The “electronic invoice” or “e-invoice” has been operating in Poland as a full-fledged official document since 2005, but it wasn’t until the COVID-19 pandemic that more and more companies decided to send invoices electronically to their counterparties, and the Ministry of Finance began to move toward making the use of electronic structured invoices mandatory in business transactions starting in 2023.
Although this is not a new concept there is still some confusion about what exactly falls under this definition.
Below we answer some questions about electronic invoices. We will also try to introduce the topic of the KSEF system, which from January 2022 introduces a structured xml format, the FA(1) e-Invoice file, and look at the benefits of true e-invoicing compared to other commonly used invoice types.
What is an e-invoice?
An electronic invoice is an invoice that is issued, sent, received, processed and stored electronically using specific document formats. E-invoices are digital throughout the document lifecycle, from issuance to archiving.
E-invoicing solutions can help replace manual tasks with automated operations to increase efficiency, eliminate errors and help businesses comply with regulations.
What is not considered an e-invoice?
While there are many accepted formats for e-invoices, not all digital invoices are e-invoices. Here are two types of invoices that are not considered e-invoices:
- PDF invoices, usually sent via email, are not e-invoices. Faktury PDF nie mogą być przetwarzane automatycznie, ponieważ nie są przesyłane w ustrukturyzowanym formacie.
- Paper invoices, even if converted to digital format, are not e-invoices because they were not issued electronically.
What are the rules for sending electronic invoices to customers?
Law of March 11, 2004. On tax on goods and services (i.e., Journal of Laws of 2020, item 106, as amended) describes in Art. 106m ways to “ensure the authenticity of the origin, integrity of the content and legibility of the invoice”.core Under these regulations, an electronic invoice must meet several requirements:
- Authenticity of origin – confidence in the identity of the supplier of goods or services or the issuer of the invoice;
- Integrity of content – contains everything that a VAT invoice;
- readability of the invoice.
These requirements can be ensured by any business controls that establish a reliable audit trail between the invoice and the delivery of goods or services. The law recommends the following measures:
- qualified electronic signature or
- electronic data interchange (EDI).
What else is required to send an electronic invoice to a contractor?
His consent is required, i.e. the recipient’s acceptance to receive invoices in electronic form.
What is an e-invoice in the KSEF system?
As of January 1, 2022, the Ministry of Finance is introducing the National e-Invoice System, which will be a voluntary solution at first (for the time of testing and implementation of the relevant software of entrepreneurs). Implementation of the mandatory KSeF eInvoice format is scheduled for 2023.
With the National e-Invoicing System (KSeF), it will be possible to issue and transmit invoices in a structured format. Such invoices will function in business as one of the permitted forms of documenting transactions, in addition to paper invoices and electronic invoices currently in business.
How will the NSEF system work?
The KSeF system will provide the HTTP protocol and the REST protocol based on it. REST API is software that will enable:
- invoicing,
- checking the status of a sent invoice,
- Downloading the list of invoices for the payment ID,
- Generation of a payment identifier,
- invoice collection,
- Authentication, or confirmation of the taxpayer’s identity.
The system will be accessed through:
- trusted profile,
- qualified signature,
- A unique Token assigned to the taxpayer.
The system makes it possible to give authorizations to, for example, the accounting office or the accounting department.
Logical structure of “e-Invoice FA(1)”.
The logical structure of the file that will be used to generate the e-invoice was published on 29.11.2021.
There will be a single structure for all types of invoices – both for basic invoices, corrective invoices, simplified invoices, advance invoices and advance billing invoices.
Elements of e-invoicing:
Polish version of elements (name the same like from XML / JSON files)
Source: https://www.gov.pl/web/kas/krajowy-system-e-faktur
In addition to the mandatory elements of a standard VAT invoice, the e-invoice to be issued on the KSeF platform has a far more elaborate scheme. As a result, the Ministry of Finance is seeking a derogation for Poland to be able to request more information from taxpayers, such as:
- EORI number (of the seller or buyer)
- email address (seller/buyer),
- telephone number (of the seller/buyer),
- The number of the WZ document associated with the invoice,
- the type of transportation used in the case of the delivery of goods made,
- carrier identification data,
- date and time of commencement of transportation,
- address of the place of shipment,
- global trade unit number,
- the symbol of the Polish Classification of Goods and Services,
- symbol of the Combined Nomenclature,
- the type of effect of the correction in the records,
- the number identifying the adjusted invoice in the National e-Invoice System (KSeF), and more.
The process of issuing a KSeF e-Invoice.
- the invoice is generated in the taxpayer’s system (e.g., finance and accounting system, sales),
- the taxpayer’s system will be connected to the KSeF system,
- after the authorization is made, it will be possible to send the e-Fat invoice file,
- the KSeF system will authorize the taxpayer and the invoice file,
- the issued e-Invoice will be assigned a unique invoice number,
- the invoice will be forwarded to the buyer,
- invoices will be archived in the system for 10 years.
What are the benefits of e-invoicing?
If done correctly, e-invoicing offers the opportunity to reduce costs and increase profit margins, which is not possible with PDF and paper invoicing. Here are some of the benefits of e-invoicing:
- Save time and eliminate errors: E-invoicing allows you to automate time-consuming and error-prone tasks such as data entry, matching and approvals, so you can redeploy staff to higher-value initiatives.
- Better cash flow and lower accounts receivable turnover rate: Removing paperwork can, in most cases, reduce sales backlogs by several days.
- Secure document and data exchange: Encrypted file transfer, digital signatures and secure systems make e-invoicing the safest way to send and receive invoices. There is also no risk of invoices getting lost in the mail or sent to junk mail.
- Real-time delivery and processing: View the status of document delivery and processing live on cloud-based platforms or, for example, directly from your ERP system. No risk of lost or destroyed invoices.
- Tracking and traceability: E-invoicing automatically tracks transaction history and the entire document journey, so you don’t have to spend time doing it manually.
- Environmentally friendly: E-invoicing helps reduce paper consumption and CO2 emissions.
- Meeting regulatory requirements: E-invoicing with the right service provider ensures that you are always up to date with tax and filing regulations.
- Readiness to work remotely: E-invoicing tasks can be performed from anywhere without the need to
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