Exchange rates for credit/debit notes as from January 2023

As from 1st January 2023 probably new rules of the applying exchange rate for the correction invoices (credit/debit notes) when the original invoice has been issued in foreign currency will come into force. So far, this aspect has not been regulated in the Polish VAT law but the SLIM VAT 3 regulation will sort out this issue and to the Polish VAT Act will be added the art. 31b in which the rules for applying the exchange rates for credit/debit notes will appear.

In accordance with the above mentioned art. 31b of the Polish VAT Act, the exchange rate for the correction invoice will be the same as the one applied for the original invoice. This rules will be applied to the in plus and in minus correction invoices. It is worth to mention that this regulation is consistent with art. 91 p.2 of the European VAT Directive.

An exception to the above rule will be applied to collective corrective invoices (credit notes) issued for discounts or price reductions granted. In this situation, taxpayer will not be obligated to apply different exchange rates for each of corrected transaction. In accordance with the project of  art. 31b of the Polish VAT Act, the taxpayer will made the conversion into PLN at the average exchange rate of a given foreign currency announced by the National Bank of Poland on the last business day preceding the date of issuing the correcting invoice (the average exchange rate of the European Central Bank will be applied accordingly). In this case, one collective exchange rate will be applied to all corrected transactions.

The project also includes the proposition to apply the same rules for the collective correction invoices issued in accordance with art. 17 p. 1 p. 4 and 5 PL VAT Act (reverse charge mechanism) and for intracommunity acquisition transactions.

The Polish Ministry of Finance points out that the proposed regulations will not be applied to the correction invoices using the conversion from income tax.

The proposed amendments are aimed at simplifying the rules on exchange rate conversions. It is worth to mention that the above regulations maintain the existing practice of tax authorities and taxpayers regarding the exchange rates applied to the correction invoices.

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