Poland has introduced a National E-invoicing System (KSeF), which will be mandatory for all Polish taxpayers and foreign companies that have fixed establishments (FE) for VAT purposes in Poland from 2025.

Challenge

Sole VAT registration does not always trigger FE, but Polish companies may expect that VAT registered taxpayers should be using KSeF and be able to process structured invoices (in dedicated, complex XML format). It is especially important that all registered taxpayers are listed in the publicly available register of VAT payers (so called white list).

As a result, current invoices might no longer be accepted and businesses might start receiving invoices in unreadable format. Consequently, foreign businesses could face delays in payments and cash flow inefficiencies caused by uncertainty over their Polish VAT status. In the past, Polish tax authorities frequently confirmed existence of FE, often in unexpected or unlikely scenarios.

Solution

A business may need to formally prove that the company does not need to apply structured electronic invoicing, due to a lack of FE creation in Poland. The only formal certainty available may be achieved by applying for an individual tax ruling in Poland. An individual tax ruling may be received in three months and presented to any contractor interested in validating your VAT status in Poland and the requirement to exchange e-invoices via KSeF.

FE creation in Poland may also trigger other VAT implications, including "VATability" of services and reverse charge application. It is crucial to have this matter investigated for proper VAT functioning of any foreign business and secured.

Implications

Affected taxpayers should consult with their tax advisors for assistance in determining FE status, recommendations enabling businesses to secure their VAT position, and help requesting a tax ruling in Poland. Tax advisors can also be helpful in the process of negotiating and explaining e-Invoicing requirements with the Polish contractors.