Olga Palczewska-Wielińska, Monika Junyszek
Generally, if you are a non-exempt taxable person and you are purchasing goods and services used for taxable transactions, you are allowed to deduct VAT at the amount arising from the invoices you received. However, Article 88 of the VAT Act provides certain exceptions. The first group of them relates to the type of goods and services purchased: no VAT is deductible for invoices for catering or accommodation services (unless they are intended for resale). In the case of passenger cars for mixed private and company use, only 50% of VAT for the related expenses can be deducted. VAT will also not be deductible if an invoice is issued by a non-existent entity or the transaction on the invoice is not subject to taxation or is exempt from VAT, or where the transaction specified on the invoice was not actually performed or the amount on the invoice is not correct.
Unfortunately, this law does not address a situation where a wrong VAT rate is applied. When the rate is too low, this does not generate any tax risks for buyers as they can deduct the remainder as an adjustment. Doubts arise when the rate on the invoice is too high. Generally, regulations do not explicitly prohibit deducting VAT from such an invoice. A private tax ruling of 22 June 2021 confirms that the amount shown on the invoice should be deducted, despite the incorrect rate. However, the amount of the tax deducted must later be reduced after the corrective invoice has been received.
There being no regulations governing this situation, there is a risk of that position being challenged by tax authorities. An over-deduction of VAT may result in tax arrears and the need to pay interest or even penalties.