Not all VAT taxpayers know that they can check their debtors online, without any certificates or fees to the revenue office.
It seems that entrepreneurs have rid themselves of one of their major headaches. They do not need to search independently for the status of their contractual partners, for the purposes of settlement of value added tax (VAT) at any given time.
Instead, they can use a special tool that has recently been made available on the Tax Portal - a computerised system of the tax administration, constituting a part the Finance Ministry’s service. This is a significant facilitator for companies using for example the so called bad debt relief. However, it is not something about which there is general knowledge.
Relief with an active taxpayer
As we already mentioned in other articles, the bad debt relief is available to entrepreneurs paying VAT, who have outstanding receivables from the recipients of their goods and services. In spite of not receiving payment, they still have to pay tax on the issued invoices. They have to wait 150 days after the payment deadline applicable to their contractual partners to receive reimbursement of the VAT. At that time, they can decrease their VAT by the amount that was paid earlier.
However, this is not a simple formality and sometimes the tax adjustment is not acknowledged by the revenue office. The entrepreneur may take advantage of the relief if the debtor is an active VAT taxpayer, but not a passive taxpayer, also referred to as VAT exempt. Therefore, it cannot be a taxpayer taking advantage of VAT exemption which is available to small enterprises, or a taxpayer performing only VAT exempt activities.
Tax Return for an adjustment, along with an attachment
Adjustment of the VAT connected with bad debt relief should be notified to the revenue office by the taxpayer in the VAT-7 return. In such case, it should be accompanied by the form VAT-ZD. This is a notification stating that the taxation basis and the amount of due tax were adjusted. In the attachment in table B, the entrepreneur should specify the debtor, its tax identification number (NIP), number of the unpaid invoice, deadline for its payment and the amount of adjustment of the tax basis and the amount of tax due.
The creditor must check this at the moment when it plans to adjust the VAT in relation to unrecoverable receivables from a contractual partner. The above is based on Article 89a par. 2 of the VAT Act.
"Pursuant to that provision, the taxpayer should among others be able to prove that it made a delivery to a taxpayer registered as an active VAT taxpayer, who is also not in a state of insolvency or liquidation," explains Mariusz Aleksandrowicz, tax advisor, legal counsel and partner handling the Taxation Law Department at FKA Furtek Komosa Aleksandrowicz law firm. The Law does not require presentation of any documents confirming meeting the requirements for taking advantage of the relief.
"The taxpayer does not have to submit an application confirming the debtor's status, obtain other certificates or collect publications of the Court and Economic Monitor. However, the taxpayer should be aware that the revenue office will verify the contractual partner's data and may question the tax adjustment made by the entrepreneur if its recipient is not included in the register of taxpayers or is in the state of insolvency or liquidation," notes Mariusz Aleksandrowicz.