Issuing an Invoice as the Moment When a Tax Liability Arises
As a general rule, an invoice for the supply of goods or services is issued after the supply has been made or the service has been provided, or after an advance payment has been received. However, the VAT Law provides an exception for certain types of services, allowing an invoice to be issued before the service is actually provided.
A tax liability arises at the earliest of the following moments:
the supply of goods or services is made;
payment or part of the consideration is received before the supply or service is provided;
a customs debt arises upon the import of goods or, if such an obligation does not arise, on the date when it would otherwise have arisen.
The possibility of issuing an invoice before the service is provided applies, in particular, to services relating to the transfer or use of copyrights and related rights, patents, licenses, trademarks and other intellectual property rights. The same applies to services directly related to these rights, as well as technical support for the use of software, hardware and other equipment over a specified period.
For services that are, by their nature, linked to a specific period of time, the supply is considered to have been made when the legal basis for providing the service expires. Where invoices are issued periodically, the supply is considered to have been made on the last day of the period covered by the invoice. If the service continues for more than one year, the supply is considered to have been made at the end of each year.
Due to the specific nature of these services, the legislation allows a taxpayer to issue an invoice before the supply is considered to have been made. However, issuing the invoice in advance is not mandatory — the taxpayer may also issue the invoice after the service has been provided.
Therefore, two options are available in practice for the services concerned:
the invoice is issued before the advance payment is received and before the service is provided;
the invoice is issued after the advance payment is received but before the service is provided.
This approach provides greater flexibility in invoicing services provided over a specific period while maintaining clear rules for determining when the tax liability arises.
