Self-billing in KSeF on behalf of foreign taxpayers

The introduction of the mandatory KSeF (National e-Invoicing System) will undoubtedly affect all issues related to invoicing, circulation of invoices within organizations or exchange of invoices with contractors. This will also concern self-billing, as invoices issued this way are subject to the obligation of being issued in KSeF, which will involve the necessity to properly manage the process of granting and receiving authorisations to issue invoices on behalf of a taxpayer.

However, while in the case of transactions between Polish entities it seems that the implementation of KSeF will not cause any significant concerns, as a taxpayer-seller will find invoices issued on his behalf by a taxpayer-buyer in KSeF, in the case of trade with foreign contractors the situation becomes somewhat more complicated.

It is worth mentioning that, in accordance with the provisions of the VAT Directive and the Polish VAT Act, invoices are, in principle, to be issued in line with the provisions applicable in the country of the supply of services or goods. There is an exception to this rule in cases where the buyer is responsible for settling output VAT on a given activity. These specifically concerns transactions settled by means of reverse charge, in which case, although the place of supply not being the country of the seller, the invoice will be issued in line with the provisions in place in the country of the seller. However, there is another exception to this exception concerning self-billing. Namely, in relation to cross-border transactions settled under reverse charge and self-billing at the same time, the invoice issued by the buyer on behalf of the seller should be issued in accordance with the provisions in force in the country of supply/delivery.

This raises the question of what impact the introduction of the mandatory KSeF will have on self-billing involving foreign suppliers. A partial answer to this question can be found in the explanatory statement to the draft act introducing the mandatory KSeF from which it follows that in the case of self-billing by a Polish buyer on behalf of a foreign seller, the Polish buyer should issue such an invoice in KSeF. For example, if a Polish company purchasing licenses from a German one issues self-billing invoices, then it should issue it in KSeF on behalf of the German company. Such an invoice does not include VAT (neither German nor Polish), as the Polish recipient settles the import of services on this account. Firstly, the legislator does not specify how a Polish taxpayer should provide such an invoice to his foreign supplier, who, after all, does not have access to KSeF, but is obliged to show such a sales invoice in his tax and accounting settlements. Above all, however, the question should be asked about the advisability of such a solution and the need to issue invoices in KSeF on behalf of foreign entities, especially in view of the fact that entities without a registered seat or a permanent place of business in Poland are explicitly exempt from the obligation to use KSeF when they issue invoices themselves. It may lead therefore to somewhat bizarre situations where a foreign entity in the standard billing model could legally issue an invoice outside KSeF, but, due to self-billing, the invoice documenting its sales will end up in the KSeF.

For example, a German taxpayer who does not have a registered seat or a permanent place of business in Poland, but owns a real estate located in Poland that he rents to a Polish taxpayer, he still will be able to issue an invoice outside KSeF, even if he is registered for VAT purposes in Poland . However, if the same taxpayer rents the same real estate to the same Polish taxpayer, but the Polish taxpayer issues invoices on his behalf as part of self-billing, the invoice will have to be issued in KSeF. Sounds logical.

Furthermore, as regards self-billing on behalf of foreign entities, also a practical aspect related to authentication in KSeF and granting authorisations for self-billing starts to appear. Namely, for an entity-purchaser to be able to issue an invoice on behalf of its supplier, that supplier should grant it the authorisation to issue invoices on its behalf. Here is where the hard part begins, as ‘accounts’ in KSeF are to be created only for Polish tax ID numbers (NIP), therefore a foreign entity not having NIP will not be able to authenticate itself in KSeF and grant appropriate authorisations. On the other hand, requiring a foreign taxpayer to obtain a Polish tax ID number in order to authenticate itself in KSeF would certainly be an excessive burden, and what is more, it would be questionable in terms of compliance with the VAT Directive.

This is also reflected in the schema for a structured invoice, which stipulates that a seller’s tax ID number should be included in his identification data, meaning that it should be the Polish NIP. Then the question arises as to how to fill in this data in the case of a foreign taxpayer who does not and is not obliged to have NIP?

These questions will probably remain to be answered until the updated version of the schema and the final version of the Act are published, however, all the above doubts could be avoided by excluding the use of KSeF for self-billing on behalf of foreign taxpayers not subject to the obligation to use KSeF.