Import of services and VAT – key insights

September 28, 2023

How to settle accounts for the import of services?

The import of services is defined as the offering of services for the performance of which the recipient becomes a taxable person. In order to correctly make a settlement from the import of services, the following should be taken into account:

– the place of taxation of services,

– the place of business or fixed establishment of the service provider,

– the entity obliged to tax the service,

– the date of its execution.

According to Article 28b(1) of the VAT Act, services provided to a taxable person are taxed at the place where the recipient of the service has its headquarters. When a service provider provides its services for a client whose fixed establishment is different from the place where his business is established, the place of taxation shall be the fixed establishment.

In a situation where the client does not have a fixed establishment or fixed place of business, the place of taxation shall be his permanent address or place of residence.

The law provides for exceptions, which are as follows:

  • services connected with immovable property, where the place of supply of services shall be the place where the immovable property is located,
  • passenger transport services, where the place of supply of services is the place where the transport takes place,
  • transport services for goods for a Polish entrepreneur, where the place of supply of services is the territory located outside the European Union,
  • admission services to cultural events, where the place of supply of services is the place where the events take place
  • cultural services, where the place of supply of services is the place where the activity is carried out,
  • short-term hiring services, where the place of supply of services is the place where those means of transport are put at the disposal of the customer,
  • tourist services, where the place of supply of services is the place where the service provider has its seat.

In the case of services provided by entities that have their headquarters or fixed place of business outside Poland, the Polish purchaser of services becomes a taxpayer. The purchase of services from foreign contractors, whose place of supply is determined on the basis of separate regulations is in Poland, obliges the buyer to settle VAT on their import.

How to document the import of services?

The import of services can be documented in two ways:

– by drawing up an accounting document, e.g. an accounting order or internal evidence, or 

– by making calculations on the invoice received from the contractor, directly entering it in the records for VAT purposes.

The tax obligation for the import of services arises at the same time as in the case of services provided by domestic entities—at the moment of providing the service. Issuing an invoice and its deadline do not affect the moment when the tax obligation arises for the import of services. In the absence of an invoice, the purchaser is obliged to prove that the tax obligation arose on the date of performance of the service. The taxable amount is everything that constitutes payment, and the national rate is granted for the correct rate.

For active VAT payers, when the purchased service is related to a taxable activity, it is possible to deduct tax. It should be remembered that taxpayers exempt from VAT cannot deduct VAT on the purchase of services. When deducting import VAT, you must show the amount of tax in the tax return.

Deduction of VAT tax on importation

The condition for deducting VAT on importation is to show the amount of tax due in the tax return. The output and input taxes should be accounted for in one return. If the output tax has not been settled on time – the return is corrected for the period in which the tax obligation arose. If the output tax has been paid on time but has not been reduced by the input tax, then the amount of VAT due for one of the two subsequent tax periods can be reduced. If this occurs later, the tax return must be corrected within 5 years.

Acquired services shall be shown in declarations:

  • JPK_V7M or JPK_V7K – for active VAT payers
  • VAT-8 – for exempt VAT payers, but registered as a VAT-EU taxpayer
  • VAT-9M – for exempt VAT taxpayers, not registered as a VAT-EU taxpayer.

To provide or purchase services from EU contractors, you must register for VAT-EU purposes. Active VAT payers must register before:

  • purchase of services, for which Poland is the place of service provision,
  • the supply of services for which the place of supply is another EU country.

Exempt VAT payers must register before:

  • purchase of services from a contractor from the European Union, for which the place of performance is the country of the buyer (Poland),
  • provision of services to a contractor from the European Union, for which the place of settlement is the country of the purchaser of this service, i.e., an EU country other than Poland.

 

After registration, a tax identification number starting with the PL code is used to settle the transaction.

 

Text based on: Poradnik VAT nr 17 (569) z dnia 10.09.2022

 

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