KSeF: a challenge or a help for businesses

5 December 2023 | Knowledge, News, Tax Focus, The Right Focus

Technological developments in tax law are now inevitable. Revolutionary changes are shaping a new reality in which both businesses and tax authorities must find their way. And after the introduction of the Standard Audit File for Tax (JPK), it is time for another leap forward – the National e-Invoicing System (KSeF). We look at whether the KSeF will be a help or a hindrance for businesses, looking at both the pros and cons of the new system.

Tax revolution: the JPK and the KSeF

Lawmakers have long been aware that traditional methods of tax collection have been outstripped by the pace of technological developments. The introduction of the JPK was therefore one of the first natural steps towards streamlining and automating the processes of recording tax events, while at the same time safeguarding the interests of the State Treasury. But the JPK is not the end. The next step will be the introduction of the KSeF.

The KSeF is an IT platform that enables taxable persons to generate and share structured invoices, which will soon become the primary and obligatory way of documenting transactions.

Currently, taxable persons can use the KSeF on an optional basis.

We believe the KSeF will minimise the risk of future errors and encourage you to take advantage of this early opportunity to try it out.  However, use of the KSeF will be mandatory from 1 July 2024.

The KSeF will be obligatory for:

  • Businesses registered as active VAT taxable persons
  • Businesses exempt from VAT
  • Taxable persons identified for the special EU OSS procedure, and having a Polish tax identification number (NIP)

Challenges for businesses: KSeF invoicing and invoice errors

Once a draft has been submitted to the system, the invoice undergoes a validation process, which consists of a technical check only. According to the system developers, this process should take a few seconds. Under heavy load, however, the waiting time could extend up to an hour. The rejection of an invoice by the KSeF can, for example, be due to the file structure not corresponding to the established template.

The KSeF does not check data for factual errors, including VAT compliance. In the event of such errors, it will therefore be necessary to issue a correcting invoice.

However, the problem becomes apparent in the case of minor errors. This is because there is no possibility of issuing a correction note in the KSeF. Previously, in certain situations, a correction note could be issued by an invoice recipient. It did not have to be accounted for and concerned formal errors that did not affect the right to deduct VAT. Therefore, in case of an error on a structured invoice, it will be obligatory to issue a correcting invoice, and this will be an additional obligation for taxable persons. Correcting invoices, like basic invoices, will also be issued as structured invoices.

Adaptation of accounting IT systems

It can also be a challenge for businesses to adapt their accounting systems to the KSeF, especially with regard to the new structured invoice template, which can involve high costs for legal, tax and IT advisory.

However, the Ministry of Finance provides free invoicing tools. An alternative may be to use programmes offered by private companies, which often offer greater accessibility and customisation for individual businesses.

Benefits of the KSeF

The KSeF is not just about challenges.

The benefits of the KSeF include a reduction in the waiting time for the refund of overpaid VAT from 60 to 40 days. A streamlined process and faster verification of VAT refund eligibility by tax offices will certainly satisfy businesses. Such a change will also have a positive impact on their financial liquidity.

An additional benefit is the automation of processes and the security of transactions. The increased speed of data exchange between business partners will allow invoices to be made available to recipients in near real time, speeding up business processes.

What’s more, because the KSeF also offers a service to store e-invoices for 10 years, there is no need to archive these documents individually. Such an initiative not only simplifies administration, but also opens up the prospect of significant savings associated with long-term document storage.

KSeF pays off

The KSeF is bringing about beneficial changes, but also a number of challenges. One of the most important may be the effective implementation of the system. Businesses will have to adapt to the new reality without correction notes. Nevertheless, it is worth noting the positive aspects, such as reduced waiting times for the refund of overpaid VAT, the automation of processes and the increased security of transactions.

We are monitoring all information relating to the KSeF. Although there is still time remaining to fully implement the system, we encourage you to contact us now and adapt your business to the significant tax changes it brings. Our tax team is here to help.

Any questions? Contact us:

Jakub Dittmer

Jan Janukowicz

 

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