Amendment to the Goods and Services Tax Act, which entered into force 1 January 2014, it has introduced significant changes in additional costs which have a significant impact on the way the tax base is established. The modifications have also affected the refraction.
Additional costs
Ancillary services are often required in order to perform basic activities, such as transport serving as a servant in relation to the sale of a particular commodity. In the event of such a comprehensive benefit, it should be established for it one the tax base.
In the revised VAT Act, the legislator clarified what costs should be considered as additional costs. According to Article 29a(6)(2) the additional costs include expenditure, such as commissions, packaging, transport and insurance costs, incurred by the delivery or service provider from the customer. Additional costs should be included in the tax base applicable to the basic act, and that in addition, whether they are settled between the parties to the basic relationship together or separately from the basic act.
Example 1:
ABC sells shipping books and charges the customer the cost of packaging the goods. Packaging costs should be added to the base of taxation of the basic activity (sale of the book) and, together with it, taxed at the tax rate applicable to the basic activity.
Example 2:
XYZ conducts shipping sales of various articles, including books, records, computer games. Individual goods are subject to different VAT rates. Additional costs should be added to the price of the goods and taxed as a total turnover. If one the goods are subject to different rates and the transport or packaging price is common to them, the additional costs should be added in a proportionate manner to the selling price of the individual goods.
The question arises as to whether the resale of electricity and telecommunications services can be similarly treated as additional costs to the main service – rental.
According to the interpretation of the individual Director of the Tax Chamber in Warsaw dated 12 August 2012 (No IPPP1/443-424/12-2/AS): rental service is a complex service - the subject of the service to the benefit of tenants, is the main service, i.e. rent of the premises and additional costs, i.e.
the supply of water and electricity, gas, the removal of impurity, are elements of the cost account to determine the amount of payment for the rental service, since they are economically complementary to the essential provision and should not be artificially separated from that provision.’
A similar position was taken by the Director of the Tax Chamber in Poznań in interpretation dated 5 June 2013 (No ILPP2/443-226/13-4/AD). As regards the additional costs of renting the premises, he stated that ‘the breakdown into essential and ancillary services is relevant for the application of the relevant VAT rate. Basic and auxiliary services are taxed at the same rate. Without the basic service - rental service - the resale of ancillary services would lose its meaning."
In view of the above, it should be considered that the costs of electricity and telecommunications services constitute additional costs associated with the rent of the premises.
Reinvoicing
Reinvoicing of services, according to Article 8(2a) VAT Act is a situation where a taxable person acting in his own name but for the benefit of a person third, participates in the provision of services. It is assumed that the taxpayer has received and delivered these services himself.
The nature of the reflection consists in reselling the previously acquired service in order to transfer the costs incurred by the reflector to an entity that ultimately uses certain services in a real way. Only services may be the subject of reflection, but they may not apply to the supply of goods. The resale of the service is identical to the provision of the service
The timing of the tax obligation in the reflection in 2014
To the end 2013, on the basis of the repealed Article 19(13)(1) point (a) and point (b) The VAT Act was of decisive importance not when the invoice was issued, but the expiry of the payment deadline, if specified in the contract. The tax payers by contract decided when the tax obligation would arise, as the above provision concerned the contract applicable to settlements for services rendered.
Due to the amendments to the VAT Act which entered into force 1 January 2014, The legislator has not decided to introduce a separate regulation regarding the moment when the tax obligation to reflect was created. Given the lack of clear regulation, there are still doubts in practice as to when the tax obligation arises.
As a general rule, expressed under Article 19a The VAT Act shows that the tax obligation arises when the goods or services are supplied. However, Article 19a(5)(4) point (a) and point (b) VAT Act provides for an exception - the tax obligation arises when the invoice is issued, among others, due to:
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- supply of electricity, heat or cooling and wired gas,
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- provision of services, including telecommunications.
In the event that the taxable person does not issue an invoice or issues it late, the tax liability arises at the expiry of the time limit for the invoice to be issued and, in the event that such a period is not specified, at the expiry of the payment period (Article 19a(7) VAT Act).
However, in the case of refacture of services, the most recent case law must be used. Judgment of the Supreme Administrative Court dated 25 October 2012 (reference no. I FSK 65/12) points out that the moment when the tax obligation in the tax on goods and services, in the case of repatriation, should be established as if from the beginning the refactured service had been made by the seller, i.e. The rules provided for should apply under Article 19a VAT Act (before amendment: repealed) Article 19.
In conclusion, the tax obligation for resale of energy and telecommunications services will arise at the time of the refakture, but no later than the expiry of the payment deadline.
Example:
If invoice (refacture) for January 2014, was issued on 7 February 2014 then the tax obligation will arise on that very day (depending on the date of payment), i.e. such invoice should be entered in the accounts and settled in the declaration VAT-7 for February 2014
All these problems will be discussed during the vat invoice training.