Czasopismo Dziennik Gazeta Prawna

The articles discusses how to properly establish for VAT purposes if a payment should be treated as a prepayment or as a payment for a partial supply. This is especially important for VAT because the tax point is different for these two kinds of payment. For prepayment, VAT becomes chargeable on receipt while for a partial supply this is on completion of the stage for which the partial payment was received. Importantly, with partial supplies, the parties should specify that a partial payment is received on completion of each stage and that such a payment is provided for with respect to each stage/part. The VAT Act does not define a prepayment so taxable persons are advised to use the approach of tax authorities as revealed in their private rulings. The authors discuss how the rulings define when a payment should be treated as a prepayment for these purposes.

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