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An invoice without VAT in Poland – who can issue it and what must it contain?

02.11.2023
An invoice without VAT in Poland – who can issue it and what must it contain?

When we hear of an invoice, we think of a document that contains some standard information, such as details of the supplier, the buyer, a description of the product or service and the relevant VAT rate. But what about when a business has the right to issue an invoice without VAT? In this article we will discuss such situations and explain when such a document is allowed, what information it contains and the differences from a standard invoice

What is an invoice exempt from VAT?

A VAT-exempt invoice is a specific type of accounting document that does not include VAT. Why? Because there are certain situations in which businesses do not need to collect this tax from their customers. In practice, such VAT-exempt invoices are relatively rare, but there are industries and situations where they are standard

For example, certain medical, educational or charitable services may be exempt from VAT. This means that a business operating in such an industry will invoice without VAT

Invoice or invoice without VAT? Differences and similarities

Businesses often ask what the difference is between a bill and an invoice without VAT. In reality, the two documents are very similar, but have some key differences.

An invoice, whether a standard invoice or a non-VAT invoice, is an official accounting document that must contain certain mandatory elements of an invoice, such as the invoice number, the date of issue and the details of both parties to the transaction. An invoice, although also an accounting document, has less restrictive requirements and is often used in situations where the issuer is not a registered VAT payer.

A VAT-exempt invoice, on the other hand, is a specific type of invoice that shows that the seller is officially exempt from VAT. In practice, such an invoice will have all the mandatory elements of an invoice, but will not include the VAT rate.

Who can issue an invoice without VAT?

Are you wondering whether you are entitled to issue an invoice without VAT? The answer to this question depends on several factors, which are set out in the law. Firstly, in order to be eligible for such a privilege, your income in the previous tax year must not have exceeded the sum of PLN 200,000. This is an important criterion that determines the possibility of benefiting from the entity exemption. If you decide to conduct business activity during the year, you are also entitled to take advantage of this exemption, but under one condition – the anticipated revenue cannot exceed the aforementioned limit.

Another important aspect is how this limit is calculated. If your activity has not been carried out for the whole year, you must take into account the appropriate proportion. The formula to calculate this is: (200,000 x number of days of activity in the year) / 365. This gives you clarity on your eligibility for this type of tax relief.

It is also worth paying attention to the type of business you are carrying out. This is because there are certain industries and types of services that are excluded from the entity exemption. This includes, among others, the sale of excise goods, precious metals, car parts or electronics.

In addition, if you are involved in the provision of consultancy, legal or jewellery services, unfortunately, you will not be able to benefit from the entity exemption. It is important to read the regulations carefully and make sure that your business qualifies for this exemption before making a decision.

Model invoice without VAT and its compulsory elements

Given that a VAT-free invoice has some specific features, what is its template? Is a vat-free invoice template significantly different from a standard invoice template?

Yes, the no vat invoice template has some unique features. Firstly, it does not include the VAT rate. Secondly, it must state that it is a VAT-exempt invoice, so that no one is in any doubt as to why there is no tax on it.

The mandatory elements of an invoice, whether with or without VAT, include:

  • Invoice number
  • Date of issue
  • Supplier’s (issuer’s) details
  • Details of purchaser
  • Description of the product/service
  • Net and gross price (in the case of an invoice without VAT, both prices will be the same)
  • VAT exemption information (in the case of an invoice exempt from VAT)

Non-VAT invoice in the context of the National e-Invoice System

The National e-Invoice System (KSeF) is a modern IT tool for the electronic issuing and receipt of structured invoices. Although the use of the system is currently not mandatory, this is set to change. From 1 July 2024, the system will be mandatory for active VAT taxpayers and, from the beginning of 2025, also for those exempt from VAT, both subject and object. At that time, it will only be possible to create invoices in structured form, which requires adequate preparation on the part of entrepreneurs.

One aspect worth notingis the precision in entering data into the system. In the past, if a mistake was made when creating an invoice, it could easily be corrected before the document was handed over to the customer. In KSeF, the invoice is automatically sent to the recipient once it has been issued. This means that any error can cause complications, and correcting even minor shortcomings will be more complex than before.

Why is it important to know about invoices without VAT?

Knowing the different types of invoices is crucial for any business. This is because it allows you to keep your accounts correctly and avoid problems with the Tax Office. By knowing the difference between an invoice and a bill or when it is possible to issue an invoice without VAT, the entrepreneur can be sure that he is acting in accordance with the law.

Have you ever wondered whether your business might qualify for VAT-free invoicing? If so, it’s worth seeking the help of a tax or accounting expert who can help you understand the regulations in detail and make sure your business is operating in compliance.

Understanding the differences between different types of invoices also allows you to better manage your business finances. By knowing how much VAT has to be paid to the tax office and how much can be kept for themselves, an entrepreneur can better plan their expenditure and investments.

Ultimately, knowledge of invoices, whether with or without VAT, is one of the key tools in any entrepreneur’s arsenal. Not only does it allow for proper bookkeeping, but it also builds trust among clients and business partners who know they are working with a professional who is aware of the applicable regulations. Want to manage your invoices well? Use the Taxon invoicing app – there’s no easier way!

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