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On August 7, 2023, the President of Poland signed the Act of June 16, 2023, amending the Polish VAT Act and several other laws. This act confirms the date previously announced by the Ministry of Finance - for the introduction of the new e-invoicing format. Starting from July 1, 2024, taxpayers must be prepared for mandatory e-invoices and the National E-Invoicing System (KSeF - Krajowy System e-Faktur). These changes are aimed at combating VAT fraud and countering tax evasion by taxpayers.
Taxpayers will be using the KSeF - National E-Invoicing System, which is a centralized platform, managed by the Ministry of Finance, designed to facilitate e-invoicing in Poland. It allows taxpayers to issue sales invoices and validate their technical accuracy. Since January 1, 2022, taxpayers can voluntarily send structured e-invoices through this platform.
New VAT regulations
The recent amendment to VAT law mandates the use of KSeF and e-invoices for all B2B transactions in obligatory form – starting from July 1, 2024. An exception is granted to taxpayers eligible for entity-based and object-based VAT exemptions. They will have an additional six-month period to adapt to the new invoice format, as obligatory use of KSeF for VAT-exempt taxpayers will begin from January 1, 2025.
As of January 2025, taxpayers will face sanctions for non-compliance - up to 100 percent of the amount of output VAT resulting from the invoice, or 18.7 percent of the gross amount in the invoice (for invoices documenting VAT-exempt activities).
How the Invoicing will change
New regulations also affect invoices generated with cash registers and fiscal printers. Invoices from cash registers can be issued in the current format until December 31, 2024. Additionally, until the end of 2024, a fiscal receipt with a NIP (tax identification number) will be accepted as a simplified invoice.
Importantly, the KSeF will not cover:
- consumer (B2C) invoices,
- tickets serving as invoices,
- invoices issued under the OSS and IOSS procedures.
There'll be also no possibility to issue credit or debit notes in the KSeF and it will be not allowed to issue such documents outside this system – in case of any errors on an invoice, they'll need to be corrected by issuing a correcting invoice - all issued within KSeF. This platform also doesn't allow for adding attachments to an invoice – thus, any extra information about the transaction that's not in the e-invoice XML file will have to be sent through the communication channels used so far (e-mail, etc.).
The new regulations also clarify foreign currency conversion issues. The currency exchange rate used for conversion to PLN from the day preceding the date indicated in field P_1 of the structured invoice will be maintained for one additional day for the invoice to be sent to the KSeF.
The amended law also introduces amendments clarifying the invoice issuance date and other issues important for the invoicing process, including what to do during a system failure and in the offline mode, as well as consent for correcting invoices to be issued during the period of system failure and in the offline mode.
Innovative shifts drawing near
The integration of structured e-Invoice support marks a substantial transformation for all enterprises. Poland's e-invoicing requirements diverge – often quite markedly – from the rules established earlier in other nations that had embraced e-invoicing beforehand.
Accommodating Polish requisites in this respect proves to be an intricate and time-intensive endeavour – the span required for groundwork should be measured in months, although its duration might notably differ based on diverse factors. The matter of precisely how long the entire procedure of adeptly integrating e-Invoices into a given company will take in practicality (for instance, whether a span of 10 months proves essential or if 6 months would suffice) is contingent upon a multitude of considerations. These include the volume of invoices generated and received, the intricacy and adaptability of financial and accounting systems, licence, billing and other operational systems employed as data sources for the invoices issued, the range of transactions, the templates employed to document these transactions, the organization's responsiveness to shifts in business processes, and much more.
For every company, it's of utmost importance to ascertain, primarily, the complexity of the situation the project team will confront, and how this will subsequently impact the timeline of said project.
Structured e-invoicing signifies a significant shift, albeit one laden with potential advantages for businesses. Through the digitization of the invoicing procedure, companies can streamline their accounting practices, ultimately saving time and allocating resources to alternative tasks and functions. Skilfully integrated e-invoicing has the potential to curtail error occurrences and the corresponding volume of requisite rectifications/submitted corrections, alongside expediting payment cycles and enhancing cash flow.
Nonetheless, the extent of the advantages arising from managing e-Invoices hinges upon the meticulous groundwork, strategic planning, and proficient execution of the requisite alterations within an organization's workflows. To guarantee a productive and effective roll-out, it's imperative to adopt a comprehensive strategy that navigates the realm of fiscal, legal, and technological dimensions and prerequisites, while duly accommodating management and business imperatives. The intricacy of the subject leads companies gearing up to manage e-invoices to grapple with an array of practical challenges (such as the inability to append attachments alongside the invoice submitted to the KSeF, complexities tied to accounting for staff expenses, and issues concerning expense legitimacy verification, as well as the assurance of accurate validation for purchase invoices, among others).
Through the lens of an EY expert
Fuelled by apprehension over forthcoming regulatory shifts (which have been notably pronounced since the voluntary KSeF Introduction), combined with concerns about incurring substantial costs associated with the ongoing alterations and the potential deferral of obligatory e-invoicing, a substantial cohort of businesses have, up until now, chosen to bide their time before embarking on the pivotal measures required to usher in the novel invoicing approach.
With the President's endorsement of the legislation, succeeded by its publication in the Polish Journal of Laws (pl. Dziennik Ustaw, the legislative trajectory reaches its culmination, underscoring the urgency to eschew any further postponements in the preparatory endeavours. This imperative rings particularly true for companies whose scale or intricacy of operations essentially renders the employment of the cost-free tools supplied by the Ministry of Finance for e-Invoice management (sending and collecting) an improbable route.
This is the case for most large and medium-sized enterprises, which will most often prepare e-invoices using their own financial and accounting solutions and systems, and then send them to the Ministry's platform by means of an API (that is, a programming interface containing a set of rules describing how systems communicate with each other, that is, how they connect and exchange data). And preparing to handle e-Invoices, in addition to implementing appropriate technological solutions, also requires appropriate mapping of the data included on the invoices, ensuring their accuracy from a fiscal point of view, adjusting the processes operating in the company, testing the entire process and training employees.
When preparing for the implementation of systems supporting e-Invoices, it is worth taking advantage of the support of experienced experts.
How EY can Help
Our digital tax team takes a deep dive to look at your tax function from every angle, from taxation to tax function operations. Learn more.
Read moreService Leader
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Channing FlynnEY Global International Tax and Transaction Services Partner, Global Technology Tax Sector Leader
Summary
With the President's endorsement, the legislative phase of efforts towards instituting compulsory e-Invoices and the National e-Invoicing System (KSeF) has concluded. These transformative shifts in invoicing are set to come into force on the 1st of July, 2024. Businesses that have yet to integrate
We warmly invite you to get in touch with our specialists, how can take care of the whole e-invoicing implementation process for you.
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