An invoice is one of the fundamental documents upon which taxpayers rely in recording the transactions they carry out within the scope of their commercial activities. This document reveals the content of the legal relationship established between the parties; it certifies that a good has been sold, a service has been performed, or an economic benefit has been provided. At the same time, it serves as a means of proof as to whether a consideration has arisen in return for such transactions and, if so, whether it has been paid. In this respect, the invoice is a written document that concretizes the debt relationship between the parties and contributes to the secure conduct of commercial life.
Pursuant to Article 229 of the Tax Procedure Law No. 213, an invoice is defined as a commercial document issued by the seller or the service provider and delivered to the customer in order to indicate the amount for which the customer has become indebted in return for the goods sold or the services rendered. This definition clearly demonstrates both the close connection of the invoice with the transaction giving rise to the debt and its function of revealing the legal relationship between the parties.
In accordance with Article 231 of the same Law, the obligation to issue an invoice must be fulfilled within a maximum period of seven days from the date on which the goods are delivered or the service is performed. Invoices that are not issued within this period are deemed by the legislator as never having been issued and give rise to the legal consequences attached thereto. In addition, the Turkish Commercial Code No. 6102 also contains provisions regarding invoices, and in particular, paragraph two of Article 21 is of significance. According to the said provision, if the recipient of the invoice does not object to its content within eight days from the date of receipt, the content of the invoice shall be deemed to have been accepted. This regulation is intended to ensure that commercial life operates within the framework of the principles of expediency and legal certainty.
Pursuant to the explicit provision of the Tax Procedure Law, invoices that are not issued within seven days from the delivery of goods or the performance of services are legally deemed as never having been issued. This situation is considered as a special irregularity within the scope of Article 353 of the Law and is subject to certain sanctions.
According to paragraph one of the said Article, regulated under the heading “failure to issue and receive invoices and similar documents and non-compliance with formal and procedural requirements”; in cases such as the failure to issue or receive documents such as invoices, expense vouchers, producer receipts, and self-employed professional receipts, the inclusion of amounts contrary to reality in such documents, or the issuance of such documents in paper form instead of electronically where required, a special irregularity fine is imposed on each of the parties who are obliged to issue and receive these documents. Furthermore, documents deemed as never having been issued pursuant to Articles 227, 231, and 234 of the Tax Procedure Law are also evaluated within this scope.
Within this framework, in the event that an invoice is not issued within the prescribed period in violation of Article 231, a separate penalty arises both for the persons obliged to issue the document and for those obliged to receive it. While a penalty not less than a certain amount is imposed in the initial determination, in repeated determinations, a fine amounting to ten percent of the amount that should have been included in the invoice or the portion that has been understated is imposed.
On the other hand, it is not sufficient for the invoice to be issued merely within the seven-day period; the principle of periodicity, which is one of the fundamental principles of accounting, must also be observed. Accordingly, the period in which the goods are delivered or the service is performed and the period in which the invoice is issued must be the same. Otherwise, it will not be possible to reflect the transaction accurately in the financial statements of the relevant period. For instance, even if the statutory seven-day period is observed, the issuance of an invoice in October for a delivery of goods carried out in September may constitute a violation of the principle of periodicity. Therefore, the invoice in question must be issued no later than the last day of the relevant month.
Judicial decisions also bear importance with respect to the legal consequences of invoices not issued within the prescribed period, and the decision of the Council of State Tax Chambers Assembly dated 24.09.1999 is of a guiding nature in this regard. This decision sheds light on the application in terms of the legal nature and consequences of invoices not issued in due time.
Council of State Tax Chambers Assembly, Merits No. 1999/29, Decision No. 1999/406;
“It was determined that the plaintiff company, engaged in the trade of construction steel, had not issued invoices for various construction steel it had sold, and a special irregularity fine was imposed for the 1997 calendar year. In subparagraph 1 of Article 353 of the Tax Procedure Law No. 213, it is stated that in the event that invoices, expense vouchers, producer receipts, and self-employed professional receipts that are required to be issued and received are not issued or received, or if amounts different from the actual amounts are included in such documents, a special irregularity fine amounting to ten percent of the amount that should have been written in these documents shall be imposed on each of those who are obliged to issue and receive them. In subparagraph 5 of Article 231 of the same Law, titled invoice order, it is stipulated that the invoice shall be issued within a maximum of ten days from the date of delivery of the goods or the performance of the service, and invoices not issued within this period shall be deemed as never having been issued. During the inspection carried out at the taxpayer’s workplace on 23.01.1997, it was determined that the taxpayer had not issued invoices for various construction steel sold to seven different customers between 02.01.1997 and 09.01.1997, and the said invoices were issued during the inspection and after the expiration of the ten-day period stipulated by law. As it was understood that all legal conditions requiring the imposition of a special irregularity fine had been fulfilled, no unlawfulness was found in the decision of insistence rejecting the case.”[1]
At this point, it should also be noted that the regulation regarding the period set forth in paragraph five of Article 231 of the Tax Procedure Law was initially prescribed as “ten days”; however, as a result of the amendment made by Article 48 of Law No. 5035 dated 25.12.2003, this period was re-determined as “seven days.” With this amendment, the period for issuing invoices was shortened in order to ensure that commercial transactions are recorded more swiftly and in a more orderly manner.
Council of State 4th Chamber, Merits No. 2020/2277, Decision No. 2023/758;
“Summary of the decision of the Court of First Instance: In the decision dated … and numbered E:…, K:… rendered by the Tax Court; it was concluded that Article 353/1 of Law No. 213, which constituted the legal basis of the disputed special irregularity fines and was in force at the time of the incident, did not prescribe a penal sanction for invoices issued after the prescribed period; in other words, in the version of Article 353/1 of Law No. 213 applicable at the date of the incident, there was no provision stating that a special irregularity fine would be imposed for invoices which, although issued, were deemed as never having been issued pursuant to Article 231; and since it was established that the plaintiff company had issued the invoices forming the basis of the penalty, it was held that the special irregularity fines imposed under Article 353/1 of Law No. 213 on the ground that the invoices had been issued after the seven-day period from the dates of approval of progress payments were not in compliance with law. For the stated reasons, it was decided to accept the case. Summary of the decision of the Regional Administrative Court: The Regional Administrative Court decided to reject the appeal pursuant to paragraph 3 of Article 45 of the Administrative Procedure Law No. 2577, stating that the decision of the Tax Court subject to the appeal was in conformity with procedure and law and that the arguments put forward by the defendant were not of a nature to require the annulment of the said decision. Upon hearing the explanations of the Rapporteur Judge and examining the documents in the file, the Fourth Chamber of the Council of State held as follows: The decision under appellate review is in conformity with procedure and law, and the grounds for appeal set forth in the petition were not deemed sufficient to require the reversal of the decision.”[2]
As can be seen, it is difficult to assert that the Council of State has developed a uniform case law regarding the legal consequences of invoices not issued within the prescribed period, and it is understood that there are decisions containing different evaluations.
Pursuant to Article 231 of the Tax Procedure Law No. 213, an invoice must be issued within seven days from the date of delivery of the goods or the performance of the service. Invoices not issued within this period are deemed, by virtue of the provision of law, as never having been issued. As a consequence of this situation, the imposition of a special irregularity fine within the scope of Article 353 of the Tax Procedure Law comes into consideration with respect to such documents.
However, upon examining the decisions of the Council of State, which is the supreme judicial authority, it is observed that different approaches have been adopted regarding the legal consequences of invoices not issued within the prescribed period. In some decisions, it is accepted that this situation, which constitutes a violation of Article 231 of the Tax Procedure Law, should be evaluated within the scope of Article 353 and necessitates the imposition of a special irregularity fine. On the other hand, in certain other decisions, although it is explicitly stated that invoices not issued within the prescribed period shall be deemed as never having been issued pursuant to Article 231, it is reasoned that this provision does not directly prescribe a penal sanction, and therefore, the imposition of an additional special irregularity fine would not be in compliance with law.
In this respect, it should be stated that there is no complete consensus in doctrine and judicial case law regarding the legal nature of invoices not issued within the prescribed period and the consequences attached thereto, and that such matters may be subject to different evaluations in practice.
[1] Council of State Tax Chambers Assembly, Merits No. 1999/29, Decision No. 1999/406.
[2] Council of State 4th Chamber, Merits No. 2020/2277, Decision No. 2023/758.