Business owners looking for new opportunities for expansion and increased earnings often decide to establish cooperation with partners from abroad. However, in the case of selling goods to customers from outside Poland, many questions arise regarding the correct principles of settling such transactions. How to correctly settle VAT on foreign invoices? What obligations do Polish regulations impose on companies? We present a number of useful information on this topic in this guide.
What are the rules for settling VAT on foreign invoices?
In order to avoid problems with correcting issued sales documents, or even the need to seek legal advice, it is worth clarifying a few issues before issuing a foreign invoice. It is best to ask yourself some important questions such as:
- When should an invoice be issued to a foreign contractor? Every time we make a transaction with a company from outside the country. However, it is important to remember that an international invoice is different from a domestic VAT invoice and its final appearance is influenced by many factors.
- When should a foreign invoice be prepared? The same regulations apply as for domestic sales: the document must be issued no later than the 15th day of the month following the month in which the service was provided. An invoice can also be issued in advance – no earlier than 30 days before the service is provided.
- Where can I find regulations regarding invoicing foreign contractors? All the necessary regulations are included in the VAT Act. In order to properly prepare an invoice for an EU recipient, it is necessary to first determine the place of supply of the service, which determines the method of settling the tax.
See also: KSEF API
As a general rule, it follows that a service provided to a non-taxpayer is deemed to have been performed where the recipient has its registered office or permanent place of business. Detailed rules are specified in Article 28b of the VAT Act, enumerating specific cases of the place of supply of services.
The principles arising from the Act are as follows:
- Services performed at the service recipient’s permanent place of business located somewhere other than the registered office. In this case, the registered office is the permanent place of business of the service recipient.
- The Service Recipient does not have a registered office or permanent place of business. In such a case, the service recipient's registered office is the permanent place of residence or place of stay of the entity using the service.
The provisions contained in Article 28b of the VAT Act apply provision of services to taxpayers both in the country and abroad, according to the rule that the place of provision is the registered office of the recipient. Article 28c of this Act regulates the provision of services to natural persons who are not taxpayers. Regardless of whether it will be pPolish invoice for a German company or from another EU country, the rules are identical.
Does the sale of services to foreign individual customers require special VAT settlement?
Selling services to a foreign individual and VAT – what does this issue look like?In the case of sales made to foreign individual customers, i.e. natural persons, a regular invoice should be issued. What is the reason for this? According to Article 28c of the VAT Act, the place of supply is the registered office of the service provider, i.e. Poland. In practice, this means that if a Polish entrepreneur provides a service to a foreign natural person, the place of supply of the service is in Poland and it should be charged with the appropriate Polish VAT rate.
How to deal with an invoice from a foreign contractor with Polish VAT?
An invoice from a foreign contractor with Polish VAT is a vast topic. If you receive an invoice from a foreign contractor with Polish VAT, you must follow strictly defined rules. These are the steps involved:
- Verification of accrued VAT. First, it is worth checking whether, according to the regulations, the transaction should be subject to Polish VAT. If the service provider does not have a permanent place of business in Poland, and the service was performed in accordance with the place of supply in Poland, then Polish VAT may be charged correctly. However, if the service provider should not have charged it, you should ask for a correction invoice without VAT.
- Registration in the register. The accepted invoice must be registered in the register and the input VAT must be deducted. The condition is that the purchased services or goods are related to the conduct of business.
- Introducing any corrections. If it turns out later that there are irregularities in the issued document, it is possible to make corrections. To do this, ask the document issuer to prepare a correction invoice.
- Document archiving. It is a good idea to keep invoices so that in the event of a tax audit you can easily provide the auditors with all the necessary documents and quickly clarify any potential doubts.
What VAT rate should be applied to an invoice for a foreign contractor?
Invoice for a foreign contractor what VAT rate will be appropriate? Choosing the right VAT rate for an invoice for a foreign contractor is extremely important. There are several rates:
- 23%, 8% and 5%. VAT rates applied to domestic transactions and when the EU contractor does not have an active VAT number.
- 0% WDT. The VAT rate applicable to intra-Community supply of goods within the EU. The condition for its application is that the seller and buyer have valid EU VAT numbers and documents confirming the export of goods from Poland. The invoice must state the recipient's EU VAT number preceded by the two-letter country code (e.g. DE for Germany).
- 0% Exp. VAT rate for export of goods outside the EU, applicable upon presentation of proof of export, e.g. SAD document or electronic PZC confirmation.
- not subordinate to the EU. Designation used for intra-Community supply of services to EU VAT taxpayers. Such transactions are settled according to the reverse charge mechanism, and the recipient's EU VAT number with the appropriate country prefix is included on the invoice.
- not sub. The VAT rate assigned to services provided outside of Poland. The reverse charge also applies in this case.
How to avoid errors when settling VAT in international transactions?
To avoid errors when settling VAT in international transactions, you should remember a few important tips. First of all, it is necessary to verify very carefully whether the service or delivery of goods is subject to the provisions of Articles 28b–28f of the VAT Act. Incorrect determination of the place of supply (domestic or foreign) may result in incorrect calculation of tax, the need to make corrections and in some cases even financial penalties.
Check: KSEF API documentation
In addition, for B2B transactions within the EU and for specific services for contractors outside the EU (described as "non-EU" or "non-EU"), it is essential to remember to include the "reverse charge" clause and the buyer's EU VAT number with the indicated country code on the invoice. The lack of this note or its incorrect placement will result in the reverse charge not being recognized.
Another serious mistake is failure to comply with the applicable deadlines. It is important to remember that a foreign invoice must be issued no later than the 15th day of the month after the service was performed. Another mistake is the lack of archiving documents. Audits and checks can be conducted even several years after the document was issued.
JWhat will the issuing of invoices for contractors from the EU look like after the KSeF comes into force?
Despite the postponement of the entry into force of the National e-Invoice System, the National e-Invoice System will have a significant impact on the way invoices are issued to foreign entities. In accordance with Article 106ga section 1 of the VAT Act, entrepreneurs will have to register foreign invoices in the KSeF, although in the next section the legislator indicated several exceptions to this rule.
Please note that an invoice in KSeF issued for a foreign recipient will not be delivered to him automatically. The Polish entrepreneur must submit the document: in digital form (e.g. PDF file), traditional (printout) or by including a QR code on the invoice, which redirects directly to the document in KSeF, enabling its verification.
It is also worth knowing the guidelines on exemptions from the principle indicated in art. 106ga sec. 1 of the VAT Act. Namely: the provisions that will come into force in 2026 exempt from documentation in the KSeF, among others, transactions carried out under the VAT OSS procedure, operations covered by the provisions of chapters 7, 7a and 9 of the VAT Act and sales to individuals who do not conduct business activity. In such cases, invoices may be delivered to contractors in both electronic and paper form.
