
received an advance on the original invoice,
he did not receive any payment at all.
The above position was also included in the individual interpretation issued by the Director of the Tax Chamber in Warsaw of March 4, 2016. with reference number IPPP3 / 443-1198 / 14-2 / ISZ.