Poland gets green light for mandatory e-invoicing from 2024
International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX
Copyright © Legal Benchmarking Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement
Sponsored

Poland gets green light for mandatory e-invoicing from 2024

Sponsored by

sponsored-firms-mddp.png
street-4472321.jpg

Janina Fornalik of MDDP explains the consequences of the EU’s decision to allow mandatory e-invoicing in Poland from January 1 2024, and how taxpayers can prepare.

An EU Council decision allowing Poland to introduce a mandatory e-invoicing system has been published in the Official Journal of the EU (L 168/81). The starting date of obligatory e-invoicing in Poland was originally planned for 2023, but has now been postponed to January 1st, 2024.

The derogation is granted for three years, until December 31 2026. It may be extended further, but Poland will still need to prove that this tool led to reducing VAT fraud and abus as well as simplifying VAT settlement for taxpayers.

Aside from Poland, a number of other member states plan to introduce obligatory e-invoicing in the coming years: Germany, France, Denmark, and Belgium. Real time e-invoicing is already operational in Italy, Spain, and Portugal.

It is worth mentioning that Poland is one of the countries that has already implemented a number of measures aimed at fighting VAT fraud, including:

  • SAF-T VAT monthly reporting;

  • A split payment mechanism;

  • A system for the electronic analysis of financial flows (STIR, which detects fraud based on bank transfers and blocks bank accounts when the risk indicator is high); and

  • An online fiscal cash register system for monitoring transactions in the retail sector.

Polish e-invoices will be issued and received in real time in a standardised XSD format through a governmental clearing system (the local abbreviation KSeF is often used, which comes from the Polish for ‘National System of e-Invoices’). All invoices will be accessible by tax authorities.

This will allow for the more effective prevention and identification of irregularities and errors, which in turn will help to combat VAT fraud and VAT evasion (especially VAT carousel fraud), and to reduce the VAT gap. Therefore, e-invoicing should reduce the number of tax audits and allow the tax authority to focus on real problem areas.

E-invoicing has already been introduced in Poland as of January 1 2022 under a voluntary model. The experience to date shows that not many taxpayers decided to switch to e-invoices, although there are incentives to do so. The main benefit is the shorter period of VAT refund (40 days instead of 60 days). In the current voluntary model, the supplier should receive the purchaser’s consent for receiving e-invoices via the KSeF central system.

Remaining questions about mandatory e-invoicing in Poland

According to the Council derogation decision, only entities established in Poland will be obliged to issue and receive standardised e-invoices. This means that foreign companies, even if registered for VAT purposes in Poland, will not fall under mandatory e-invoicing. They will still be allowed to issue and receive standard invoices – in electronic form or even on paper.

At this point, it is not certain whether the mandatory e-invoicing regulation will also cover foreign entities operating in Poland via a fixed establishment (such as a branch). The entities for which the system will be mandatory should be clearly specified in the regulations. No draft provisions have been issued so far in this matter.

In addition, it remains unknown whether invoices for private individuals will be issued in the central e-invoicing system or not. The Ministry of Finance’s plan is for the system to cover all invoices in B2B and B2C transactions.

Practicalities of e-invoicing

Businesses will be able to prepare e-invoices in their financial and accounting software and send them to the KSeF system via an application programming interface (API) – with relevant authorisation and authentication. Taxpayers can also use an online application prepared by the Ministry of Finance, which allows companies to issue and receive invoices one by one.

Each invoice will be validated by the government KSeF system from a technical perspective. In other words, the KSeF will check the invoice is compliant with the XSD schema and that the person or entity is authorised to issue an invoice. After verification, the invoice will be assigned a unique number. In cases where the invoice cannot be approved in the KSeF, the invoice will be rejected by the system.

There is a major issue for large companies issuing large numbers of invoices to be sent to the central system in batches. The verification may take a few days and, if one invoice fails verification, the whole batch of invoices will be rejected. Moreover, the system will not give any hint as to which invoice was incorrect.

Another practical issue is the lack of an option to add attachments to invoices issued in the KSeF system. The solution in this case may be to apply an external IT tool, a platform connecting the company’s system with the central KSeF system, where the attachments can be added to the e-invoices and transferred to the client.

The new e-invoicing system is a real revolution in invoicing in Poland. In the future, after the implementation process is successfully finalised, the taxpayers will benefit from the automation of accounting processes and the simplification of tax payments and tax reporting due to standardised invoices. However, the implementation process itself is very complex and time-consuming.

The main challenges of the implementation process are:

  • Switching to KSeF involves IT, financial, and organisational challenges. This is especially the case for businesses that use several different financial or invoicing systems, and that issue multiple invoices.

  • The new system requires developing or adapting multiple internal processes and procedures, including verifying invoices before sending them to the KSeF system, monitoring rejected invoices, changes in contracts, an invoices workflow, and methods of delivering invoices to customers who have no access to KSeF (such as foreign businesses or private individuals).

  • The implementation of structured e-invoices requires coordinating the work of teams involving IT specialists, finance experts, accountants, tax specialists, and  invoice issuing and processing personnel.

Only comprehensive and early planning for the new e-invoicing implementation process will allow companies to properly prepare for upcoming changes. Taxpayers should start to plan now, to ensure they will be ready on time.

more across site & bottom lb ros

More from across our site

The ‘big four’ firm has also vowed to spend more on nurturing junior talent; in other news, Blick Rothenberg has hired a pair of tax partners
However, making APAs harder to reach could ‘pose problems’ for UK businesses
Microsoft's director of benefits taxation tells ITR about having no normal days, family inspiration and what makes tax cool
The 61-year-old has run the firm’s UK business since 2020
The report, which again demanded PwC release more information related to the scandal, 'did not go far enough', Australian Greens Senator Barbara Pocock told ITR
Resources needed to manage new compliance and financial reporting requirements will be significant, BDO also said
Interested parties may submit their comments on proposed bills and the subsidiary legislation by July 5
The Australian government has run roughshod over professional tax bodies with untested reporting obligations to please a mob baying for PwC’s blood, writes Tom Ravlic
Technical excellence is paramount for clients looking to hire new advisers, according to a survey of nearly 29,000 corporate counsel
The EU nation currently has a headline rate of 25%; in other news, DLA Piper and RSM UK have strengthened their tax teams
Gift this article