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KSeF through the eyes of a tax expert: KSeF as a tool in the hands of tax authorities?

On July 1, 2024, regulations for the mandatory National e-Invoicing System (KSeF) will go into effect.
Magdalena Jakubowska
Senior Tax Specialist, Tax Advisor

Taxpayers face the challenge of implementing KSeF and, most importantly, selecting IT tools that will effectively issue e-invoices and integrate with the system provided by the Ministry of Finance.

The introduction of the mandatory National e-Invoice System may bring both short- and long-term benefits (e.g., streamlining the invoice archiving process). Undoubtedly, implementing KSeF may pose a threat to taxpayers, especially for companies that rely on simplifications in VAT settlements. Therefore, it is worth looking at the National e-Invoice System from the perspective of correct invoice circulation within a company, as well as VAT settlement, and changes that need to be implemented within the organization to avoid potential disputes with tax authorities.

Goals of introducing KSeF

The primary goal of introducing the National e-Invoice System is to create an "invoice database" to which tax authorities will have access.

According to the justification for the amendment to the VAT Act and the derogation decision of the Council of the EU, the goal is to "better combat VAT fraud and evasion" and increase the automation of tax administration activities by enabling automatic verification of consistency between declared and paid VAT.

This system won’t be the only control tool at the disposal of the tax authorities, as they already have JPK, the White List of Taxpayers, VIES and STIR. However, it should be noted that the introduction of KSeF will allow tax authorities to access (and thus control) invoices in real time. Tax authorities will have the ability to automatically control the data contained in the JPK, without having to contact the taxpayer.

What possibilities does KSeF give tax authorities?

The introduction of a mandatory KSeF will allow tax authorities to identify suspicious transactions more easily (e.g.: VAT carousel).

Important: Contrary to the announcements of the Ministry of Finance, this will also impact the situation of fair taxpayers.

Access to e-invoices will grant tax authorities the ability to carry out verification and inspection activities without notifying the taxpayer of the initiation of such measures. Additionally, tax authorities will have access to e-invoices during customs and tax audits. This significantly limits the taxpayer's ability to influence the proceedings (as well as the opportunity for self-control through the submission of corrections to incorrect JPK).

At the same time, tax authorities will have the ability to define the goals of potential tax and customs audits more precisely (which, one may fear, will not be limited to VAT alone but will also encompass CIT and TP).

It can be assumed that the introduction of obligatory KSeF will significantly change the frequency and nature of tax inspection activities and audits conducted by tax authorities (as was the case with the introduction of JPK). Nevertheless, we will only have the opportunity to see what such verification activities will look like in the new "post-KSEF reality" (the introduction of JPK had a significant impact on the quantity and quality of VAT verification activities).

How should taxpayers prepare for the implementation of the KSeF?

The implementation of the National e-Invoice System within an organization should be preceded by a detailed analysis of potential tax risk areas and the simplifications used in VAT settlements (e.g., verification principles of contractors, applied exchange rate calculation methods, issuance of corrective invoices, settlements with foreign taxpayers, including the inclusion of transactions for VAT purposes in the WDT scheme).

After conducting a thorough analysis, changes should be introduced, and the adopted principles should be adjusted to the applicable regulations and the tax authorities' interpretative guidelines.

What changes should taxpayers implement?

Considering the aforementioned changes, taxpayers should make adjustments to the procedure of issuing and accepting e-invoices and focus on implementing procedures that enable effective invoicing and VAT reconciliation.

Issues to be addressed:

  • Introduction of procedures for issuing e-invoices and their acceptance
  • Implementation of rules for internal control of invoices issued and received by the taxpayer (above all, ensuring effective flow of information between different departments in the organization e.g.: sales department or purchasing department)
  • Verification of accounting and IT systems for the possibility of accounting for VAT in accordance with applicable regulations (e.g.: regarding advance invoices, correction invoices)
  • Verification of the taxpayer's existing procedures for the circulation of documents (e.g.: concluded contracts, proofs of service performance)
  • Implementation of procedures for the responsibility of individuals in the organization
  • Conducting training for employees

…what's next?

Taxpayers have just over 6 months left to introduce the mandatory KSeF. It is worth using this moment to introduce new procedures and rules for VAT settlement, which will enable correct VAT settlement.

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