Poland’s Ministry of Finance published an updated draft of the e-invoicing act on 15 March 2023 and announced that the implementation of mandatory e-invoicing for VAT purposes and the new national invoicing clearing system, called KSeF, will be postponed to 1 July 2024 and 1 January 2025 for VAT-exempt taxpayers (the new system was originally slated to become effective on 1 January 2024). Mandatory e-invoicing will apply to Polish-established businesses, as well as to foreign entities with a fixed establishment (FE) in Poland. Taxpayers have been able to elect to participate in the system since 1 January 2022.
Poland received a derogation from the European Council on 17 June 2022 allowing the country to introduce mandatory e-invoicing (for prior coverage, see the item in the Bytes column in the July 2022 issue of Indirect Tax News).
Mandatory e-invoicing generally will be required for activities that require an invoice issued in accordance with the Polish VAT Act and will generally apply to entities established in Poland and those operating in the country through an FE. There will be exemptions from the KSeF, such as invoices issued to private consumers (B2C transactions), transactions carried out without the engagement of a Polish FE, invoices issued under the EU One Stop Shop and Import One Stop Shop, toll receipts and railway tickets.
Penalties will be imposed for noncompliance with the KSeF, although a moratorium on penalties will be in place until 1 January 2025.
The VAT in the Digital Age (ViDA) initiative, unveiled by the European Commission on 8 December 2022, contains an ambitious set of measures—including the introduction of mandatory e-invoicing—to modernise the EU VAT system (for prior coverage, see the article in the January 2023 issue of Indirect Tax News). The ViDA proposals still have to be discussed by the EU member states and ultimately will require their unanimous approval to become law. If approved, the measures will apply as from 2025 and 2028.
The concept of ViDA will be based on a post-audit model, under which taxpayers will only have to report “headline” information in invoices for intra-community supplies; data on relevant transactions will be sent to the national tax authorities and subsequently included in a central database to be set up by the European Commission. However, some member states (currently Italy, Poland, Portugal and Spain) have decided to proceed with a “pre-clearance model” that will require VAT payers to report information to the tax authorities in real time when issuing invoices to customers. Poland had to request a derogation to implement KSeF, which was granted and will apply from 1 January 2024 through 31 December 2026.
Due to the complexity of the rules relating to foreign entities with an FE in Poland and the lack of clear guidelines, the government intends to release explanatory notes to help foreign entities determine whether they have or should recognise an FE in Poland.
Although the draft e-invoicing act still has to make its way through the legislative process and may be further revised or refined, the introduction of KSeF clearly will significantly affect the issuance and circulation of invoices, so affected businesses should begin now to plan for their new obligations and facilitate a smooth transition.
BDO in Poland