Changes to the VAT Act effective from 1 July 2024

President Andrzej Duda signed the Act of 16 June 2023 amending the Act on Value Added Tax and certain other acts on 4 August this year. An analysis of the changes introduced by the amendment clearly shows that a systemic revolution is approaching. The Act will introduce a requirement for taxpayers to use the National e-Invoicing System (KSeF), which has been available on a voluntary basis since 1 February 2022. The new e-invoicing system will be implemented in two stages. From 1 July 2024, it will become mandatory for active VAT taxpayers, both domestic and foreign, who are registered for VAT in Poland and have their registered office or a fixed place of business here. The second stage will come into force on 1 January 2025, from which point the system will also be mandatory for taxpayers exempt from VAT either subjectively or objectively. It is worth noting that the system will remain optional for foreign taxpayers who do not have a registered office or fixed place of business in Poland, as well as for taxpayers issuing consumer invoices.

In addition, taxpayers must prepare for issuing invoices outside of the KSeF system, meaning two systems will effectively operate in parallel, with the ministerial system forming the basis. Consequently, due to the upcoming changes, invoices will once again become a point of focus for taxpayers. The amendment will require adaptation of financial and accounting systems to the new reality through the purchase of new software and training in its use. Taxpayers will also need to learn how to issue invoices and what can be included on them. The amendment will also introduce severe penalties for failure to comply with the upcoming changes.

What will the new invoices look like?

Currently, invoices can be issued in paper form, electronically (e.g. PDF), or as structured documents via the voluntary National e-Invoicing System. Once the amendment comes into effect, the structured invoice will become the standard, which in practice will operate in a single format, known as a schema — an XML file. The unified invoice format is intended for all VAT taxpayers, including public entities such as municipalities involved in economic activities. The final schema format has already been prepared by the Ministry of Finance and is available in the Central Repository of Electronic Document Templates. The e-invoice will open as a PDF or in a web browser. Each visualisation will contain a unique QR code, allowing taxpayers to quickly and easily verify that the invoice data matches the original data stored in the National e-Invoicing System.
Regarding the data required on the e-invoice, there will be no fundamental changes. The invoice will still contain information such as: the name or company name of the taxpayer and purchaser of goods or services, their addresses, taxpayer’s VAT ID (NIP), buyer’s VAT ID (NIP), the date of delivery or completion of the service, the name (type) of goods or services, and the total amount due. The new rules will also allow for the inclusion of optional elements. It is worth noting that, once the Act comes into force, it will no longer be possible to attach additional documents to the invoice, which is currently allowed.

The procedure for issuing and receiving e-invoices

Currently, the procedure for issuing invoices is regulated by Article 106g of the VAT Act. This provision will be repealed and replaced with new regulations under Articles 106ga to 106gd. According to the amendment, the taxpayer will first generate the invoice as an XML file in their financial and accounting system. Next, the entity will need access to the KSeF system. They must authenticate themselves in the system, e.g. using an e-signature, to transmit the e-invoice. Following successful verification, individual invoices or batches of invoices will be recorded in the system. The KSeF system will then verify the invoices and assign them an appropriate number.
The amendment also provides for the issuance of corrective invoices and offers specific solutions for when the system is unavailable or access is disrupted on the taxpayer’s side. In such cases, the new regulations allow for offline mode — the taxpayer can generate the e-invoice in their system/application and, after regaining access to KSeF or resolving the issue, submit the invoice to the system without penalty.

What are the penalties for failing to comply with the new procedures?

The amendment introduces severe penalties for non-compliance with the new regulations. Penalties may apply for not issuing invoices via the system, issuing invoices in an incorrect format, or failing to submit invoices on time in the event of system downtime or access issues. In such cases, fines may amount to up to 100% of the VAT shown on the invoice or 18.7% of the total amount due. However, the tax office will have the discretion to mitigate penalties depending on the circumstances of each case, including the severity and context of the breach, whether the taxpayer has previously failed to comply, whether they were previously penalised for the same conduct, the extent of their contribution to the non-compliance, and whether steps were taken to avoid the breach. If the breach resulted from force majeure, the tax authority will refrain from imposing a penalty.

Advantages and disadvantages of the new regulations

The Ministry of Finance, in its communication regarding the amendment, highlights several tax and business advantages resulting from the changes. E-invoicing is expected to streamline and expedite economic transactions by introducing a single standardised invoice format, replacing paper and PDF documents with digital data, and promoting the digitisation and automation of invoice exchange and accounting between taxpayers. This solution will not only allow businesses to document transactions more quickly and efficiently but also speed up payment processing.
Furthermore, the change is expected to support accounting automation, reducing the number of errors. Paper or graphic invoices will no longer need to be scanned or manually entered, as XML data can be directly imported into systems. The changes will also accelerate data exchange between contractors, as issued invoices will be made available to recipients in near real-time by the administration. It is expected that the changes will support fair competition by ensuring that buyers can verify that invoices are issued by authorised entities. Likewise, invoice issuers can be sure that recipients have received their invoices.

From a tax perspective, taxpayers using the KSeF system who apply for a VAT refund will receive it in a shorter period — 40 days. There will no longer be a need to issue duplicate invoices, as e-invoices in the KSeF system cannot be lost or destroyed. Both the issuer and the recipient will always have access to them. Another benefit introduced by the amendment is the elimination of the requirement to submit the Standard Audit File for Invoices (JPK_FA) upon request by tax authorities. The new regulations are also expected to enable faster correction of invoices.

Despite the numerous advantages, potential negative consequences for taxpayers must also be considered. The new regulations will inevitably lead to additional costs for businesses, including purchasing new software and training employees. Initially, this may create confusion and anxiety among taxpayers due to the threat of strict penalties. To avoid such outcomes, everyone affected by the changes should familiarise themselves thoroughly with the new regulations and prepare accordingly. The Ministry of Finance assures that it will provide appropriate tools to ensure that all parties can properly adapt to the upcoming changes.