One of the most popular tools for running online advertising campaigns is Google Ads. However, when it comes to billing and accounting, questions arise regarding the invoicing of advertising services in the context of VAT. How do you account for Google Ads invoices to meet tax requirements and avoid trouble with the IRS? In this article, we’ll take an in-depth look at the issue and provide practical tips for accounting for Google Ads invoices in the context of VAT.
Google Ads invoice – general rules
Accounting for Google Ads invoices depends on your tax situation as an entrepreneur. Here is the general way of posting:
Prepayment invoice
If you are an active VAT taxpayer, the invoice for the prepayment can be recorded in the VAT sales register at the time of payment.
The VAT rate will correspond to the rate in effect in the country from which you use Google Ads (generally 23% in Poland).
The amount of the invoice will be shown on the output and input tax side, making the transaction tax-neutral, as long as you are entitled to full VAT deduction.
Billing invoice
The billing invoice can be recognized in the PIT register as a deductible expense on the date it is issued.
The amount of this invoice will be treated as an advertising expense and will affect tax calculations under the income tax (PIT) settlement.
Why are you invoiced with VAT for Google Ads media budget?
An invoice with VAT is issued because Google Ads services are subject to VAT according to tax laws in Poland and other EU countries. This means that VAT is charged on these services, and businesses are required to account for them.
Entrepreneurs running their own businesses are increasingly using online advertising systems, including Google Ads. The invoice for Google Ads services is issued by Google’s Ireland branch, but its accounting and tax treatment depends on the tax situation of the business in question.
Summary
The invoice for Google Ads should be accounted for in accordance with tax regulations in Poland, including VAT and PIT, depending on your tax status. If you have doubts – it is worth consulting an accountant or tax advisor to ensure that these transactions are correctly accounted for.
