Poland is adhering to EU directive 2014/55/EU on mandatory electronic invoicing for B2B and B2G transactions.
Like many other European countries, Poland mainly promotes e-invoicing to help combat tax fraud and evasion and get real-time information on the country’s business activity.
In particular, Poland has excelled at analyzing the so-called VAT gap—the difference between expected and actual VAT—and outlining the necessary steps that need to be taken to reduce it.
While the adoption rate is lower than in other European countries, the trend is slowly picking up.
B2G e-invoicing has been mandatory in Poland since 2019; hence, public entities must accept e-invoices issued by suppliers.
However, as more businesses realize the benefits of electronic invoicing, many are now engaging in B2B e-invoicing voluntarily. They will be subject to obligatory invoicing starting in July 2024 using the KSeF platform.
As a result, we shall explore all the facts, key dates, and details on mandatory e-invoicing in Poland in this article so you can be up to date and prepared for the change and compliance.
Is electronic invoicing mandatory in Poland?
Electronic invoicing is mandatory in Poland. On August 7, 2023, the President of Poland signed the June 16, 2023 Act, amending the Polish VAT Act and several other laws.
This act validates the date the Ministry of Finance had previously indicated for the rollout of the new e-invoicing format.
Beginning on July 1, 2024, taxpayers will need to get ready for the National E-Invoicing System (KSeF - Krajowy System e-Faktur) and required e-invoices. The purpose of these modifications is to stop taxpayers from evading taxes and to stop VAT fraud.
For taxpayers eligible for a subjective or objective tax exemption or only engaged in tax-exempt activities, e-invoicing using KSeF will be mandatory starting January 1, 2025.
The system is modeled after the Italian e-invoicing system. It involves taxpayers preparing invoices in their own ERP system and submitting them to the KSeF system to be certified with a timestamp and an allocated invoice number.
Key dates for implementation of e-invoicing in Poland
The following are the important dates for the implementation of the new regulation.
- Companies in Poland began participating in voluntary B2B e-invoicing in January 2022 by providing "structured" invoices to KSeF and reaping tax savings.
- By July 1, 2024, all non-VAT-exempt enterprises in Poland must utilize B2B electronic "structured" invoices (XML).
- Penalties for noncompliance will be implemented on January 1, 2025.
What businesses are affected by the e-invoicing mandate in Poland?
The following are the different entities affected by the e-invoicing mandate in Poland:
- All Polish entities that carry out B2B transactions in Poland
- Self-billing invoice issuers in B2B situations
- Foreign entities with fixed establishments (FEs) are liable to pay VAT in Poland when FE intervention occurs in transactions.
- VAT-exempt taxpayers (must be below the turnover threshold as of January 1, 2025).
- FE foreign entities (must send invoices to the KSeF portal)
- Non-FE foreign entities (KSeF standards done voluntarily)
What format is used in e-invoicing in Poland?
In July 2024, Poland will implement the National e-Invoicing System (KSeF) and mandatory structured e-invoicing.
The format for sending and receiving invoices would change from paper and PDFs to electronic, i.e., XML, by the logical structure of e-Invoices (FA_VAT).
What is the e-invoicing process in Poland?
The electronic invoicing process in Poland will follow a clearance model. This means that the public administration will have to authorize each transaction for it to be valid.
To do so, the Polish government has set up the National Electronic Invoicing System (KSeF). Thus, companies will issue the XML invoice from their systems to the KSeF portal.
The KSeF will assign the invoice a unique identification number (KSeF ID) and record the time and date of receipt of each authorized invoice.
The invoices authorized by the national system will be stored and retrieved manually or automatically by the acquirer for later consultation.
What is the penalty for not adhering to the e-invoicing rule in Poland?
Entities that do not adhere to the e-invoicing rule in Poland will be subject to a penalty (the relevant law will come into force in January 2025).
The penalty may be up to 100% of the amount of tax due on the invoice or a fine of up to 18.7 percent of the total amount in the case of an invoice without the VAT amount. This penalty may be imposed if the taxpayer:
- Fails to issue an invoice using the KSeF despite such an obligation.
- Issues an invoice in electronic form, not following the template provided.
- Fails to send it to the KSeF on time (in the case of invoices issued during a KSeF temporary breakdown, the taxpayer is obliged to deliver to KSeF within seven days after the end of the failure).
How will businesses ensure compliance with the e-invoicing mandate in Poland?
In order to continue doing business in Poland, affected companies must comply with the new B2B e-invoicing laws.
To get started, you should assess the functionality of your ERP system. Can it send and receive structured data or rely on paper or PDFs?
If your system is not yet ready, update it and modify the data to meet all local jurisdictional requirements.
It is optional to have a service provider operating on your behalf. However, handling e-invoicing internally usually requires a lot of time and effort.
Setting up an e-invoicing solution requires significant technical expertise, and the processes used must be monitored continuously and adjusted as regulations change.
When errors occur, rapid and proactive troubleshooting is also necessary.
On the other hand, partnering with a specialized service provider like Storecove can help you ensure you are using the correct sending and receiving infrastructure for e-invoicing.
Finally, Polish or foreign companies doing business in Poland must start taking action now. Although 2024 may seem far away, early adoption has numerous advantages, particularly for large organizations.
Also, it may appear difficult, but regulated e-invoicing immediately benefits your company. Sending electronic invoices per regulatory requirements will help you optimize your internal processes and lay the groundwork for further upgrading and automating your operations.
If you find it complex and require help with your Poland VAT compliance, Storecove can assist you so your transactions can go smoothly. We help companies use the right sending and receiving infrastructures for e-invoicing.
Contact us today to speak with one of our e-invoicing experts.
Benefits of e-invoicing in Poland
Companies who choose to use e-invoices voluntarily can benefit from some special measures:
- The VAT declaration period is reduced from 60 to 40 days.
- Exemption from the JPK_FA file declaration.
The government anticipates the following benefits from the widespread adoption of the B2B invoice.
- Increase in control of the tax system while at the same time limiting irregularities in the VAT settlement.
- Provision of greater security to commercial transactions with a standardized invoice.
- Increase in state budget revenues as a result of increased VAT collection.
- Improvement of the economy’s competitiveness and the entrepreneurial mindset.
You may also like: 11 Reasons to Partner with an E-invoicing Service Provider.
Takeaway: Stay updated with Poland's e-invoicing regulations to navigate its e-invoicing landscape
The mandatory implementation of electronic invoicing in Poland is a transformative step towards modernizing financial processes.
Businesses must stay informed about key dates, affected entities, format requirements, and the intricacies of the e-invoicing process to ensure seamless compliance.
Understanding the penalties for non-compliance emphasizes the gravity of adhering to the e-invoicing rule. It’s not just a legal requirement; it’s a strategic imperative for businesses operating in Poland.
Navigating this regulatory terrain requires a proactive approach. Businesses should explore strategies and tools to ensure compliance efficiently.
The benefits of e-invoicing, such as enhanced efficiency and cost reduction, further underscore the advantages of embracing this digital shift.
As you embark on this journey, you may need a safe, seamless, and secure electronic invoicing system that complies with the financial and tax legislation surrounding e-invoicing in Poland. Storecove can help you.
We provide a comprehensive solution for businesses to send and receive electronic invoices in complete compliance with the Polish government’s legal requirements. Contact us today for more information.
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