Poland’s E-Invoicing Reform: Overview of KSeF System

Since earlier this year, when the first draft continuous transaction controls (CTC) legislation was published in Poland, there’s been good progress in the development of the CTC framework and system, the Krajowy System e-Faktur (KSeF).

After several reiterations, the CTC legislation was finally adopted and published on the Official Gazette on 18 November 2021. Implementing legislation regulating different aspects of the CTC system, e.g., the authentication and inbound processes, is underway and the technical documentation and the test environment are continuously updated.

According to the latest documentation, these are the key features of the KSeF framework:

• Scope: KSeF is Poland’s new e-invoicing system which utilises a centralised platform for issuing, receiving and archiving e-invoices in business-to-business (B2B) relationships. A structured e-invoice can be issued for business-to-consumer (B2C) transactions if requested by the customer. Business-to-government (B2G) transactions are processed under a separate Peppol-based system, the PEF, which has been in place for some time.
• Voluntary phase: Starting from January 2022, KSeF goes live as a voluntary system, meaning there is no obligation to use this e-invoicing system in B2B transactions. Certain benefits are offered to taxpayers who opt to use the CTC system to encourage adoption, including quicker tax refunds and exemption from the need to submit the SAF-T file, JPK_FA (report of invoices). If buyers don’t accept to receive structured e-invoices through KSeF, suppliers are still free to use KseF to issue their e-invoices and receive the associated benefits. Still, they must continue to send the invoice to the buyer out-of-band in the agreed form and format (paper, PDF, EDI etc.).
• Mandatory phase: It is expected that the system will be mandatory in 2023, but no defined date has been set yet.
• Clearance process: KSeF is a clearance system whereby e-invoices are sent to a centralised platform in a regulated structured XML-based format, the FA_VAT, according to the API and schema specifications. The system validates the invoice against the schema specifications, and if it passes the validation, assigns a unique ID to the invoice, which identifies the invoice in KSeF. The structured e-invoice containing the unique ID number is considered the legal invoice and is made available to the buyer through the KSeF.
• New structured e-invoice: The structured e-invoice, the FA_VAT, is a new type of e-invoice as it includes more than standard invoice data required under the VAT e-invoicing rules, such as payment data, data related to the settlement of customs duties, data on the transaction terms. In many ways, it is similar to the JPK_FA with around 67 fields in common, making the JPK_FA redundant.
• Integrity and authenticity of structured e-invoice: Issuing and receiving e-invoices through the KSeF is added to the existing list of e-invoice integrity and authenticity methods listed in the Polish VAT law (EDI, BCAT, e-signatures etc.). This means that, during the voluntary phase, suppliers and buyers can rely on the KSeF e-invoicing process to ensure the integrity and authenticity of their e-invoices. Once it becomes mandatory, issuing and receiving e-invoices through KSeF will be the only permitted method to comply with the integrity and authenticity requirements of the VAT law.
• Authentication method: A qualified e-signature or seal (QES) is one of the accepted methods for authenticating the taxpayer or authorised entity in the system, e.g. accountant, third-party service provider. Details about how the authentication process will work technically is to be confirmed in subsequent documentation.
• Archiving: KSeF offers an archiving functionality for taxpayers who wish to archive their e-invoices in the CTC system during the voluntary phase. During the mandatory phase, e-invoices will be archived automatically in KSeF for ten years (subject to the taxpayer’s authorisation following data privacy rules such as GDPR), which will provide the tax administration with immediate access to stored e-invoices and thus facilitate tax audits. Therefore, the existing VAT rules (articles 112 and 112a of the Polish VAT law) stating taxpayers must store their e-invoices until the end of the statutory storage period, will become obsolete. However, taxpayers will most likely still store e-invoices in their archive to ensure they have evidence in case of a dispute against the tax authority.

The Polish authorities have made a considerable effort to make all the required documentation and details available in time for the system’s roll-out in January 2022. However, certain key details regarding the process are expected to be clarified in the updated test environment scheduled for release on 13 December 2021.