The issue of prematurely issued advance payment and service invoices has long been one of the most contentious issues in relations between businesses and tax authorities. Issuing a document in advance, followed by a late payment by the contractor, often resulted in the document being classified as a so-called "empty invoice," a devastating event for the taxpayer. A groundbreaking change to the individual tax ruling issued by the Head of the National Tax Administration in July 2025 finally brings long-awaited rationalization and brings order to the tax authorities' previously chaotic approach.
The National Tax Information's (KIS) interpretation of the law so far has been exceptionally harsh towards taxpayers. In situations where a business entity issued an advance payment invoice beyond the statutory 30-day deadline, and the customer paid late, the tax authority automatically deemed such a document as not documenting an actual event on the date it was issued. The legal consequences were absolute, as officials invoked Article 108, Section 1 of the Goods and Services Tax Act, ordering immediate payment of the VAT invoice, without the right to consider the tax liability date under general rules.
Receiving a late payment didn't correct the formal error in the eyes of the tax authorities. The only way to avoid a severe penalty was to correct the invoice to zero and reissue it after receiving the funds. This state of affairs generated additional bureaucratic burdens, unnecessary chaos in the accounting records, and a constant risk of litigation for companies operating in industries with specific settlement models, such as IT, construction, or real estate development.
A breakthrough came with the issuance of a decision by the Head of the National Revenue Administration (KAS) ex officio amending the unfavorable individual tax ruling initially issued by the Director of the KIS. The case concerned an IT company providing ongoing services and granting licenses, where contractors often made payments 30 days after invoice issuance. In the amended interpretation, the Head of the KAS unequivocally questioned the previous, pro-fiscal stance of the first-instance authority.
The new position of the tax authorities has implemented a transparent settlement mechanism that fully respects the EU principle of VAT neutrality. If an invoice is issued prematurely, the seller's tax liability does not arise at the time of issuance, but rather under general rules, i.e., upon actual receipt of payment or performance of the service. This means that the taxpayer reports the tax due in the declaration for the period in which the tax liability actually arose, without the need to hastily correct the premature document to zero.
At the same time, the issue of the right to deduct input tax incurred by the purchaser of a service has been clarified. A contractor receiving an invoice issued prematurely does not acquire the right to deduct VAT upon receipt. This right materializes only in the settlement for the period in which the seller's tax liability arose, i.e., upon actual payment. This structure effectively protects the state budget against unauthorized early tax deductions, while eliminating the need to artificially withdraw documents from legal circulation.
The decision of the Head of the National Tax Administration (KAS) is a milestone in bringing tax practice closer to market realities. Businesses gain significantly greater trading security and settlement stability in situations where their contractors are late in settling advance invoices. However, it should be remembered that the change in interpretation does not mean complete acceptance of invoicing discretion. The regulations specifying the deadlines for issuing documents remain in force, and ignoring them constitutes a formal defect. To safely utilize the new interpretation, meticulous documentation of the actual nature of the transaction becomes crucial. In the event of a tax audit, taxpayers must be able to prove that the prematurely issued invoice was related to an actual service that was ultimately completed and paid. For entities using non-standard settlement models, applying for their own individual interpretation remains the recommended solution, providing full legal protection.
This article is for informational purposes only and does not constitute legal advice.
The law is current as of July 25, 2026.
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