Green light for Mandatory E-Invoicing in Poland from 2023
Poland must receive a derogation from the European Commission in order to make e-invoicing mandatory under its new KSeF national e-invoicing system. This is in line with other EU member states that have or will introduce compulsory e-invoicing. In August 2021, Poland submitted to the European Commission a request for a derogation from the rules under the EU VAT Directive. These stipulate that the use of an electronic invoice shall be subject to acceptance by the recipient. In practice this means that within the European Union (EU), the decision to use electronic invoices remains ultimately a matter for agreement between the trading parties and not tax authority mandated or forced upon a customer by its supplier. By removing the right to receive an invoice in paper format, formal approval from the European Commission is a requirement.
The requirement to seek a derogation may be removed in the future under proposals under the VAT in the Digital Age initiative. For now, the European Commission, based on the proposal sent to the European Council, issued a draft derogation decision for approval authorising Poland to implement a mandatory electronic invoicing system from 1 April 2023 until 31 March 2026. The Ministry of Finance confirmed that based on the derogation, it will move forward with implementing “universal electronic invoicing” in Poland.
Background and goals of KSeF e-invoicing and e-reporting in Poland
Poland believes that the mandatory use of e-invoicing and the e-reporting of additional transactional data through its new National e-invoicing system (Krajowy System e-Faktur (“KSeF”) will produce several benefits for both the tax authority and taxpayers:
- significantly improve the data analytics capabilities of the Polish tax authority
- allow more effective prevention and identification of irregularities and errors which will help combat VAT fraud and evasion (especially VAT carousel fraud) and reduce the VAT Gap
- automatically verify the VAT declared on invoices and paid to the tax authority and more accurately verify VAT refund claims submitted by Polish taxpayers
- allow the preparation of pre-filled VAT declarations and recapitulative statements
- complement other measures introduced by Poland to combat VAT fraud and evasion and modernise the VAT system such as the JPK (the Single Audit File for VAT purposes), the split payment mechanism, the system for the electronic analysis of financial flows (STIR) and the online fiscal cash register system for monitoring the retail sector
- provide a storage and archiving service for taxpayers
- eliminate the need to print invoices and manually post them into accounting systems
- make it impossible to lose invoices
- automate accounting processes and simplify of tax and reporting obligations
- facilitate secure settlement of invoices between companies
Scope of KSeF e-invoicing and digital reporting mandate
1. Applies to all taxpayers established in Poland (including Polish businesses currently benefiting from the VAT registration exemption for small enterprises).
2. No requirement for foreign taxpayers (i.e. VAT registered but without an establishment in Poland) to use KSeF and issue e-invoices to customers or receive e-invoices from Polish suppliers.
3. Requirement to issue e-invoices for all transactions carried out by taxable persons established in Poland that currently require issuing a tax invoice.
4. Requirement to transmit to the KSeF specific information on certain transactions that do not require issuing a tax invoice, including:
- Intra-Community acquisitions of goods
- cross-border supplies of services (where the customer must self-account for VAT in Poland).
5. The issuing of compliant structured e-invoices will need to be via the KSeF.
6. Businesses will be able to produce structured e-invoices in their financial and accounting software and send them to the KSeF via an API (with relevant authorisation and authentication). Taxpayers can also use the online app ‘e-Mikrofirma’ which is accessible via smartphone and any taxpayer can use a web form logged-on to e-Urząd (e-Office).
7. E-invoices will need to be validated by the KSeF and will be time stamped and assigned a unique number. Once validated, the document will be deemed received and will automatically be available for the recipient to read or download. This makes the Polish e-invoicing mandate using KSeF, a pre-clearance e-invoicing model like the SDI e-invoicing platform used in Italy.
8. In the event of the unavailability of the KSeF system, a message will appear on the website and there is a proposed emergency procedure which will allow the issuing of invoices direct from their own accounting software to ensure the smooth processing of invoices by taxpayers.
The introduction of e-invoicing will initially be on a voluntary basis. However, it is anticipated that this will quickly move to being made compulsory next year.
Pilot programme to enable testing of the KSeF system
Voluntary e-invoicing under KSeF
Mandatory e-invoicing under KSeF (date TBC but expected)
In addition, the Ministry of Finance announced several incentives to encourage Polish taxpayers to voluntarily adopt e-invoicing ahead of the mandate next year.
E-invoicing is the clear direction of travel for tax authorities across Europe. Poland joins a growing list of countries that have already implemented or announced upcoming e-invoicing mandates, including Italy, France and Spain.
Find out more about Avalara's e-invoicing solutions.
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