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SLIM VAT 3 – conversion rate for correcting invoices issued in foreign currency

With the draft amendment to the VAT Act, taxpayers finally got a regulation on the issue of determining the conversion rate for correcting invoices originally issued in foreign currency, through the implementation of a new Article 31b to the Act. The lack of such regulation to date in the Act was a source of ongoing uncertainty as to the correctness of accounting for adjustments both increasing and decreasing the value of transactions.

Planned changes

Under the planned changes, the exchange rate to be used for converting the amount of the adjustment to the taxable base on the correcting invoice will be the same as the rate applicable to the original settlement – this will apply to both plus and minus adjustments. For example, where the original invoice used the exchange rate of 10 May 2022 for the service provided, the taxpayer will use the same rate for the correcting invoice issued to it.

The above is a consequence of the adjustment of Polish law to EU law, more specifically the first subparagraph of Article 91(2) of the VAT Directive, under which where the amounts used to determine the taxable amount of a transaction other than the importation of goods are expressed in a currency other than that of the Member State in which determination of that value takes place, the exchange rate to be applied shall be the last recorded rate of sale, at the time VAT becomes chargeable, on the most representative currency market or markets of the Member State concerned, or the rate determined by reference to such market or markets, under the conditions laid down by that Member State.

From the above provision, it is therefore clear that the principle of converting the exchange rate is based on the time when the tax becomes chargeable (the so-called historic rate).

What about collective invoices?

The regulations for summary correction invoices are contained in Article 106j(3) of the VAT Act. However, when converting the exchange rate here, the rule will be slightly different. Fortunately, the taxpayer will not be forced to use the original exchange rate applied to each of the adjusted transactions, but will make the conversion at the average exchange rate of the foreign currency in question announced by the National Bank of Poland on the last business day preceding the day on which the adjusted invoice was issued (the ECB average exchange rate will be used accordingly). Consequently, there will be one collective rate for all adjusted transactions.

Reductions and discounts

Similarly as in the case of domestic transactions, the provisions will also apply in the event of granting a discount or rebate and receipt by the taxpayer of a collective correcting invoice for such transactions with respect to intra-Community acquisitions of goods, as well as made in the conditions referred to in Article 17(1)(4)-(5) of the VAT Act. In such a case currencies other than the euro shall be converted using the exchange rate of each of them against the euro.

In practice it is also possible that a counterparty from outside the European Union does not issue an invoice documenting a given transaction (due to other regulations in force in a given country), and then makes a discount or rebate. Then, of course, the above rules will not apply due to the lack of the relevant proof documenting the transaction in question with an indication of the date. It will therefore be impossible to determine the relevant exchange rate.


The solutions adopted represent a significant simplification of the exchange rate conversion rules for taxpayers. Admittedly, they are nothing surprising or new – in essence, they maintain the existing practice of authorities and taxpayers with regard to the conversion of exchange rates when correcting invoices are issued. However, the planned provisions will finally clarify the situation for taxpayers, thus avoiding unnecessary deliberations on the correct form of their settlements – provided, of course, that the law is passed unchanged. According to the current draft, the above provisions are to come into force on 1 April 2023.