According to Article 46 The Commercial Companies Code (hereinafter: KSH) for the conduct of matters of the partnership, a shareholder (also a limited partnership) is not paid. In practice, however, it happens that the subcontractors charge limited companies for their management activities involving the management of the company.
Is it possible for the consultant to issue an invoice with VAT due at the rate 23% A limited company is entitled to reduce the value of the tax due by the tax charge resulting from the content of such an invoice?
In view of the content of the provision set out above, the positive answer to this question becomes controversial, particularly where the scope of management services provided does not exceed the basic management of the company.
Assuming the operation of a limited partnership as an active VAT taxable person carrying out the activities taxed, it could be considered in first that the concept of providing services to it is very broad and does not cover only the actions of the taxpayer, but also the obligation to refrain from doing or to tolerate acts or situations.
The provision of services must therefore mean any conduct of a taxable person, which is not a supply of goods, to another entity. Content Article 5(1)(1) It is clear from the VAT Act that the supply of goods and services are, in principle, subject to VAT only if these activities are carried out against payment.
In order to regard the service as paid, there must be a legal relationship between the service provider and the recipient and a remuneration should be paid in return for the service. There must be a direct link between the service provided and the remuneration paid for it.
This means that there must be a clear direct advantage to the provider of the service from the legal relationship on which the service is performed. The payment received should therefore be a consequence of the performance.
Based on the principles and criteria set out above, it is possible to adopt a scenario in which the Company is charged at the end of each month by its subsidiary (e.g.
a legal person), a VAT invoice for the services provided to the Management Board and representation and in which the Company and the Complementary are active VAT taxable persons, not providing exempt and established sales in Poland. Based on Article 117 and Article 121 KSH.
and the Contracts of the Company, the Complementary performs the activities of the Management Board and representation, for which by the power of resolutions of shareholders The applicant would be entitled to pay. This right is not dependent on his share of the profit of the limited partnership.
The question of the validity of the resolution is open in this situation, if the provision Article 46 KSH is a mandatory provision, since it does not contain a clause ‘unless contractual provisions provide otherwise’. The Complementary has a statutory right and obligation to conduct matters of the company.
However, according to the provision Article 46 KSH, for the conduct of matters of the company, the partner is not paid.
Only a clear confirmation of the scope of the relationship between the limited partnership and the subsidiary, which goes beyond the ordinary company-shareholder relationship, regulated by the KSH, allows the existing obligation to be regarded as actual and the service provided by the subsidiary for consideration and, most importantly, legally acceptable. Only in this case would it be reasonable to recognise that the parties have a valid civil-law relationship (agreement) resulting from the obligation undertaken by the subsidiary to manage the limited partnership and from the obligation of the limited partnership to pay remuneration to the subsidiary for the services it provides.
Only in such a case should the services provided be documented by means of a VAT invoice issued by a sub-contractor (registered active VAT taxable person) to a limited partnership, with the amount of tax payable in its content calculated at the appropriate rate of tax.
Also only then does the VAT invoice issued by the subcontractor for the provision of management and representation services give the recipient the right to receive an invoice for these services - a limited company to reduce the tax due by the tax shown in the invoice.
If we consider that the Complementary did not have the right to collect remuneration for the scope of the activities carried out in favour of the Company and any contractual provisions are invalid, then the invoice issued should be regarded as a ‘empty’ invoice without the right to deduct the tax due by the tax charged in the invoice issued.
All these problems will be discussed during the vat invoice training.