e-Invoicing in Poland: A Complete Guide For Your Business

The Poland government plans to implement e-invoicing from 1st January 2024 and issued the draft regulations accordingly. However, the Polish Ministry of Finance postponed the e-invoicing implementation date to 1st July 2024.

The e-invoicing initiative significantly changes business operations. The e-invoicing implementation is complicated, time-consuming, and involves substantial financial investment. One can observe the same in the case of large companies that already started the implementation process.

This article explains all about e-invoicing in Poland including, what is it, the latest updates, challenges in implementation, and how to prepare for it.

What is e-invoicing in Poland?

Businesses in Poland shall issue and receive e-invoices in real-time using a standardized XSD format. Further, they should do e-invoicing through the National System of e-invoices (a governmental clearing system), called Krajowy System e-Faktur, or KSeF.

KSeF validates each invoice from a technical perspective. Once the invoice is validated successfully, the KSeF portal will assign a unique KSeF ID number for that e-invoice and makes it available for the purchaser. Then the purchaser can download the invoice for further use. 

However, KSeF rejects the invoice if there is any technical mistake or when unauthorized entities have issued e-invoices. It is to be noted that tax authorities can access all invoices whether it is successfully validated or rejected.

Poland tax authorities are already implementing e-invoicing voluntarily from 1st January 2022. However, only a few businesses have switched to standardized e-invoices, even though the authorities announced incentives. The major benefit of e-invoicing is getting a VAT refund within 40 days instead of 60 days.

Latest updates on mandatory e-invoicing in Poland

The Ministry of Finance published the first draft regulation on mandatory e-invoicing in December 2022 and submitted the same for public consultation. Businesses and tax advisers raised many comments regarding the technical aspects and scope of e-invoicing.

The ministerial website shows that a lot of the submitted comments were accepted. Apart from the postponement of implementation, the tax authorities announced the following charges:

• B2C transactions are excluded from the scope of e-invoicing.
• The implementation date has been postponed to 1st January 2025 for small businesses exempt from VAT, .i.e, below the threshold of PLN 200,000 (approximately $45,000 yearly).
• Further, the timeline was postponed to 31st December 2024 for simplified invoices issued from cash registers or for cash receipts. However, the document shall contain the purchaser ID; the value should be up to PLN 450.
• Specific railway tickets and toll receipts are kept out of mandatory KSeF e-invoicing.
• A separate procedure for invoices that are initially issued offline but fail when submitted to the KSeF.
• Postponed imposing penalties for non-compliance with the KSeF to 1st January 2025.

Challenges with e-invoicing in Poland

The Ministry of Finance plans to retain the scope of e-invoicing in the mandatory KSeF, as mentioned in the draft provisions. Accordingly, the e-invoicing shall cover entities established in Poland and entities operating in Poland through a fixed establishment such as a branch.

So, it can be concluded that the foreign companies registered for VAT purposes in Poland and do not have a fixed establishment won’t fall under mandatory e-invoicing. Accordingly, they can still issue and receive standard invoices electronically, such as a PDF or even on paper.

However, the fixed establishment is controversial in the EU, as reflected in many judgments of the Court of Justice of the EU and the Polish administrative courts and tax-binding rulings issued by the tax administration.

Hence, the Ministry of Finance plans to issue explanatory notes specifically on the fixed establishment criteria to help foreign companies, and their Polish contractors determine whether they have a fixed establishment in Poland.

Below are a few more challenges in Poland e-invoicing:

• Businesses can not add attachments to invoices in the KSeF system.
• The KSeF verifies the large batch of invoices in batches but not ‘real-time,’ in a few instances, it may take days to complete the verification. The major challenge in this process is that if one invoice fails in verification, the portal will reject all invoices in that batch and won’t point out the incorrect invoice/s.
• The law defined the invoice date as the date of successful validation by KSeF. Further, businesses shall consider the same for reporting purposes. However, it may differ from the actual date of the invoice. Even after many businesses raised concerns over this aspect, the Ministry of Finance is unwilling to change the rule as it is committed to automatic verification of VAT settlements based on the invoice clearance date from KSeF.

How to prepare for e-invoicing in Poland?

The new e-invoicing system is a revolution in invoicing in Poland. The implementation of KSeF is a complex and time-consuming process.

KSeF is not just adopting the technical aspects; first, a business must understand how the KSeF impacts them and what changes they must make to internal procedures, business processes, contracts, regulations, etc.

Hence, businesses shall plan early and comprehensively to make changes properly for the smooth implementation of e-invoicing.