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Purchase of agricultural products by an entrepreneur – all about the RR invoice

25.09.2023
Purchase of agricultural products by an entrepreneur – all about the RR invoice

The RR invoice is an accounting document that can seem like a mystery to many flat-rate farmers and their contractors. While it may not be significantly different from a standard VAT invoice at first glance, it has some unique features and regulations that are key to properly issuing and accounting for it. So, if you’ve been wondering how to properly fill out an RR invoice, whether and when VAT can be deducted from it, how to book it in the P&L, or under what circumstances you can issue a correction to it, you’re in the right place. We invite you to read more!

What is a VAT RR invoice?

Let’s start with the basics: what is a RR invoice? This is a specific type of accounting document, which is issued in the context of transactions related to agriculture. This invoice is aimed at flat-rate farmers and is designed to simplify and at the same time systematize financial processes related to their business

The VAT RR invoice is a document for the purchase of agricultural products and certain services from flat-rate farmers. Although it is the farmer who sells the products, the purchase document is always issued by the buyer

RR invoice – who issues it?

An RR invoice is a document that is issued by a person or company that purchases agricultural goods or uses services provided by a flat-rate farmer. This type of invoice applies only to transactions in which the buyer is a business that is registered as an active VAT taxpayer. The supplier, however, must be a flat-rate farmer

Not every purchase from a farmer will require a VAT RR invoice – before each transaction, you should find out whether he meets the criteria and the statutory definition of a flat rate farmer

RR invoice – who is a flat rate farmer?

A flat-rate farmer is a person engaged in agricultural activity who supplies agricultural products from his own agricultural activity or provides agricultural services, and in doing so enjoys tax exemption under Article 43(1)(3)

According to the above law, a flat-rate farmer is exempt from VAT when supplying agricultural products from his own agricultural activity and when providing agricultural services. In addition, according to Article 115 of the same law, a VAT-settled flat-rate farmer is entitled to a VAT refund on the purchase of certain agricultural inputs that are subject to VAT

In addition, flat-rate farmers who enjoy tax exemption are also exempt from the obligation

  • issuing invoices,
  • keeping records of supplies and purchases of goods and services,
  • to file a tax return with the tax office,
  • make a VAT-R registration declaration.

When purchasing goods or services from such an entity, entrepreneurs who are active VAT taxpayers shall issue an RR invoice

VAT RR invoice – sample

In general, the RR invoice template can vary, but there are some basic elements that must be included on it. These include

  • details of the supplier and purchaser – the name or surname of the supplier and purchaser, along with their addresses,
  • necessary dates – the date of purchase of goods/services, the date of issuance of the document and the invoice sequence number,
  • identification numbers – tax identification numbers or PESEL number (of both supplier and buyer),
  • unit price of goods or services – the cost of one unit of the purchased agricultural product without taking into account the amount of the lump-sum tax refund,
  • total value of products/services – the value of the order, without taking into account the amount of the lump-sum tax refund,
  • totalvalue – the total value of purchased agricultural products, including the amount of lump-sum tax refund,
  • detailed description of agricultural products – the name, specification, quantity and classes of products that were purchased,
  • tax refund – the rate and amount of the lump-sum tax refund on the value of the acquired agricultural products.

These data are necessary for proper accounting and must be included in an understandable and clear manner. In addition, the VAT RR invoice should also include a special statement by the supplier of agricultural products or services – “I declare that I am a flat-rate farmer exempt from the goods and services tax under Article 43(1)(3) of the Law on Goods and Services Tax.”

How to issue an RR invoice online?

In the age of technology, issuing an RR invoice online has become much easier. There are many accounting programs and platforms that offer the possibility of issuing this type of invoice simply and quickly. All you need to do is register on the appropriate site, fill in the necessary data and you’re done! You can also automate the entire process, which is especially useful for those who have many transactions to settle

RR invoice and VAT deduction

Another issue is RR invoice vs. VAT deduction. VAT deduction on an RR invoice is possible only in certain cases and under certain conditions. It is worth noting that not in every case a flat-rate farmer has the right to deduct VAT. This is related to various aspects, such as the type of activity, the type of goods purchased, or the purpose of the transaction

RR invoice – how to book in the P&L

While the invoice itself is a document, its proper posting is a step that cannot be skipped. It must be included in the tax books, and this means entering it in the appropriate columns in the Revenue and Expense Ledger (P&L). What’s more, for a VAT RR invoice, accounting can be more complex, as it also requires taking VAT into account

RR invoice correction

Correction of an RR invoice is a procedure that may be necessary when there are errors on the original document. These can be both formal errors, such as typos in the name or address, as well as factual errors, such as a wrong price conversion. In such a case, it is the issuer’s responsibility to issue a correction as soon as possible, which must be accurately described and contain information about what changes have been made

Can a farmer issue an RR invoice ?

Last, but not least, the question is: can a farmer issue an RR invoice ? Although the buyer, who is an active VAT taxpayer and buys products from a flat-rate farmer, is obliged to issue an invoice, it must be approved by the flat-rate farmer. However, it is permissible that it is the farmer himself who prepares and issues the VAT-RR invoice, if both parties so agree. In such a situation, the buyer must provide the form, complete the data, and then give the seller a copy of the invoice

The above article contains the most important information about the RR invoice and should answer most questions about this document. Of course, each transaction and each case is unique, so it is always advisable to consult an accounting expert to avoid possible problems. You can also use the TAXON invoicing app – this modern tool will make all your paperwork easier!