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New Polish VAT Rates Classification as of 2019

Starting from 2019, the Ministry of Finance in Poland plans to introduce a new classification of VAT rates. This will be related to the change in the way the goods and services are identified for the VAT purposes in Poland by departing from the use of Polish Classification of Goods and Services 2008 (PKWiU) fin favour of the Combined Nomenclature (CN) in respect of goods and the current Polish Classification of Products and Services 2015 (PKWiU). In addition, the Ministry plans to introduce Binding Rates Information (WIS) – as an instrument which provides taxpayers with certainty as to the correctness of VAT taxing on transactions. In this respect, the draft provisions will determine the procedure for issuing WIS and will provide adequate protection for taxpayers using the WIS. This institution is supposed to be similar in its form to the currently existing Binding Tariff Information and Binding Excise Information. However, at the present stage, it is not yet known, however, neither to what extent nor to which category of entities WIS will refer to, i.e. whether it will be a decision binding only for its addressee, or the scope of its protection will be also extended to the other entities.

Unfortunately, due to the planned changes related to the VAT rate allocation method, the Ministry does not plan to reduce the VAT rate of 23% and 8%.

The above draft legislation is undoubtedly a step in the right direction aiming to unify and organize an application of the VAT rates. Moreover, introducing Binding Rates Information (WIS) should be fundamentally assessed positively and treated as an additional protection of the taxpayer’s rights in case of any unexpected change of tax authorities’ approach on the classifications of goods. However, at the current stage of the legislation process it is difficult to judge unequivocally whether the changes will create positive impact from the taxpayers’ point of view.

KR Group’s experts will ensure the ongoing monitoring and keep you informed about the expected changes on a current basis.

Dorota Socha

VAT Consultant

 

Update 13.11.2018

According to the latest update from the Polish Ministry of Finance, most of the above-described changes will come into force as of 1st January 2020. However, in order to allow the taxpayers to familiarize themselves with the new regulations, they will be able to apply for the Binding Rates Information sooner – starting from 1st April 2019.

Moreover, the Ministry has announced more details on Binding Rates Information (WIS) as completely new legal instrument. Introducing this solution is aimed at unifying the VAT-rates treatment and providing the taxpayers with an additional means of protection in case of any potential dispute with the tax authorities. From the legal point of view, such information would be issued by the tax authorities as an administrative decision. As a consequence – the tax authorities will be unable to question the application of a certain VAT rate as long as the description of the given goods or service corresponds to the WIS. In order to harmonize the VAT rates system, the Ministry is planning to introduce an online base of Binding Rates Information. Every single taxpayer will be able to relay on the already-issued WIS in case of any dispute with the tax authorities. As long as the disputable goods or services correspond to the WIS included in the base – they will benefit from the protection of WIS as well.

Maciej Szeweńko

VAT Consultant

 

Update 06.12.2018

Binding Rates Information (hereinafter WIS) presented last month by the Ministry of Finance is a younger brother of currently existing mechanisms such as binding tariff information or binding excise information issued by the customs authorities. The new fiscal tool is established to provide protection for the entrepreneurs seeking to confirm proper VAT rate for their goods or services. Consequently, WIS should be considered as broad protective instrument given its binding nature in regard to both: the applicant and indicated good/service. In contrast to the currently applicable classifying opinions issued by the Central Statistical Office, WIS is to be  valid decision published and communicated by the issuing authority via public register (following exclusion of sensitive information ). As a result, every taxable person will be able to rely on a specific WIS insofar as his product/service corresponds to the characteristic specified in the previously issued decision. Therefore, scope of protection will be analogical to one provided presently by the individual tax ruling.

We suspect that WIS will prove to be a real revelation. The cost of issuing such decision will amount to PLN 40 (<10 Euro) per application (one application=one product/service), while the effects on the taxable subject should be seen only as beneficial . The preliminary assessment of the Ministry of Finance is also very positive. It is estimated that during the first year approximately 30 thousand applications will be reviewed. WIS will be issued by the Director of the Tax Administration Chamber without unduly delay no later than within 3 months of the date of submitting application. The new provisions will come into force as of 1st April 2019, nevertheless acquiring WIS will only be permitted in respect of transactions performed from 1st  January 2020.

Beata Burdzińska

VAT Consultant

 

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