The way of the dodo, American Investor, March 2011
The new electronic invoices regulation of the Polish Minister of Finance (Regulation of December 17, 2010, on Electronic Transmission of Invoices and Rules for Storage and Presentation to Tax and Fiscal Audit Authorities) entered into force on January 1, 2011, significantly liberalizing the strict rules previously in force.
The old days
ntil the end of 2010, there were just two acceptable ways to issue electronic invoices, using a secure electronic signature with a verified certificate or an electronic data interchange (EDI) system. Interpreting the regulations strictly, the tax authorities stressed numerous times that only electronic invoices transmitted by one of these methods entitled taxpayers to deduct the input VAT on the invoice. The tax authorities refused to accept invoices issued in .pdf format without a secure electronic signature. Moreover, invoices issued and transmitted electronically could be stored only in electronic form.
Critics objected strongly to these rules, arguing that the requirements imposed on taxpayer who wanted to issue and transmit invoices electronically were too restrictive and required them to incur significant costs to acquire an electronic signature or an EDI system, as well as systems for storing electronic invoices. This rigidity was also out of line with the e-invoice regulations in force in other European countries, not to mention that since Poland joined the European Union, invoices no longer need to be signed.
Paper and electronic
Before the new regulation went into force, taxpayers who did not want to go to the trouble of issuing electronic invoices under the rigorous Polish rules would sometimes use a mixed system, in which the original invoice for the buyer was issued and sent on paper, but the issuer retained a copy of the invoice only in electronic form.
The tax authorities disputed this system, arguing that all copies of the invoice (i.e. the original for the buyer and the copy for the seller) should be issued in the same manner and in the same form. In a judgment dated November 3, 2009 (Case No. I FSK 1169/08), the Supreme Administrative Court rejected that position by the tax authorities and held that the taxpayer could use a mixed paper/electronic system. The court found that there was no legal barrier to issuing invoices on paper but storing them electronically, so long as the seller was able to print out the invoice whenever requested by the tax authorities. This system may continue to be used by taxpayers who do not wish to issue electronic invoices but also find it burdensome to store hard copies of invoices.
How it is now
From January 1, 2011, electronic invoices may now be transmitted in any electronic form, so long as the transmission method has been accepted in advance by the recipient (in writing or electronically). A list of methods has been established for transmitting invoices in electronic form, provided that the form selected by the taxpayer assures the authenticity of origin and integrity of content of the invoice. Under the new regulation, “authenticity of origin” means certainty as to the identity of the supplier of the goods or services or the issuer of the invoice, and “integrity of content” means that the information required to be included in the invoice is not altered.
The new rules thus authorize taxpayers to use the previous methods for transmitting e-invoices (i.e. using an electronic signature with a verified certificate or an EDI system), which are expressly mentioned in the regulation. In addition, the rules now give taxpayers the option to use new and significantly cheaper methods for transmitting electronic invoices.
From a review of the regulation, it should be accepted that it is now permissible to transmit e-invoices using an electronic signature without a verified certificate, or only in .pdf format, even though the regulation does not expressly mention such forms. It should be borne in mind, however, that in the event of a dispute with the tax authorities, the taxpayer will have to prove that the method it used to transmit e-invoices assures authenticity of origin and integrity of content of the invoice. Interpretations will probably be issued in the near future under the new rules, in which the tax authorities confirm what methods of transmission they find acceptable.
The rules for storage of e-invoices have also changed. According to the new regulation, electronic invoices may be stored in any manner (i.e. after printing out a hard copy, or electronically), so long as they are divided into settlement periods and the storage method assures (1) authenticity of origin, integrity of content and legibility of the invoices from the date of issuance through the expiration of the tax obligation, (2) ease of location of the invoices, and (3) immediate access to the invoices for tax authorities and fiscal audit authorities.
The regulation also provides that electronic invoices may be stored in electronic form outside of Poland, so long as tax authorities and fiscal audit authorities may be given online electronic access to the invoices. There is thus nothing in the regulation preventing a taxpayer from storing e-invoices on a server located outside of Poland. In the event of a tax audit, however, the taxpayer will be required to allow the tax authorities to access the invoices immediately and confirm the information contained in the invoices.
End of paper?
The newa regulations concerning electronic invoices will probably encourage taxpayers to issue and transmit invoices in electronic form. Now when taxpayers decide to issue e-invoices, they need not incur substantial additional costs to acquire an electronic signature or special EDI system. On the other hand, for businesses that issue hundreds of invoices every month which they previously had to mail to all of their customers, the decision to replace the traditional system with issuance of e-invoices should generate significant savings in the company budget. It is important to bear in mind, however that the other party—the recipient of the invoices—must agree to receiving invoices electronically.
Published in: American Investor, March 2011