Certificate of Completed Works (Services Rendered): Details, Timing and the E-Invoice

The certificate as a primary accounting document

The Law on Accounting (Article 14) states that business transactions are recorded on the basis of primary accounting documents evidencing that the transactions took place. A certificate of completed works is the typical document of this kind for works and services: the contractor recognises revenue on its basis, and the customer recognises an expense or the cost of an asset.

Primary documents are drawn up when the transaction takes place or afterwards. If documents from the counterparty for a transaction relating to the reporting period have not been received, the transaction is still recorded, with the relevant primary document prepared. So a certificate that arrives the following month does not allow the expense to be shifted: the date is set by the fact that the work was performed.

Mandatory details

There is no single approved certificate form for all works and services, but every primary document must contain the details listed in Article 14 of the Law on Accounting.

• the name of the accounting entity (contractor and customer);
• the name and number of the document, and the date and place it was drawn up;
• the name, content and quantity of the transaction with units of measurement, in physical and monetary terms: which works, in what volume and at what price;
• the positions, signatures, surnames and initials of the persons who carried out the transaction, or other details needed to identify them.
• In practice it helps to add a reference to the contract and the service period, the VAT amount (if the contractor is a VAT payer) and a note on whether there are any claims.

E-invoice and certificate: what each one proves

Under Article 47 of the Tax Code, legal entities, IEs and self-employed persons selling goods (services) must issue invoices to buyers, and the invoice is, as a rule, issued electronically in the e-invoice information system.

For VAT, the key point is the turnover date. Under Article 242 of the Tax Code, the turnover date for services is the date the invoice or another document confirming the provision of services is issued (signed). For continuous services — communications, utilities, financial services and so on — it is the last day of the calendar month in which they were provided. For construction and long-term contracts without monthly handover, the turnover date is also the last day of each month.

So for VAT purposes a signed e-invoice can fix the turnover date by itself. But an e-invoice is a settlement and tax document: it says nothing about acceptance of the result, defects or the customer's position on quality. That is the job of the certificate.

Why the certificate matters for works contracts

The Civil Code (Article 646, Part Two) requires the customer to inspect and accept completed work within the time and in the manner set by the works contract, with the contractor present, and to notify the contractor immediately of any deviations from the contract or other defects.

• A customer who discovers defects on acceptance may rely on them later only if they are recorded in the certificate or another document confirming acceptance.
• A customer who accepts work without inspecting it loses the right to rely on obvious defects that could have been found by an ordinary inspection.
• The customer must notify the contractor of hidden defects found after acceptance within ten days of discovering them.
• If the customer avoids acceptance, the contractor may sell the result one month after the handover date and after two warnings — unless the contract provides otherwise.

The certificate and tax-deductible expenses

For profit tax, justified and documented expenses are deductible (Article 305 of the Tax Code). Together with the contract and the e-invoice, the certificate shows that the service was actually provided and is connected with the company's business. This matters especially for consulting, marketing and management services: during an audit the tax authority looks not only at whether an e-invoice exists but also at what was actually delivered — reports, results, correspondence.

If the provider is a foreign company registered under Article 279 of the Tax Code to supply electronic services, it does not issue invoices (Article 47 of the Tax Code). In such cases the contract, the certificate or the provider's report and the payment documents become the main evidence of the expense.

Electronic certificates and retention

The Law on Accounting expressly allows primary documents to be drawn up and submitted as electronic documents. In practice an electronic certificate is signed with the electronic digital signatures of the parties' authorised persons in an electronic document management system.

A primary document may not be corrected without confirmation from the parties to the transaction: if the price or volume changes, a new or adjusting certificate is issued, and for the e-invoice the seller issues an additional or corrected invoice (Article 47 of the Tax Code). Primary documents are kept for the periods set by law, but for no less than five years after the reporting year (Article 29 of the Law).

Checklist before signing

• all details required by Article 14 of the Law on Accounting are filled in;
• volume and price match the contract and the e-invoice;
• the service period matches the reporting month;
• defects, if any, are listed in the certificate and not only in emails;
• signatories are authorised (order, power of attorney or the director's e-signature);
• for complex services, a report or the deliverable is attached.
• General rules for primary documents are covered in our article on primary documentation, and e-invoicing in the article on electronic invoices.