Slim VAT Package – changes to Correcting Invoices (in minus)

On January 1, 2021, the “Slim VAT Package” entered into force, containing solutions that simplify running a business, including simplification of invoice corrections.

The most important changes regarding the new rules for recognizing correction invoices (in minus) issued from 2021 do not require formal fulfillment of the conditions for obtaining confirmation of receipt of the correction by the contractor.

The Ministry of Finance in the tax explanation indicates i.a.:

In regards to the agreement between the parties on the terms of reduction:

• “the parties to the transaction can independently create a method of documenting the conditions of lowering the tax base and output tax, which will be the easiest to implement under specific business conditions“
• “such understanding may be the conclusion of an agreement specifying in which situations the buyer obtains the right to recover part of the remuneration, (…) in the terms and conditions of the sale, (…) also during the cooperation between the parties. Entrepreneurs may conclude various types of annexes to contracts, agreements or create other documents commonly used in trade “,
• “an acceptable form of reconciliation (constituting a premise for both the right to correct the tax due by the seller and updating the obligation for the buyer to make a similar adjustment) may also be verbal (telephone) arrangements and the implicit acceptance of the terms by both parties to the transaction”,
• “the burden of proof related to documenting the agreed arrangement is always on the seller”,
• “if the conditions for lowering the tax base are agreed, respectively, the return of a batch of goods or a return of funds – these conditions are agreed upon when a later event occurs, i.e. for the return of goods, the moment of receipt of the returned batch of goods by the seller, and for the return of funds to the bank account the moment of crediting the amount returned to the buyer’s account ”;

in the scope of supporting documentation:

• “other than the confirmation of receipt of the correcting invoice, the evidence proving the reduction of the tax base, which is already in the possession of entrepreneurs as part of the commercial documentation, has gained significance,”
• “for example: return of an advance payment for an unrealized delivery – the taxpayer returns the advance payment to the account – in the title, he enters the return for an unrealized delivery and the order number. In this case, confirmation of receipt by the buyer of the refund, if the parties have not concluded any additional agreements or the terms of the correction, will naturally be considered a business document containing both the reconciliation and the fulfillment of the agreed terms of in minus correction “,
• “the taxpayer collects and stores documentation confirming the agreement on the conditions of reducing the VAT tax base and the fulfillment of these agreed conditions in any form”.

Due to the above, the reduction of VAT is possible only after collecting the above-mentioned documentation in a given month.

It is also worth noting that instead of collecting confirmations of receipt of correcting invoices, an obligation to document the arrangement of the correcting invoices with the buyer appeared. The fact of establishing the conditions for adjusting the tax base, however, can be documented with any documents, not just one that was previously required to be in possession.