BDO Indirect Tax News

Poland - Update on the introduction of mandatory electronic invoicing

Polish VAT-payers are preparing for a digital revolution in invoicing. We expect that the mandatory centralised platform, the National e-Invoice System (KSeF), will be in effect from 1 July 2024, which will require that all invoices to entrepreneurs, with few exceptions, will have to be issued in accordance with a specific XSD structure (in the form of XML) in the KSeF (for prior coverage, see the article in the April 2023 issue of Indirect Tax News). Structured invoices (e-invoices) will replace traditional hard copy invoices and regular electronic (PDF) invoices.

Draft regulations released in November 2023 include a technical regulation and an amendment to the invoice regulation. The mandatory model will apply to all entities regardless of the size of the business.

When preparing for the implementation of mandatory e-invoicing, taxpayers should coordinate activities in several areas, including accounting and IT. The most important areas that should be taken into account are permissions and authorisations, selection or adaptation of ERP systems, and knowledge of the schema itself.

It is worth noting the detailed scope of the information required on e-invoices, indicating whether the invoices are mandatory or optional. The system will only verify the semantic accuracy of an invoice, i.e., technical compliance with the scheme, but not the accuracy of the invoice content or its reliability. If a taxpayer fails to comply with the requirements, the system will reject the invoice, which means that it will not be issued. Moreover, all errors will have to be corrected through correction invoices, as correction notes will be eliminated.

The new obligations likely will result in a need to verify and adapt internal procedures for issuing invoices, their circulation, accounting and VAT settlement.

Mandatory e-invoicing will not be limited to taking actions within the organisation but may also affect relations with other entities. New regulations may force taxpayers to discuss with contractors adjustments and changes to contractual provisions or transaction conditions, e.g., in the area of payments, including additional elements on invoices, etc. It is also important to know that the e-invoicing system does not support attachments, so VAT payers will have to devise new methods for delivering attachments (e.g., transport documents, time sheets, etc.) to contractors.

Other obligations to be imposed in relation to the KSeF should also be taken into account. Polish legislators intend to introduce a requirement that VAT payers include the number assigned to an invoice by the e-invoicing system in the bank transfer title. As from 1 July 2024, this requirement will include transfers made under the split payment mechanism.

E-invoicing will also affect the documentation of transactions involving foreign entities. Foreign VAT-payers that have a VAT fixed establishment in Poland and that participate in a given activity will have to issue e-invoices documenting these activities. Such taxpayers should verify the existence or absence of a fixed establishment in Poland. However, mandatory e-invoicing will not apply to foreign taxpayers with a permanent establishment in Poland for income tax purposes if they do not also have a fixed establishment for VAT purposes.

Moreover, it should be noted that the new requirements will apply to invoices documenting foreign transactions, including intra-Community supplies of goods or services for foreign entities. The method of delivering such invoices to foreign taxpayers that do not have a VAT fixed establishment in Poland should be agreed individually with these taxpayers.

Emilia Wolnowska
BDO in Poland