National e-Faktur system

Freepik Image From 1 July 2024 a very important change in the system of operation of taxable persons is announced, namely VAT. It is then to become compulsory to use the KSeF system[1].

This abbreviation means the National e-Factur System and it is a platform for issuing and receiving invoices online, which took the form of structured invoices.

From a legal point of view, it is therefore a new process allowing the trading of invoices documenting transactions performed by entities established in Poland and Polish tax registration.

This amendment was introduced on the basis of Act dated 16 June 2023 amending the Goods and Services Tax Act and certain other laws (Journal of Laws, item 1598, Further: Amending Act), and since January 2022 it is possible to use such a system on a voluntary basis. It therefore operates in parallel with the current document turnover. This allows, at least to a limited extent, an analysis of its current functioning and the possibility of addressing possible problems.

The preparation of the activities, regardless of the size and form of the holding of the taxpayer, in this respect raises many far-reaching consequences for accounting and sales systems, as well as, and perhaps above all, from the perspective of invoicing processes and documentation of transactions.

These are often processes that go beyond the accounting area, and the impact of KSeF implementation on logistics, export sales, accounting for employee purchases or distributed customer service can be enormous. Inadequate preparation for this revolution can make it difficult or impossible to do business.

Appropriate adjustments in the area of invoice process, transaction maintenance, tax analysis and process optimization should therefore be prepared.

General system information

As indicated in Act dated 11 March 2004 on tax on goods and services (i.e. Journal of Laws of 2023, item 1570 as amended, hereafter: VAT Act) KSeF is an information system, operated and administered by the Head of the National Tax Administration, serving[2]:

• granting, amending or withdrawing the right to use the KSeF;
• notification of certified designated entities under Article 106nb VAT Act on the powers conferred to use or receive KSeF;
• the authentication and verification of the KSeF rights of use held by the entities referred to above;
• issuing structured invoices[3];
• access to structured invoices;
• receiving structured invoices;
• storage of structured invoices;
• the identification number assigned to the KSeF;
• analysis and verification of the correctness of structured invoice data;

notify certified entities of:

• the date and time of issue of the structured invoice and the number identifying the structured invoice assigned to the KSeF and the date and time of its allocation,
• date and time of rejection of the invoice in case of non-compliance with the model of the structured invoice,
• the lack of the possibility to issue a structured invoice - in the event of an inaccessibility of KSeF;
• notification of entities other than those authorised to use the KSeF.

So as you can see, it is a system with a wide functional aspect. However, it is not intended to replace existing accounting and invoice systems, but to integrate to simplify and structure the transmission of accounting and tax data. It is important to be aware that the issuing of invoices in KSeF is a continuous process rather than a periodic process, as has been the case so far, among others, with the generation of JPK files.

Who, then, will be affected by the KSeF system? This obligation will be covered by Polish VAT invoices, including those with a rate of duty 0% and exempt from VAT, issued by entities established in Poland. Foreign entrepreneurs holding a permanent place of business in Poland and the Polish NIP number, both personally and through e.g.

established representatives, will also be required to issue invoices in KSeF. However, in the case of transactions with foreign counterparties, the provisions do not provide for any form of exemption from the obligation to use KSeF by national entities.

This means that, in addition to their introduction into the System, appropriate documentary trade will also have to be ensured for the foreign counterparty under the present rules. In the case of documents received from a foreign counterparty, there is no obligation to add them to the KSeF.

In summary, according to Article 106ga, which will be established from 1 July 2024, taxpayers will be exempt from the obligation to issue structured invoices:

• not established or established in the territory of the country;
• not established in the territory of the country which has a permanent establishment in the territory of the country, where that permanent establishment does not participate in the supply of goods or services for which an invoice has been issued;

using specific procedures:

• a non-EU procedure for certain services,
• a specific procedure for the provision of international occasional road and passenger services,
• Special procedure for distance selling of imported goods (IOSS);
• Performing transactions to the purchaser of goods or services which are a natural person who does not engage in business activities;
• in the case of duly documented supplies of goods or services as defined in the rules issued under Article 106s.

Of which first two where it is possible to issue an additional structured invoice if the taxable person so decides. Due to their structure and functions, KSeF will not be subject to, inter alia, amending notes, pro-form invoices or internal invoices. Also duplicate invoices will be unnecessary as the recipient will be able to download the invoice again at any time.

This should not be expected to work autonomously. As with the JPK, it is reasonable to assume that market-based accounting systems will be able to integrate their own solutions and allow direct implementation of invoices from available software to the KSeF system without the need for double insertion, which may be a particularly important solution for the largest operators on one hundred And thousands of documents a month.

The scope of work before the implementation of the KSeF is large and covers many entities. Therefore, they should be interested in their requirements and in the process of analysis and adaptation of processes and data. This will increase the opportunity for smooth implementation of solutions to meet new obligations.

Preparation for implementation of the KSeF

As mentioned above, taxpayers should look closely at the existing processes and capabilities and requirements of the KSeF in order to prepare for the inevitable change and transition to the e-invoice system.

The process of issuing and accepting invoices should be carefully mapped together with an indication of the relevant data disclosed and implemented at each stage, as well as who makes key decisions on the occurrence of non-standard invoices.

Attention should be paid to the dependencies that occur at the stage on production and collection of orders on stock through transport, sales of traders or customer service. Economic activity can use many simplifications that are "flexible" and easy to adapt to processes. The KSeF structure is, relatively speaking, rigid.

The taxpayer must therefore know where the current processes are incompatible with expectations in order to correct them properly. Since the process of issuing invoices in KSeF is a continuous process, there is no time for manual corrections or makeshift solutions.

The whole system of thinking about issuing invoices is subject to change, where the data cannot be improved at the last minute before sending it to the client. It is therefore necessary to introduce appropriate procedures to avoid as many errors as possible on invoices.

KSeF does not have a system for validating the correctness of the invoice in a different respect to the structural compatibility of the file. It may therefore appear that an invoice with all the legal effects of such an issue will prove to have calculation errors or factual errors.

Much can also depend on how accounting systems are integrated. The obstacle will often be a complicated technical environment – limitations on the possibility of modifying the system, the existence of many data sources or the organisation's document circulation systems.

The entity must therefore obtain the necessary information in advance in order to know how the accounting system available to it will change and how effectively it will be operated for the purposes of issuing structured invoices.

The quality of data, which are often written in textually, prone to errors and inconsistencies, can also be a problem in integration with the KSeF. The system itself now assumes a total 373 possible fields to fill.

Communication with internal or external technical departments is therefore essential in order to develop the correct architecture of the taxpayer's systems. The system does not allow, for example, the attachment to the invoice.

It is therefore important to rethink the way additional data has been processed and adapted to the new conditions.

Tax payers also need to analyse their processes related to their tax obligations and the simplifications that affect the calculation of tax obligations. The most common ones concern delivery and receipt dates of invoice, but also other elements such as, for example, clearing split payments.

These are simplifications that result from adopted culture and technical constraints on the taxpayer and do not affect the amount of tax liability. However, in the KSeF, they will become clearly visible to tax authorities and therefore their modification should be considered.

For example, the system will not allow the registration of taxpayers, sellers and buyers to be verified, either in VAT or in the "white list" of the bank account. These processes are still on the taxpayer's side.

The last procedural element that taxpayers should analyse is the optimization area. In other words, the development of such standards of conduct, which will enable important benefits to be achieved through the automation of the collection of purchasing invoices, also supplied through KSeF.

For those for whom it was a manual process, there may be a significant improvement in work- and time-consumingness by importing them directly into the accounting system.

Improving the quality of processes, automation and integration, not to mention the immediate transmission of cost information, should definitely be counted against the additional advantages of the implementation of the KSeF.

Operation of KSeF

It is also important for the correct use of KSeF to understand it. It is not just a technical aspect of the programme code, but its impact on economic activity and, for example, taxation.

The VAT Act indicates that the structured invoice is deemed to have been issued on the date of its transmission[4], which affects the origin of the tax moment.

It is therefore not important to register it or to issue it in the taxpayer's system only a technical operation to send it to the KSeF, which is additionally disclosed in the received issue of the KSeF.

This was also confirmed by the Director of National Tax Information (hereinafter DKIS) in his personal interpretation: ‘With regard to the legal provisions set out above and the description of the case set out in the proposal, the tax liability for the rental services provided arises when the structured invoice is issued, i.e.

on the day of its transmission to the National e-Factur System, according to Article 19(5)(4) point (b) in conjunction with Article 106na(1) Act’[5]. However, only after it has been reprocessed and given a number, more of which in the following part of the article, can be indicated by the date on which it was received by the purchaser.

The actual date of taking it or accepting it does not matter. ‘Consumption of receipt of the invoice by the purchaser will be important for purchasing processes in many organisations. If, to date, an invoice not meeting the requirements laid down with the counterparty (e.g.

no PO number) has been treated as incorrect by the buyer and returned without being included in the books (regardless of the fiscal regularity of the approach), this process will have to be changed.

Organisations will also need to verify the purchase invoices received from unknown entities (...), as well as invoices documenting the purchase of workers’[6]. This also applies to amending invoices.

At the same time, the rules allow the granting of appropriate powers to entities other than the taxable person and the issuer/receiver of the invoice, i.e. the accounting office or the individual. However, both the assignment and the withdrawal of such permission are carried out manually.

KSeF also does not have in its structure the function of ‘notifying’ entities with a new structured invoice received. This results in the development with customers, as well as within their own organization, of additional control procedures which will prevent the purchase invoices received from being omitted. Experts in this regard point to the important elements to be included in this procedure, both for accounting service providers and for companies[7]:

• rules on the granting of powers within an entity,
• which positions within the company will have the widest range of invoicing rights and access to invoices.
• when entitlement must be withdrawn and within what time limit for a particular person in office,
• under which procedure an external entity is authorised to receive invoices from the KSeF,

what will be the acceptance of invoices for accounting, who will be the person who indicates which documents should be entered with the KSeF and which should not be included in the books, who will issue invoices, who will be responsible for sending invoices to the KSeF,

how often invoices are transferred to KSeF,

how documents not covered by the KSeF will be stored, e.g. invoices for imports of goods, intra-Community acquisitions of goods etc.,

who will be obliged to archive the aforementioned documents,

whether the programme will be used between the external entity and the taxpayer.

Operation in KSeF

Not only will it be relevant to give authorisation to the natural persons or economic activities concerned, but also the way in which it will be done. Regulation of the Minister of Finance of 27 December 2021 on the use of the National e-Factur System (Journal of Laws, item 2481 as amended, further: The KseF Regulation) points to three the types of allowances and the entities holding them. The rights to:

• granting, amending or withdrawing the right to use KseF;
• issuing or accessing structured invoices;
• issuing the invoices in question under Article 106d(1) VAT, which is structured invoices.

A number of entities with individual powers are broad and indicated Under section 2 KSeF Regulations.[8] However, the use of the system shall require the authentication of the entity/person entitled by a qualified electronic signature, a qualified electronic seal, a signed trusted or generated by the KSeF, after the authentication of the taxable person or entity authorised in the manner referred to Under point 1-3, a sequence of alphanumeric characters, excluding the punctuation marks assigned to the taxable person or rightholder and his rights[9].

Any changes, assignments or permissions can be made using the interface software. The system also allows to operate with authorization token[10], i.e. an electronic authentication tool that acts as a key to access the system.

Each of these authentication solutions has its advantages and disadvantages. The best solution will be the size of the taxpayer. A qualified electronic signature is therefore indicated for single-member economic activities due to its simplicity and lack of additional formalities.

The person conducting such activities, after logging in with a signature containing the PESEL or NIP number, will receive full privileges in the KSeF.

In the case of companies and larger entities, it may be more important to use an electronic qualified stamp, including the taxpayer’s NIP number, which will allow, inter alia, to circumvent the need to notify the tax office using the application of ZAW-FA. The seal can also be used by many employees.

„Authorization tokens, also called access tokens, are a powerful tool, especially in the context of automated processes or operations performed by machines. In IT systems such as KSeF, they can play a key role, allowing convenient, safe and efficient access management. The vast majority of operations that we perform in KSeF, using the authorization token, becomes much more effective. This allows operations to be carried out in a completely automatic manner, without the need for human participation and the need for every signature or electronic seal to be used.”[11]. However, this is a rather risky method and should be used with appropriate safety safeguards and procedures.

When access to the System is granted, account should also be taken of possible problems in implementing structured invoices. The system allows batch shipping, allowing mass transmission of sales invoices for display and through an interactive session, i.e. automatic issuing of single invoices.

Batch shipping can be used to prepare ‘packages’ of invoices whose size cannot exceed 50 MB and the packages alone cannot be more than 100. If at least one The invoice in the package will be incompatible with the structure, the entire package will be rejected. Therefore, they should be verified in advance on structural correctness.

However, such input cannot be made with the use of an authorisation token, but must be signed by the authorised person. Expressing an invoice using an interactive session works in a similar way as issuing an invoice in an accounting system, but is done directly in KSeF.

From the purchase point of view, the collection of invoices can only be made through an interactive session. There are no limits to the collection of new and old invoices. You can also filter purchase invoices with an indication of the range of dates and times in which these documents were accepted by the KSeF.

As has been mentioned, the system does not inform the taxpayer of the emergence of new documents, which may be particularly embarrassing for entities where the marketing of purchase invoices is continuous.

This seems to be an important drawback of the system, as the indication which purchase invoices were already collected and which were not, seems to be a simple functionality.

Example of invoice process with the taxpayer

In order to illustrate the process, let us try to go through the processes required in KSeF for the activities of the taxpayer. ‘The course of the sales process including the mandatory KSeF shall include the following steps:

• preparation of a substantive invoice,
• technical preparation of the invoice,
• user authorisation in KSeF,
• dispatch of invoices to KSeF,
• validation of the invoice and its acceptance (or not) to the KSeF,
• giving a reference number.’[12]

The persons responsible for the taxpayer prepare invoices in their accounting system. They operate on a structure tailored to the requirements of a structured invoice. They must therefore indicate which fields will be optional and optional. Then the required information is matched to the sources, i.e.

orders or internal documents related to the supply of products/services. Depending on your software, this can be done manually or automatically.

It is worth remembering that the Company should have previously analysed whether the invoices issued so far did not contain, for example, simplifications in terms of measure or quantity of products, as these are the items required in the invoice structured for each row.

At the same time, in a separate process all the annexes required to be submitted to customers in the agreed manner are prepared.

Then people with the right permissions and authorizations open a session in KSeF allowing to load a sufficient amount of packed invoices. After importing documents, individual invoices are given their KSeF numbers. KSeF number consists of 32 signs.

In order it will be the seller's NIP, then the invoice date (in YYYYMMDD format) at the end and twelve technical marks and two-character check sum[13]. The number of the taxpayer should be recorded in its own system, again it can be done automatically using an integrated accounting system.

It is necessary to issue a corrective invoice, in the event of a tax inspection or proceeding by the tax authority, and ultimately indicates the date of issue of the invoice in question. It may differ from the date of its entry in the system, for example, due to technical failure or disrupted message.

It is also worth remembering that the system does not provide for the process of cancelling the invoice issued.

The provisions of the VAT Act indicate that one of the key dates to determine the moment of the tax obligation is the date of delivery[14], the date of transfer of the right to dispose of the goods as the owner[15].

In this respect, there are often simplifications on the part of taxpayers, mainly due to the difficulty of monitoring, considering the date of delivery of the invoice, while the correct delivery date may be much earlier and later.

Following the implementation of the KSeF, monitoring of the correctness in this respect will become simpler and, for example, through adequate integration of the accounting system with the KSeF, justified to ensure that invoices are taken into account during the relevant settlement periods.

Where goods are transported, the date of delivery may be the date of issue of the goods to the carrier and not the date of completion of the transport.[16].

A well-prepared accounting system will allow the taxpayer to add a number of invoice endorsements to its own needs as well as to its own status, e.g. a small taxpayer, self-invoicing options, provides for the possibility to include descriptions of transport, cargo and payments, and to indicate charges and deductions[17] in transactions with a counterparty through the Settlement Node.

The course of purchasing invoices with the taxpayer will be simpler. The invoices received in KSeF must be downloaded, verified and subsequently entered, automatically or manually, into the accounting system. The system provides for the possibility to save invoices to the Taxer's disk in xml and pdf format.

However, it should be borne in mind that the invoices in the KSeF are deemed to have been received at the time of the issue of the KSeF, the taxpayer will not be able to reject the document. The invoices containing errors will be considered to be effectively received and can only be corrected by issuing a correction invoice.

The problem can also be invoices with incorrect NIP and thus sent to, for example, another entity. In this case, the seller may only adjust the invoice to zero and reissue the correct document. This poses additional problems or will the original invoice have to be included in the accounting system of the entity that received it?

‘Because the taxable person who received the invoice at KSeF but did not acquire any goods or services, from the taxable person indicated on that document as the Entity[1] – there is no right to deduct VAT from this invoice. There is therefore no reason to include such invoice in the VAT records.

The seller, on the other hand, should issue a corrective invoice ‘to zero” (reply of the Ministry of Finance received by authors 22 September 2022)”[18]. However, what if it is a few months before the correction of the “zero” invoice is sent? There is no clear answer to this right now.

This process can also serve to issue "left" invoices to taxpayers. It is therefore appropriate to pay particular attention to verifying the correctness of invoices received.

According to Article 86(10)(10b) VAT Act the right to reduce the tax due by the amount of input tax arises in the settlement for the period during which the tax obligation on the party arose, but not earlier than the date of receipt of the invoice. In KSeF, this date will be the date of giving it a KSeF number, so usually the date of issue by the seller. With some simplification, the date of receipt of the invoice can therefore be obtained from its KSeF number and thus settled during VAT settlement periods.

So, as we can see before the actors, the difficult stage of adapting processes to the new reality. A good error handling process will be important. If KSeF rejects invoices, this may cause significant procedural problems.

It will be important to reduce the factor of "human error" and to correct the automation of data transmission within the accounting system.

This may require changes in the system or improvement of the data in the main system files, but the smaller the number of operations will have to be performed on the data to generate the XML file, the less likely the error is.

This applies, for example, to the appropriate GTU marking or, for example, the use of TP markings, which will be easier to program inside the system than controlled at the level of invoice file generation.

Another important point is the issue of invoice archiving. In principle, KSeF keeps its invoice data for a period 10 years, which means longer than taxpayers are obliged to do so[19]. However, in some cases invoices should be kept longer, e.g.

in the case of invoices documenting the acquisition of fixed assets or invoices from years in which the tax loss was shown[20]. Where the taxable person does not have invoices which are not included in the KSeF or which do not need to be archived any longer, KSeF may be an effective archiving tool and be a cost-effective alternative.

Chart. Map of invoice operation in KSeF

Source: J. Fornalik, National e-Factur System mandatory from 1 July 2024 – practical aspects of implementation of KSeF, PP 2023, No 12, p. 8-15.

KSeF failure

Although the Ministry of Finance ensures that the system will be unfailing, there are cases where the taxpayer does not have access to it, for example, due to his own Internet failure. During a transitional period in the event of lack of access, invoices should be issued by traditional method or only after access has been regained. From 1 July 2024 will be Article 106nf VAT Act. It provides that if the taxable person issues invoices outside the KSeF he will have a certain time to send them to the system in due time, namely:

• 7 days in the event of a KSeF failure;
• no later than the following working day, in the event of an inaccessibility of KSeF, after the end of the inaccessibility;
• no later than the following working day, in the case of technical problems on the part of the taxpayer, after the date of issue of the invoice outside the KSeF.

Communications on occurrence and termination of the accident and the lack of availability of KSeF The Minister responsible for public finances will publish, on the basis of Article 106ne VAT Act, in the Public Information Bulletin, on the website of the body of the office serving that minister, a relevant communication which sets out the duration of the accident or the inaccessibility.

These messages are also posted through interface software. This provision also mentions "social means of communication", but does not define what they may be. Answers were given to the service Prawo.pl „Under this term, all sources of information providing data, opinions, large-scale communications shall be understood.

Such a source may be the devices, institutions and persons by which the transmission of information is directed to the wide receiver. This term is often understood as synonymous with mass media, which includes real-time information, and it is about radio, television and the Internet"[21].

The ambiguities in this case may be a source of future disputes with tax authorities. Some evidence will also be required to prove the occurrence and termination of the failure within certain time limits. What if the communication is transmitted by a ‘social medium’ that the taxpayer is not following?

This is a high risk element in KSeF institutions, especially given potential penalties.

Penalties related to KSeF

The provisions of the VAT Act also provide for penalties for issuing invoices without the KSeF. They are indicated under Article 106ni VAT Act, which will enter into force from 1 January 2025, giving six months of "security" to taxpayers.

It states that a taxable person who, contrary to the obligation, has not issued a structured invoice or, in the absence of access to the KSeF, has issued an invoice which does not conform to the model provided or has not received access within the statutory deadline, has not sent it to the KSeF, is liable to a fine of up to 100% the amount of tax shown on the invoice.

In the event that the invoice does not contain the tax shown, the fine will amount to 18.7% the total amount of duty shown on such an invoice.

It is worth noting that the amount of the penalty is ultimately of a discretionary nature. The Ministry of Finance explains in the explanatory memorandum to the KSeF rules that the penalty will be moderated according to the gravity of the offence and other mitigating factors, which is particularly important in terms of e.g.

problems with sending invoices to KSeF as a result of a failure or other technical problems. It is also worth mentioning that the project initially assumed minimum fine thresholds of 1,000 PLN for invoices showing VAT and 500 PLN for invoices without VAT.

In this case, the legislator took into account the appropriateness of abolishing these provisions in the latest draft amendment.

Penalties will be imposed by decision without prior notice to remedy the infringements and will have to be paid without notice within the time limit 14 the days from the date of notification of such a decision, in accordance with the provisions of the Code of Administrative Procedure.

It is also interesting that, in the event of a taxpayer's failure to comply with his obligations in the scope of a penalty, no criminal proceedings will be initiated, or fiscal misdemeanour. However, this also means that the so-called institution will not be used in this respect. voluntary disclosure.

Summary

The aspects related to the implementation of the KSeF are multi-faceted, and even in this article they were not all covered. The preparation process itself for structured invoices is a challenge, especially because of the need to understand many IT concepts and to contact relevant internal or external specialists.

It also gives rise to a review of existing business processes and the removal of convenient but not entirely correct "shortcuts" in terms of issuing and circulation of invoices. In case of doubt before joining KSeF, a portal containing answers to the most common questions, which is constantly being expanded, was made available.[22].

However, the positive aspects must also be highlighted. A single invoice format will improve internal processes and provide a wider possibility to automate accounting processes, which, with a multitude of IT solutions, will significantly reduce the aspect of "human error" or facilitate controlling processes.

This is by far the next step following the introduction of OCR and workflow processes based on invoice scans directly into the system, which may have caused problems with, for example, illegible scans.

Unification of the format and data contained in the invoice diagram fields will allow full automatic reading of data into accounting systems.

Nor did the legislator give up the provisions that were intended to encourage taxpayers to use the KSeF. This therefore means that the following provisions will remain in force:

• Short term reimbursement of excess VAT 60 to 40 days – it may therefore become a new standard term without additional conditions;
• simplified settlement of in- minus corrective invoices (on the issuer's side, the reduction of tax due will occur on the date of issue of the correction invoice and on the recipient's side at the time of receipt);
• no obligation to send on request to tax authorities the structure of JPK FA for structured invoices.

However, it is worth considering the early start of invoicing based on KSeF even before the statutory obligation. This can be done to a degree limited to specific customers or to specific types of invoices in order to smoother the introduction of your business into an unusual and new operating system and to avoid surprises that will surely occur when it comes 1 July 2024