Magdalena Szczepańska, Natalia Sęk

The article addresses the VAT treatment of advance payments. It describes controversies about how to recognise an advance payment and the supporting invoice if the payment has been received more than 30 days after the invoice date. There have been recent tax rulings which, favourably for businesses, offer assurance against claims that such premature invoices are “empty”. However, in fear of penalties, taxable persons adjust their accounts and recognise such invoices despite lack of a commercial rationale. With no precise law in place to regulate the duties and methods related to making adjustments on account of premature invoices for advance payments, whether or not any particular treatment is correct will depend on the approach of tax authorities.