The much-anticipated mandatory e-invoicing via the National System of e-Invoices (KSeF) has finally received a derogation decision by the European Commission (EC). The derogation was approved by the EC, however, the decision states that it shall apply from 1 January 2024 until 31 December 2026.
The Polish government requested by letter derogation from Articles 218 and 232 of Directive 2006/112/EC on the common system of value-added tax, which was received by the EC back in August 2021. The derogation was needed to allow Poland to introduce mandatory electronic invoicing for all transactions carried out by taxable persons that are required to issue invoices. The decision does not mention the necessity to report transactions such as intra-Community acquisition of goods or purchases of services, which appeared in the previous position of the Commission, under the KSeF. However, this does not mean that transactions of this type will certainly not be reported in the KSeF.
According to Article 4, in the submitted derogation request, the Polish e-invoicing system would:
- Help in combating value added tax (VAT) fraud and evasion.
- Significantly improve the analytical capabilities of the Polish tax administration, enabling it to automatically verify the consistency between VAT declared and VAT paid, and
- Increase the accuracy of the verification of VAT refund claims submitted by taxpayers.
Further, it would complement other measures which aim to combat VAT fraud and evasion and modernize the VAT system.
What are the rules and to whom do they apply?
The obligation to issue structured invoices via the KSeF will apply to all taxpayers established in Poland, conducting activities requiring the issuance of an invoice in accordance with Polish VAT regulations. Although the initial request by the Polish government originally covered all VAT taxpayers, in the letter of February 8, 2022, Poland limited the scope to domestic taxpayers only.
Therefore, foreign taxpayers, including those only registered for VAT purposes, and do not have their registered office in Poland, are excluded from the obligation to use structured invoices and submit via the KSeF. In principle, therefore, these entities will issue invoices on the basis of the existing rules.
How does this affect you?
This means that e-invoicing will not be mandatory for Polish taxpayers until 2024, at the earliest. The Polish government has clearly signaled that they plan to make it obligatory after receiving approval from the EC, with the timelines previously expressed (webinar) pointed to January and Q2 of 2023 as a planned date to mandates the use of the e-invoicing system. The Polish e-invoicing system is called KSeF (Krajowy System e-Faktur, or National e-Invoicing System), which is governed by the Ministry of Finance. The e-invoicing system is already live and available for use by taxpayers on a voluntary basis.
Possible next steps
While taxpayers have 18 months breathing room before this mandate will come into play, reach out to Fonoa to find out how we can automate e-invoicing for your business.
At Fonoa we know that new regulations such as these have a substantial impact on how businesses operate. That’s why we built Fonoa Reporting, a solution that automatically reports sales transactions to tax authorities across the globe. Fonoa’s API-first solution automatically generates invoices for all relevant transactions, making sure a business follows all the local rules as it transacts globally. With a focus of flexibility, Fonoa ensures businesses, wherever they are, allow their customers to reclaim VAT on their transactions.
Fonoa is following these updates closely. We stand ready to support clients when the mandate is officially expressed. You can use Fonoa to take care of all of your indirect tax compliance needs.