Settlement of VAT in the case of intra-Community import of services
Even if your business operates exclusively on the domestic market, you need to be familiar with the basic principles of so-called settlement of imports of services. You can see this, for example, in a situation when you advertise yourself on popular social networks or internet search engines, and you receive the invoice for the service e.g. from Ireland.
Imports of services under the VAT Act
By imports of services - in accordance with point 9 of Article 2 of the Act of 11 March 2004 on goods and services tax (hereinafter VAT Act) - must be understood as the provision of services:
- where the service provider is a non-established taxable person without permanent place of economic activity on the territory of Poland, and in the case of services covered by Article 28e of the VAT Act (services connected with immovable property), that person is not registered as an "active taxable person", or "exempt taxable person" pursuant to Article 96(4) of the VAT Act.
- where a taxable person by virtue of their implementation is the customer (acquiring services) with established business or permanent place of business in Poland and who is liable to VAT. In this case, the recipient is also a non-taxable person, registered or obliged to register pursuant to Article 97(4) of the VAT Act
In general, the purchase of services from foreign contractors in case of the occurrence of those conditions requires the purchaser to account for VAT.
How to settle imports of services
Invoice for the service received from a foreign counterparty must meet the requirements of the VAT Act, and both the contractor and the Polish entrepreneur must be registered as a taxable person within the EU. The registration shall be made on the form VAT-R (more on this topic can be found in the guide relating to the registration for intra-Community transactions). After registration the entrepreneur becomes the holder of NIP-UE number.
Document received from the foreign counterparty imposes on a Polish entrepreneur 23 % VAT burden on services.
The taxable amount is to be the value of service (Article 30c (1) of the VAT Act). Remember that the value of an invoice issued in a foreign currency into PLN should be converted into PLN according to average rate of the NBP at the date prior to the issue of an invoice. Importantly, since 2014, there is no obligation to draw up internal invoices in respect of the tax. Currently, the relevant calculation can be made on the booking order document or even on the same invoice VAT.
In the case of taxpayers not exempted from VAT, clearance of imports of services must be fiscally neutral, because the burden of VAT also goes to the right to deduct input VAT. Both parties are normally reported on the VAT-7 return.
Imports of services does not require to submit the VAT recapitulative statement.
In a worse situation are entities exempt from VAT — they also have an obligation of adding the VAT due to the invoice, and do not have the right to deduct the input VAT. The tax liability shall be paid to the tax office in the wake of Declaration VAT-9M. VAT is deductible for tax purposes.
See the explanation of the Ministry of Finance on some situations related to the liability for tax:
- The contractor from Germany on 20 January 2017 has supplied the service of car repair in German territory to a Polish taxable person. Will there be for Polish taxpayer a tax obligation in respect of the import of services, and, if so, when?