Reinvoice in the affiliated entities
What is a reinvoice? Unfortunately, this concept does not have its exact definition in tax law but it can be defined as the transfer of costs of a service or goods purchased by a given company to another company. A good example may be the rental service when we rent the premises to another entity. If the contract with the energy company is penned for us, then after having received the invoice for the service, we can "re-invoice" it to our client.
It is also possible to re-invoice services within affiliated entities. In this case, all the rules regarding the documentation of the transaction, as set out below, still apply.
Article 8, paragraph 2a of the Act of March 11, 2004 on tax on goods and services (the so-called VAT Act) says that "If the taxpayer, acting on their own behalf but for the benefit of a third party, participates in the provision of services, it is assumed that the taxpayer himself received and rendered the services." For this reason, re-invoicing is a resale of previously purchased services or goods, and therefore a type of transaction.
Pursuant to the Act of February 15, 1992 on corporate income tax (the so-called CIT Act), taxpayers making transactions with related entities are required to prepare tax documentation for these transactions, the total value of which exceeds EUR 50,000, when their revenues or the costs in the year before the tax year exceeded EUR 2 million. The documentation must be prepared for the year in which the transaction took place and the following year. Thus, re-invoicing constitutes a part of the documentation, all components of which are presented in the aforementioned Act.
The text of the act also states: “Affiliated entities are obliged to prepare local transfer pricing documentation for the financial year, which presents the relations between these entities. The purpose of the documentation is to demonstrate that the transfer prices were established on terms that would be agreed between unrelated entities. In other words, the purpose of preparing the documentation is to demonstrate the arm's-length nature of the transaction. The obligation to prepare local transfer pricing documentation depends on the value of the controlled transaction in a given financial year. " For the exact amounts to be taken into account, please refer to Article 11 of the Corporate Income Tax Act.
The reinvoice does not have to look identical to the original purchase document, but it must contain all the data required on the VAT invoice - information about it is included in Article 106e of the VAT Act.
In the case of re-invoicing, it is worth using the advice of a proven accounting office. TaxCoach will help you complete tax documentation and choose the best form of taxation for you.
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