National System of e-Invoices (KSeF). What should I know?

National System of e-Invoices (KSeF). What should I know?

Electronic invoices, that is, invoices issued and received in any electronic form such as PDF, are an everyday occurrence in commercial life. They are usually issued using invoicing software that generates all the mandatory elements of an invoice. Currently, in the business world, there are electronic invoices, paper invoices and voluntary e-Invoices in the KSeF system. The issuance of electronic invoices as well as paper invoices is going to be replaced by mandatory e-Invoices, i.e., structured invoices used in the National System of e-Invoices.

National System of e-Invoices – basic information about KSeF

The KSeF National System of e-Invoices is another step towards the sealing of the VAT tax system by the Ministry of Finance that has been in motion since 2016. KSeF is also intended to ensure that transactions between business entities can be monitored on an ongoing basis, and thus is expected to reduce the need for the tax administration to conduct audit activities at businesses by precisely targeting them where irregularities in settlements with the state are suspected. These goals will be achieved through the introduction of a uniform structured invoice template in XML format for all business entities required to issue invoices in the KSeF system. The KSeF system will record sales invoices and correcting invoices to sales invoices, which will be stored in the National System of e-Invoices for a period of ten years, starting from the end of the year in which the invoice was issued.

Is KSeF mandatory?

The National System of e-Invoices was introduced in 2022 and, presently, the use of KSeF is voluntary, but as of 1 July 2024, and for the VAT-exempt small and medium-sized enterprise (SME) sector as of 1 January 2025, it will be mandatory regardless of the scale of business or industry.

The e-Invoice, or structured invoice, will henceforth be the only form of documenting business-to-business transactions where the entity issuing the invoice:

• has a permanent place of business in Poland; or
• is headquartered in Poland.
  
  

The issuance of e-Invoices in the KSeF system is not applicable to:

• invoices issued pursuant to OSS and IOSS procedures;
• consumer invoices (B2C);
• tickets performing the role of an invoice (including receipts on toll highways);
• invoices issued by taxpayers with neither a registered office nor a permanent place of business in Poland;
• invoices issued by taxpayers without a registered office in Poland who have a permanent place of business in the country, but this permanent place does not participate in the supply of goods or services for which the invoice is issued;
• cash register invoices and receipts with NIP (tax identification) numbers until the end of 2024.
  
  

Special attention should be paid to the fact that the issue of correctly determining the existence (or not) of a permanent place of business in Poland still poses many problems, and a mistake in this regard will have very serious consequences. Therefore, it is worthwhile for foreign entities that are currently only registered for VAT purposes in Poland to use the coming months to apply for an individual interpretation, providing protection against a different position of the tax authorities on the issue of the existence of a permanent place of business.

How to issue e-Invoices?

Issuing structured invoices in KSeF is possible in two ways, i.e., through:

• online platforms that have been made available to taxpayers by the Ministry of Finance. These platforms include:
  
  - Podatnik KSeF application: a web-based application that provides access to the production (working) version—where the documents issued go into legal circulation—and the test/demo version (where you can learn about the functions offered by this government system);
  
  - e-mikrofirma application: a module included in the e-Urząd Skarbowy system, which can conveniently transfer data to records kept for VAT purposes;

• commercial programs (accounting, warehousing and other): commercial programs that implement the ability to generate e-Invoices using the databases contained in these programs and send these invoices to the KSeF system through a gateway at the Ministry of Finance.

Subsidiaries and branches of foreign companies in Poland where the invoicing process takes place abroad will have to adjust their systems to generate structured e-Invoices. They can also use the services of accounting offices, which will issue e-Invoices and send them through a gateway at the Ministry of Finance. This applies to other entities as well, since the KSeF allows the taxpayer to directly grant authorizations to specific individuals, including those outside of its own organization, or to designate an entity authorized to issue and/or receive invoices and allow indirect delegation of authorization by that entity.

National System of e-Invoices – benefits for entrepreneurs

The Ministry of Finance is attempting to encourage entrepreneurs to implement the issuance of e-Invoices in KSeF even before it becomes mandatory to issue invoices in this system. In order to promote this system, facilities have been introduced in the regulations for taxpayers who issue e-Invoices. These include a reduction in the period within which overpaid VAT is refunded (from sixty to forty days) as well as no obligation to prepare the Standard Audit File of Tax—the JPK_FA module.

Importantly, the costs associated with the implementation of the mandatory KSeF system in companies are treated as research and development expenditures. This classification will enable you to take advantage of a tax credit that allows you to deduct up to 200 percent of the costs incurred!

The introduction of the unified structured e-Invoice in economic circulation in Poland and the ability to pull these invoices into accounting systems from KSeF will automate accounting processes, which will save time and thus costs for companies.

National System of e-Invoices. Summary

The National System of e-Invoices is a solution that, thanks to the development of modern digital technologies, on the one hand, provides greater control of the State Treasury over taxpayers and businesses, in particular over VAT, and on the other hand, significantly facilitates economic processes in companies through automatic verification of their counterparties and the possibility of automatic entry of purchase and sales invoices and their corrections in accounting systems.