When a Company Is Entitled to Input VAT

The supplier issues a VAT invoice under the rules of the Tax Code and registers it in the Unified Register of VAT Invoices. The buyer checks the date, party details, item description, rate and VAT amount. After registration, the accountant can include the confirmed amount in input VAT for the relevant reporting period, subject to the applicable time limits.

The substance of the transaction is also important to the buyer. The contract, invoice, acceptance certificate, delivery note, payment and accounting records should relate to the same supply. If the director purchases equipment, raw materials or services for the company, it should be clear where the purchase is used and how it relates to income-generating activity.

Under paragraph 198.6 of the Tax Code, the right to include a registered VAT invoice is retained for 365 calendar days from the date it was issued. If the supplier registers the invoice late, the accountant uses the actual registration date and the final deadline established by the Code.

If the supplier delays registration of the VAT invoice, the manager can remind the supplier of the contractual deadline, while the accountant shows the owner the amount of VAT that is not yet confirmed in the Unified Register. For a major purchase, this can represent a significant amount of working capital. The parties can agree in the contract in advance how tax documents are exchanged and the consequences of the supplier failing to meet its obligations.

Purchases, Imports and Adjustments

For imports, the accountant uses the customs-declaration data and documents confirming payment of customs charges. Import VAT enters the accounting records together with the value of the imported goods. For the owner, it forms part of the total landed cost of the consignment, so customs and accounting data should match by goods, quantity and dates.

An advance payment, return of goods, reduction or increase in price may change the VAT amount. The supplier and buyer prepare an adjustment calculation in the cases provided by the Code. The accountant checks which VAT invoice it relates to, who must register the document and in which period the input VAT changes.

For purchases used in transactions with a special tax regime or outside business activity, the accountant separately checks the rules of Article 198 of the Code. The owner receives an explanation of the amount that remains in input VAT and any VAT liabilities arising under the relevant rules.

For fixed assets and expensive equipment, the accountant maintains the link between the invoice, payment, commissioning and VAT invoice. The owner can see the capital expenditure, VAT amount and expected useful period at the same time. This helps distinguish input VAT on a genuine business investment from ordinary current expenses.

How to Control VAT Without Losing Cash

The VAT return should include amounts supported by the Unified Register, primary documents and accounting records. The director should see separately the confirmed input VAT, invoices awaiting registration and adjustments. The owner can then see the real VAT payable separately from amounts still awaiting registration.

A supplier contract may provide deadlines for primary documents and responsibility for tax documents. The manager monitors the commercial side, the accountant monitors the Unified Register, and the director receives information on amounts affecting cash flow. This is particularly important for major purchases and regular imports.

UBC can review one reporting period, a single disputed amount or the entire VAT block. To start, the VAT return, incoming VAT-invoice register and several main contracts are sufficient. The accountant receives a document-based breakdown, while the owner receives a clear amount of confirmed input VAT and a list of issues requiring a decision.

VAT affects cash flow, so the director benefits from a short monthly summary: VAT liabilities on sales, confirmed input VAT, import VAT and amounts still awaiting registration or adjustment. On this basis, the accountant determines the amount payable, while the owner reserves the required funds in the tax account in advance.

For a company with many suppliers, it is useful to compare the value of purchases each month with confirmed VAT by major counterparty. The owner can immediately see which supplier is delaying documents and how much working capital is affected. The accountant can separately highlight large invoices, imports and fixed-asset purchases so that the director focuses on material amounts while small standard purchases remain in ordinary accounting.

If the owner plans a significant purchase, the director can assess the VAT effect on price and working capital before signing the contract. The amount of cash tied up before the goods are sold will differ for deferred payment, prepayment and imports. This calculation helps the owner reserve funds for taxes and supplier payments in advance and keep sufficient liquidity for ongoing operations.