A VAT Group is a solution that allows related entities to operate as a single taxpayer for VAT purposes. Although the companies retain their separate legal identities, for VAT purposes they jointly account for tax, operate under a single VAT identification numer, and bear joint and several liability for the Group’s obligations.
The introduction of the National e-Invoicing System (KSeF) imposes obligations on VAT Groups (GV) similar to those applicable to other taxpayers. However, due to their specific nature, VAT Groups require the implementation of dedicated technical and legal solutions.
While this structure simplifies internal settlements, it also gives rise to significant organisational and tax challenges. In practice, questions arise as to which entity is actually responsible for invoicing, whether the concept of „one invoice” truly applies within a VAT Group, and what risks – particularly in the context of KSeF – may affect all members of the Group.
Challenges and potential issues
1.Duality of roles
The basic challenge in the VAT Group model is the duality of roles. The Group acts as a single consolidated taxpayer vis-a-vis the tax authorities, assuming the rights and obligations of its members. However, the technical proces of issuing invoices remains with the individual companies (members of the Group). This issue arises already at the identification stage. Purchase invoices issued by external entities are delivered to a shared inbox assigned to the VAT Group’s VAT ID. At the same time, in the sales process, a specific Group member must be identified as the actual supplier, which requires precise completion of the structured e-invoice.
2. Complex XML structure and technical barriers
The risk of technical errors in VAT Groups is significantly higher than for single taxpayers due to the need to apply specific markings within the XML structure.
A similar mechanism applies to purchases. The VAT Group is indicated as the buyer in the Podmiot2 element, while the data of the relevant member is reported in Podmiot3 with role „10” (VAT Group member – recipient).
The structure also includes an indicator specifying whether the invoice relates to a specific Group member:
- value „1” – the invoice relates to a VAT Group member and requires completion of the Podmiot3 section
- value „2” – the invoice is not assigned to any specific member
An additional challenge is ensuring consistency between the VAT Group’s registration data and the data used in KSeF. Any inconsistencies in identification data may hinder the proper assignment of roles and permissions within the system.
3. Permission management and penal-fiscal liability
The hierarchical KSeF model for VAT Groups (where a chain of permissions is created: VAT Group member -> authorized entity -> individual user) may give rise to operational challenges. Members of the Group are jointly and severally liable for tax obligations, and inconsistencies in granting permissions (e.g. expired tokens or incorrect delegation of permissions to an accounting firm) may result in a disruption of the invoicing process. To mitigate such risks, it is advisable to carefully design the permission framework and designate an appropriate number of individuals responsible for invoicing within KSeF. Another important aspect of granting permissions is the lack of anonymity – each operation requires authentication via a unique signature or personal identification number, enabling authorities to immediately attribute responsibility for incorrect invoicing to a specific individual (in line with penal-fiscal regulations).
4. VAT Group exists solely for VAT purposes
It should be noted that a VAT Group is a concept that exists exclusively under VAT regulations. For other taxes, its members continue to operate as separate entities. As a result, revenues and costs are accounted for individually by each member for their own business purposes. Therefore, it is crucial to implement appropriate procedures and ensure accuracy in VAT Group invoicing. Failure to properly identify the relevant VAT Group member on invoices may lead to incorrect settlements for other taxes.
A VAT Group, as a single VAT taxpayer, may simplify processes such as the number of filed VAT returns, VAT refund procedures, or the offsetting of VAT within the Group resulting from internal settlements rather than taxpayer – authority relations. However, to ensure that the VAT Group remains a beneficial and attractive solution, it is essential – already at the early stage of KSeF implementation – to properly adjust procedures and structured invoice fields in order to minimize the risk of future errors.
If your organization operates within a VAT Group structure or is considering its establishment and requires support in adapting processes to KSeF requirements – both from a legal and operational perspective – please fell free to contact the Nexia Advicero team.