Change in the VAT settlement in relation to the output tax not included in the relevant declaration

Service-Tax

When deducting VAT on certain transactions, entrepreneurs must at the same time show the amounts of tax due corresponding to the transactions in question. Many entrepreneurs find this aspect difficult. Amendment to the VAT Act from January 1, 2017. introduces a mechanism of appropriate reporting of input VAT in relation to output VAT in the above situations. Check when a change to VAT billing applies.

The right to deduct input tax in relation to the tax due by the end of December 2016.

Pursuant to Art. 86 sec. 2 point 4 of the VAT Act, in the light of the previous legal status, the amount of input tax is the amount of tax due to:

  1. provision of services (reverse charge) for the contractor who, as the recipient, settles VAT on a given transaction - obligation to demonstrate the VAT due in the month of sale of the provision of services,

  2. deliveries of goods with (reverse charge) for a contractor who, as a buyer of goods, settles VAT on a given transaction - obligation to report VAT due in the month of sale of goods,

  3. intra-Community acquisition of goods and intra-Community acquisition of goods for remuneration where VAT is settled by the buyer of the goods - obligation to show the VAT due in the month of issuing the invoice.

The settlement of the above transactions implies the disclosure of the VAT due in the month when the tax obligation arises, while the taxpayer acquired the right to deduct the input VAT by the amount of the tax due provided that the tax due on the above transactions is shown in the appropriate declaration.

When the VAT due on the above-mentioned transactions was shown with a delay
the deduction of input VAT against output VAT has always arisen retroactively.

The right to deduct input VAT in relation to the VAT due from January 1, 2017.

Starting from January 1, 2017, the amended VAT Act introduces certain changes, in relation to which the taxpayer will have the right to reduce the amount of VAT due by the amount of input VAT in the settlement for the period in which in relation to goods and services purchased or imported by the taxpayer a tax obligation has arisen, i.e. in the case of:

  1. provision of services (reverse charge) on the part of the recipient,

  2. delivery of goods with (reverse charge) to the buyer of the goods,

  3. intra-Community acquisition of goods and intra-Community acquisition of goods for remuneration on the part of the buyer if:

- the taxpayer receives an invoice documenting the delivery of goods, constituting his intra-Community acquisition of goods, within three months from the end of the month in which the tax obligation arose in relation to the purchased goods,

- will include the amount of VAT due on the above transactions in the tax declaration, in which it is obliged to settle this tax, no later than within 3 months from the end of the month in which the tax obligation arose in relation to the purchased goods

Change in the VAT settlement and the right to deduct input VAT in relation to the VAT due from 1 January 2017 - in a special situation

Another case that may happen is the situation in which the taxpayer included the amount of tax due in the tax declaration, in which he is obliged to settle this tax, later than 3 months from the end of the month in which the tax obligation arose in relation to the purchased goods that is in the 4th month.

In such a situation, the taxpayer may increase the amount of input tax in the settlement for the tax period for which the deadline for submitting the tax return has not yet expired. This means that the taxpayer has the right to deduct the amount of input VAT against the VAT due on an ongoing basis, i.e. in the VAT return that will be submitted at the moment.

Of course, pursuant to Art. 86 sec. 11 of the VAT Act, if the taxpayer has not made an appropriate deduction of VAT on the above-mentioned transactions within the above-mentioned dates, it may still reduce the amount of tax due
in the tax declaration for one of the next two tax periods.