A preliminary audit conducted by the MF shows that the introduction of mandatory KSeF on the planned date will not be possible. It detected critical errors related to the system's code, functionality, and performance. Finance Minister Andrzej Domański said he could not allow for a situation in which Polish companies cannot issue invoices, hence putting the stability of economic turnover at risk.
The Ministry of Finance has not provided an exact date when mandatory KSeF will be introduced, explaining that the date will be determined after an external audit. It will soon publish a tender for its implementation.
The Ministry announced it will intensify consultations with the business community, so that the KSeF system will not be introduced in defiance, but with the cooperation of all concerned parties.
The National System of e-Invoices was introduced as early as 2022 as a voluntary solution. The system was to be made mandatory for all VAT payers by July 1st this year.
KSeF is a platform for issuing and receiving invoices electronically. The invoice issuer generates an electronic document, which is then sent to the recipient via. The recipient will receive notification of the invoice, which they can then process, store, and make payments. Invoices can be accessed by the entrepreneur and an accounting firm, but also by tax authorities.
Download the PDF file here.
This year the event will be bigger than ever with more business participants like investors, developers, bankers, dealmakers. It will be hosted at two locations: Palais Niederösterreich / Hotel Hyatt Andaz. The main topics are: investment markets, financing, retail, logistics, offices, living assets, hotels, etc.
We will participate in meetings with key developers and investors about crucial topics in the CEE region, such as regional expansion; investment strategies; or environmental, social, and corporate governance.
We hope to see you in Vienna!
Anita Supel
Accounting Director
a.supel@krgroup.pl
Miłosz Saramak
Head of Marketing and Business Development
m.saramak@krgroup.pl
László Hosszú
Hungary Country Manager
l.hosszu@krgroup.hu
The simplifications included in the SLIM VAT 3 package cover the following areas:
A system of differentiation of VAT sanctions has been introduced, requiring the consideration of the taxpayer's economic situation. This means that tax authorities, when determining VAT sanctions, will take into account specific circumstances of each case, and the sanctions will have an individualized character.
The sales value limit for a small taxpayer has been increased from the current EUR 1.2 million to EUR 2 million, thanks to which a greater number of entities will be able to benefit from quarterly VAT settlements and the use of the cash accounting method.
The possibility to dispose of funds in the VAT account has been expanded by making it possible to use them to pay, for example, for the tax on the extraction of certain minerals, the tax on retail sales, the so-called sugar tax, the so-called tax on shipbuilding, the fee on "jigger" and the tonnage tax.
The transfer of funds between VAT accounts in a VAT group was regulated - the possibility of transferring funds from the VAT account of a group member to the VAT account of the group representative was introduced.
The requirement to possess an invoice regarding intra-Community acquisition of goods (ICA) has been abandoned when deducting input tax related to it.
In the case of receiving documents confirming intra-Community supply of goods (ICS) with a 0% rate at a later date, the transaction will need to be reported in the settlement period in which the tax liability arose.
Regulations have been introduced allowing for the submission of declaration corrections directly to the Łódź Tax Office outside of the OSS and IOSS systems.
The rules for applying the foreign currency exchange rate adopted for the conversion of amounts from correcting invoices have been clarified. Taxpayers will use the so-called historical rate, i.e. the rate used on the original invoice when taxing the transaction.
For cumulative downward adjustments concerning domestic and intra-Community transactions and transactions settled in the reverse charge system in the event of a discount or price reduction, SLIM VAT 3 introduces the possibility of using one foreign currency exchange rate - from the day preceding the day of issuing the correcting invoice.
Introduced the possibility of waiving the adjustment if the difference between the preliminary proportion and the final proportion does not exceed 2 percentage points.
The obligation to agree in the form of a protocol with the head of the tax office on the proportion to deduct input tax was eliminated. The necessity to notify the head of the tax office of the adopted proportion was introduced.
Increased the amount allowing for recognition that the proportion of deduction determined by the taxpayer is 100%, in a situation where the proportion exceeded 98%, from the current PLN 500 to PLN 10000.
Simplifications were introduced in the scope of reporting settlements related to invoicing (e.g. adapting the conditions for issuing invoices to e-receipts) and keeping sales records using cash registers (e.g. the possibility of waiving the obligation to print fiscal documents by taxpayers). A new electronic receipts distribution system was introduced.
Consolidation of the issuance of binding information by designating a single authority competent to issue WIS, WIA, BTI and PIT, which will be the Director of the NIS.
Provisions on the rules for issuing and applying WIS and WIA, i.e. binding information of a national nature, have been unified. The application fee for issuing a WIS has been eliminated.
Download the PDF file here.
The Ministry of Finance announcement
According to the Ministry of Finance, in the announcement published on March 31, 2023, this solution will increase the competitiveness of the Polish stock exchange system and was expected by the interested industries. These provisions were introduced into the Polish legal order pursuant to Article 199a (1) (a and e) of the VAT Directive - this solution is already used by e.g. Czech Republic, Denmark, Germany, Ireland, Italy, Portugal, Romania and Great Britain.
The current solution, detailed in Chapter 1c of Section XIII of the Law of March 11, 2004 on Value Added Tax (Journal of Laws of 2022, item 931, as amended), taxpayers are purchasers, or service recipients of gas in the gas system, electricity in the electricity system and the provision of services for the transfer of greenhouse gas emission allowances, in situations when they are made directly, or through an authorized entity, on:
and the supplier/service provider, as an entity which is an active VAT taxpayer, does not enjoy a subjective exemption in this tax.
Pursuant to the regulations, a buyer or a supplier is considered mainly as taxpayers who are:
These are not the only entities that, when purchasing gas, energy or gas emission allowances from entities operating on stock exchanges, regulated markets or OTF, may become entities obliged to settle the tax due on these transactions. That is why it is so important for interested entities to track the introduced changes in order to avoid negative financial consequences.
At this point, it is worth mentioning that in the case of the supply of gas or energy, the purchaser is an active VAT taxpayer whose main activity with regard to the purchase of gas or electricity is to resell them and whose consumption for own purposes of these goods is insignificant. With regard to the service of transferring gas emission allowances, the condition is that the purchaser is an active VAT taxpayer.
The application of the regulation means that the supplier of gas in the gas system, electricity in the power system, or the supplier of services in the field of transferring greenhouse gas emission allowances, does not settle the output tax. In such a case, the seller should issue an invoice that does not include the VAT amount, with a note that the reverse charge applies to this type of transaction. It is the purchaser or recipient who will be obliged to settle the output tax on the aforementioned activities, which, taking into account the principle of VAT neutrality, becomes for the purchaser or recipient at the same time an input tax deductible from output tax.
However, in order to benefit from the above regulations, both the supplier/service provider and the purchaser/service recipient must notify the Head of the Tax Office of the commencement of these activities.
The notification should contain, in addition to the data concerning the person submitting the notification such as his name, name and surname, tax identification number; the date of commencement of these activities and the type of activities performed.
In the event of any change in the data contained in the notice, the submitter of the notice shall, within 14 days from the date of occurrence of the change, file a notice of the change in the data contained in the notice, thereby specifying the date of occurrence of the change.
Failure to comply with these obligations may result in a fine for both the supplier and the purchaser. The entity which submits the notification after the deadline or provides data that is not in accordance with reality is also subject to this penalty.
This year the event will be bigger than ever with more business participants like investors, developers, bankers, dealmakers. It will be hosted at two locations: Palais Niederösterreich and Vienna Am Belvedere. The main topics are: investment markets, financing, retail, logistics, offices, living assets, hotels, etc.
We will participate in meetings with key developers and investors about crucial topics in the CEE region, such as regional expansion; investment strategies; or environmental, social, and corporate governance.
We hope to see you in Vienna!
Miłosz Saramak
Head of Marketing and Business Development
m.saramak@krgroup.pl
László Hosszú
Hungary Country Manager
l.hosszu@krgroup.hu
The reduction of VAT rates applies to the following categories of goods:
The amendment will enter into force on February 1, 2022.
Should you be interested in obtaining further information, or would like to discuss the impact of the new VAT rates, please contact us.
You can read the draft amendment here.
Deadline for submission of the report: 31.01.2022.
The report includes the following details:
- from the issue date of the invoice or bill confirming the delivery of goods or service provision;
- from the issue date of invoice or bill confirming the delivery of goods or service provision;
The report shall be sent electronically:
Board members are responsible for submitting the report. Not submitting the report will be treated as an offence and will be a subject to a fine amounted up to PLN 5,000.
If the report is submitted on time by a person/persons entitled to represent the company, all members of the management board or another managing body shall be exempt from liability, regardless of whether they participated in submitting the report.
The submitted data is published on the BIP (Public Information Bulletin) website. Should any questions arise, we remain available.
Article 3 of this Act amends Article 13a of the Act of 08.03.2013 on Counteracting Excessive Delays in Commercial Transactions (unified text Journal of Laws of 2021, item 424). These amendments replace in paragraphs 1, 3 and 4 the references to Article 27b(2) of the Corporate Income Tax Act with references to Article 27b(2)(1) and (2) of that Act.
The Amendment Act came into force on the day after the date of promulgation, i.e. on 16.12.2021.
As a result of the above change, entities referred to in Art. 27b section 2 point 3 of the Corporate Income Tax Act, i.e. real estate companies, including real estate companies belonging to a tax capital group, are not obliged to submit, by 31 January of each year, a report on payment terms used in commercial transactions in the preceding calendar year.
Thus, a real estate company may be obliged to file the aforementioned report only under the rules provided for other entities, i.e. if its revenues earned in the tax year exceed the equivalent of EUR 50 million.
We would like to inform you that we are also aware of the information that the Ministry of Development and Technology is working on additional amendments to the Act on Prevention of Excessive Delays in Commercial Transactions in order to move the deadline for filing the report on payment dates in commercial transactions from January 31st to April 30th for all entities.
As of today, however, we have no information on what stage the work is at or when it will be completed.
Previously, the tax regulations imposed an obligation on taxpayers to document a transaction with an entity based in a tax haven, when the value exceeded PLN 100,000 in the tax year. For 2021, taxpayers will also be obliged to prepare transfer pricing documentation in a case where:
Under the amended regulations, it is presumed that the beneficial owner has a place of residence, registered office or management in a territory or country applying harmful tax competition if, in the tax year or financial year, the other party to the transaction makes settlements with an entity with its registered office or management in a territory or country applying harmful tax competition.
The jurisdictions classified as tax havens are indicated in the Regulation of the Minister of Finance of 28 March 2019 on Countries and Territories Applying Harmful Tax Competition with Respect to Corporate Income Tax.
Due diligence
If the presumption is not rebutted, taxpayers will be obliged to prepare local transfer pricing documentation also when entering into transactions with unrelated parties. Thus, due diligence is important when reviewing transfer pricing obligations in this regard.
Pursuant to the tax explanatory notes (Transfer pricing tax explanations No. 4—Presumption and due diligence referred to in CIT Act Art. 11o(1b) and PIT Act Art. 23za(1b)), to exercise due diligence in verifying transactions with unrelated parties it will be necessary to obtain a statement from the counterparty indicating that it does not make any settlements in the tax year with an entity located in a tax haven.
To exercise due diligence with respect to related parties, it will be necessary both to obtain an appropriate declaration and to verify the information received from the related party. Sources of knowledge about a related entity may include for example:
We recommend reading more about the tax explanations of the Ministry of Finance at the following link.
Risk minimization measures
First and foremost, the new obligations coming into force will require taxpayers to exercise due diligence. Measures that will reduce the risk of having to prepare transfer-pricing documentation include:
The validity of transfer pricing analyses prepared by taxpayers for 2017 expired in 2020. Some companies, due to possible changes in the market in which they operate, should check whether there was a need to update their analyses prepared later than 2017.
By the end of December this year, taxpayers who have a tax year coinciding with the calendar year and who in 2020 completed transactions with related entities with a value exceeding the statutory limits of:
are required to prepare local transfer pricing documentation for these transactions and a statement on preparation of local transfer pricing documentation and application of market prices, and to complete the TP-R form.
Reporting obligations
The reporting obligations include:
Reporting obligation | Deadline for submission | Deadline for submission—changes related to COVID-19 | Obligated entity |
TP statement | By the end of the 9th month after the end of the financial year | By 30 September 2021 if the time limit expires between 1 February 2021 and 30 June 2021 An extension by 3 months if the time limit expires between 1 July 2021 and 31 December 2021 | Related entities required to prepare local transfer pricing documentation |
TP-R form | By the end of the 9th month after the end of the financial year | Related entities required to prepare local transfer pricing documentation and related entities with their residence, registered office or management in Poland, to which the obligation to prepare local transfer pricing documentation does not apply | |
CbC-R form | By the end of the 12th month after the end of the financial year | No changes | Parent entities that are part of the group of entities and have their registered office or management in Poland (in cases specified in the Act on Exchange of Tax Information with Other Countries, also entities that are not parent entities) |
CbC-P form | Within 3 months from the end of the financial year of the group of entities | No changes | Each entity within a group of entities, if its results are consolidated in the group’s financial statement and the group’s consolidated annual revenue exceeds EUR 750,000,000 |
TP statement
Entities preparing transfer pricing documentation must also submit a statement to the relevant tax office on preparation of the TP documentation and the application of market prices in mutual settlements.
Who takes responsibility?
Due to the COVID-19 pandemic, rules for signing TP statements are simplified. Under normal circumstances, the statement would have to be signed by the management board of the company, but during the pandemic the statement may be signed by any persons authorized to represent the unit. Please note that it is not allowed to submit a statement by an attorney. A model statement can be found on the website of the Ministry of Finance.
TP-R form
All transactions subject to the documentation obligation in 2020 should be reported in the TP-R form. Importantly, domestic transactions exempt from the obligation to prepare documentation pursuant to Art. 11n of the CIT Act are also subject to reporting. Please note that the TP-R form for 2020 is different than the TP-R form for 2019, so it is not enough to update the previous document. The form may only be submitted in electronic form via the e-Deklaracje system.
Penalties for failure to fulfil obligations
In the case of failure to submit a TP statement on preparation of local transfer pricing documentation and the TP-R form, submitting them after the deadline, or providing false statements, taxpayers may face financial penalties under the Fiscal Penal Code, which may amount to up to PLN 27,000,000.
This is the last moment to fulfil the transfer pricing obligations for 2020, so in case of any doubts, please contact us!
Due diligence
Withholding tax is a tax which the remitter is obliged to collect when withdrawing recievables on certain grounds, e.g. on interest, for advisory services, legal services, management and control, or dividends to a non-resident.
The remitter may apply a reduced WHT rate or not collect the tax at all, if allowed by a tax treaty or by specific regulations. Then the remitter is required to hold a certificate of tax residence and exercise due diligence.
So far, the due diligence assessment has taken into account the nature and scale of the activities carried out by the remitter. According to the Polish Deal provisions, due diligence will also be assessed through the prism of the relationship between the remitter and the taxpayer. This means that in the case of payments of receivables between related entities, a higher standard of due diligence will be expected, as entities within capital groups have greater access to specific information regarding other entities in the group.
Changing the definition of “beneficial owner”
For WHT due diligence, it is also important to determine the beneficial owner of receivables. According to the new provisions, the definition of “beneficial owner” will change. Thus an entity that is an intermediary obliged to transfer all or part of the receivables to another entity, would not be regarded as the beneficial owner. The current version is narrower, as it indicates that the obligation to transfer all or part of the receivables to another entity should be legal or factual.
Pay-and-refund mechanism
If the total amount of receivables paid on the foregoing basis exceeds PLN 2 million in the tax year for the same taxpayer, the remitter will be obliged to collect WHT according to the tax rate resulting from the CIT Act on the surplus over PLN 2 million.
Under the bill, the pay-and-refund mechanism will not be applied to all income earned in Poland by non-residents subject to withholding tax. The catalogue iss narrowed to revenue generated:
The pay-and-refund mechanism will apply to the aforementioned revenue only when such receivables are paid to a related entity.
Moerover, it should be noted under the proposed new Art. 26(2ec) of the CIT Act, the pay-and-refund mechanism will also be applied to receivables that, without justified economic reasons, were not classified as receivables covered by this mechanism.
Opinion on the application of exemption = Opinion on the application of preferences
Opinions on the application of an exemption are to be replaced by opinions on the application of preferences, due to the extended scope of these opinions. Both the remitter and the taxpayer would be able to apply for an opinion.
Even if the receivables were covered by the pay-and-refund mechanism, based on an opinion on the application of preferences it would be possible to:
• refrain from collecting tax in accordance with a tax treaty
• apply the rate resulting from a tax treaty, or
• apply exemptions under the CIT Act (Art. 21 (3) or 22(4)).
Remitter’s declaration for use of relief at source
Under the changes, the pay-and-refund mechanism would not apply if the remitter submits a declaration that:
Such declaration is to be made by the head of the entity within the meaning of the Accounting Act, stating the function performed by the declarant. According to the provisions, if an entity is managed by a multi-person body, the declaration is to be made by one or more authorized representatives. An attorney will not be entitled to submit the declaration.
Due to introduction of many crucial changes, we have compiled for you the most important information affecting individuals conducting business activity, so that you may consider the essential tax changes introduced under the Polish Deal.
The key tax changes introduced under the Polish Deal starting 1 January 2022 include:
1. Increase of amount exempt from personal income tax for business owners operating as sole traders and taxed under the general tax scale, to PLN 30,000 per year.
Change | Current value | Value from 2022 |
Increase of tax-free amount | PLN 0–8,000 | PLN 30,000 |
Change | Current value | Value from 2022 |
Threshold for the second tax bracket | PLN 85,525 | PLN 120,000 |
The health-insurance contribution will be assessed on income (less social insurance contributions, if not deducted as a tax cost) and will constitute:
Form of taxation | Tax rate | Amount of health-insurance contribution |
Flat rate | 19% | 4.9% of income |
Tax scale | 17%/32% | 9% of income |
The health-insurance contribution will not be lower than 9% of the minimum monthly wage in force as of 1 January of the contribution year. It is projected that from 2022 the minimum health-insurance contribution will be PLN 271 per month.
Monthly revenue (income) | Health-insurance contribution—flat rate |
up to PLN 5,510 | PLN 270.90 |
PLN 8,000 | PLN 392.00 |
PLN 10,000 | PLN 490.00 |
PLN 12,000 | PLN 588.00 |
PLN 13,000 | PLN 637.00 |
PLN 15,000 | PLN 735.00 |
PLN 20,000 | PLN 980.00 |
PLN 30,000 | PLN 1,470.00 |
Monthly income (income) | Health-insurance contribution in 2022—tax scale |
PLN 3,010 | PLN 270.90 |
PLN 5,000 | PLN 450.00 |
PLN 7,000 | PLN 640.00 |
PLN 8,000 | PLN 720.00 |
PLN 10,000 | PLN 900.00 |
PLN 12,000 | PLN 1,080.00 |
PLN 13,000 | PLN 1,170.00 |
PLN 15,000 | PLN 1,350.00 |
PLN 20,000 | PLN 1,800.00 |
PLN 30,000 | PLN 2,700.00 |
Data on amounts of health-insurance contributions in 2022 from zus.info.pl
In the case of settlement of tax under the flat rate on recorded revenue, the health-insurance contribution will be 9%, payable at three different tax thresholds. The amount will be linked with the average monthly wage, which in 2022 is projected to be PLN 5,922.
Annual revenue | Monthly health-insurance contribution |
up to PLN 60,000 | 9% contribution based on 60% of average monthly wage—PLN 305.56 |
PLN 60,001–300,000 | 9% contribution based on 100% of average monthly wage—PLN 509.27 |
300,001 and up | 9% contribution based on 180% of average monthly wage—PLN 917.00 |
This relief will be applied only to persons working under an employment contract or operating a business settling tax under general rules (according to the tax scale).
This relief will not apply to persons working under a contract of mandate (umowa zlecenia) or a contract to perform a specific work (umowa o dzieło). Nor will it be available to business operators taxed at the flat rate, persons performing activities personally, payers of flat-rate tax on recorded revenue or under the tax card, retirement pensioners or disability pensioners.
For purposes of the new middle-class relief, within the range of income mentioned above, taxpayers will be divided into two narrower groups:
The difference between these groups will be the manner of calculation of the relief. For the first income range (PLN 5,701.00–8,549.00), the relief will be calculated using the formula:
((Income*6.68%-PLN 380.50))/0.17
For the second income range (PLN 8,549.01–11,141.00) it will be calculated using the formula:
((Income*(-7.35%)+PLN 819.08))/0.17
In the case of spouses settling income tax jointly for the whole year, each of them will be able to deduct the middle-class relief only up to half of the sum of the total income earned by the spouses during the tax year, calculated according to the statutory formula.
Middle-class relief will apply only within the range of annual income from PLN 68,412 to 133,692. This means that if the taxpayer exceedsthis ceiling in a given year, even by a single zloty, the taxpayer will lose the right to middle-class relief. This will lead to a highly unfavourable situation for the taxpayer. If the taxpayer claims the middle-class relief in the monthly settlement, but it turns out in the annual tax return that the taxpayer exceeded the allowable limit, the taxpayer will have to refund the relief, and will be forced to pay a large shortfall in tax along with the annual PIT return.
Therefore, everyone should carefully examine their anticipated annual income. This should reflect not only monthly salary, but also additional taxable income, such as various types of supplements, overtime pay, bonuses, cash equivalents for unused holiday, in-kind benefits (healthcare or athletic subscriptions) and the like. Based on this analysis, the taxpayer should decide whether to claim the middle-class relief in monthly settlements, or not.
Due to the changes in the regulations governing the TaxFree procedure, taxpayers intending to introduce VAT refunds for travellers into their operations, or continue making such refunds, must register in the TaxFree system on the PUESC platform by 31 December 2021.
How does it work?
The TaxFree procedure consists of the possibility of obtaining a VAT refund on goods purchased in Poland by travellers, or, on the seller’s side, the possibility of applying a 0% VAT rate under certain conditions. Individuals living outside the EU who have removed their purchased products from the EU can apply for a VAT refund on their purchases. The value of the goods entered in a single document must exceed PLN 200. The VAT can be refunded by the seller or by an entity designated by the seller.
Necessary conditions for VAT refunds
To carry out VAT refunds, certain conditions must be met:
Documents required to apply the procedure
Through 31 December 2021
As of now, to obtain a refund, the traveller must present the refund document (issued by the seller) along with a fiscal receipt containing a stamp from customs confirming that the product was removed from EU territory.
From 1 January 2022
In connection with the revised regulations, the complete set of documents will be issued and transmitted electronically from the national TaxFree system located on the PUESC platform.
Using this system, the seller will issue and store documents, record amounts of VAT refunds paid out to travellers, and also indicate the place of sale and refund of VAT.
In light of introduction of the electronic system, it will be necessary to use online cash registers. The seller will not be required to attach a physical cash register receipt to the TaxFree document, as the receipt will be electronic.
Tax advantages for the seller
When applying the TaxFree procedure, the seller can apply the 0% VAT rate for goods subject to the procedure. To apply this rate, the seller must meet several conditions:
The seller can apply the 0% VAT rate in two instances:
Registration procedure
To commence TaxFree sales from 2022, it will be necessary to register in the PUESC system. Registration involves:
If you have additional questions or doubts about the TaxFree procedure or registration for the procedure, we are ready to help.
Undoubtedly, it is no easy task to orient oneself among the thicket of new regulations. Many employees are already wondering what net pay they will receive in January 2022. Especially for you, we have compiled information presenting the key tax solutions provided for in the Polish Deal, and we have also prepared sample pay calculations showing who will gain from the Polish Deal, at what income levels, who will lose, and those for whom the changes will have a neutral impact.
Key tax changes introduced by the Polish Deal from 1 January 2022 affecting employees’ pay:
To claim the monthly deductions of the tax-free amount in calculating the worker’s pay, the employee should complete a PIT-2 statement and submit it to the employer.
This relief applies only to employees working under an employment contract or persons operating a business and paying income tax under general rules (i.e. according to the tax scale).
Middle-class relief will also be available to creative employees earning revenue subject to 50% revenue-earning costs, on the condition that they are persons actually performing duties under an employment relationship.
Employees earning income abroad (from a foreign employer) will also be eligible for middle-class relief if they pay PIT advances themselves in Poland. They will deduct the relief for months in which their income from foreign employment falls between PLN 5,701 and 11,141.
This relief will not apply to persons performing work under a contract of mandate or contract for a specific work. Nor will it be available to business operators paying PIT at the flat rate of 19%, persons performing personal services, taxpayers paying PIT based on a flat rate on recorded revenue, or under the tax card, or recipients of retirement or disability pensions.
As part of the new middle-class relief, within the range referred to above, taxpayers are divided into two narrower groups:
The difference between these two groups will consist in the manner of calculation of the relief. For the lower income range, the relief will be calculated using the formula:
(income × 6.68% ˗ PLN 380.50)/0.17
And for the higher income range:
(income × (˗7.35%) + PLN 819.08)/0.17
In the case of spouses settling income tax jointly for the whole year, each of them will be able to deduct the middle-class relief only up to half of the sum of the total income earned by the spouses during the tax year, calculated according to the statutory formula.
Middle-class relief applies only within the range of annual income from PLN 68,412 to 133,692. This means that if the taxpayer exceeds this ceiling in a given year, even by a single zloty, the taxpayer will lose the right to middle-class relief. This will lead to a highly unfavourable situation for the employee. If the employee claims the middle-class relief in the monthly settlement of pay, but it turns out in the annual tax return that the employee exceeded the allowable limit, the taxpayer will have to refund the relief, and will be forced to pay a large shortfall in tax along with the annual PIT return.
Therefore, employees should carefully examine their anticipated annual income. This should reflect not only monthly salary, but also additional taxable income, such as various types of supplements, overtime pay, bonuses, cash equivalents for unused holiday, in-kind benefits (healthcare or athletic subscriptions) and the like. Based on this analysis, the taxpayer should decide whether to claim the middle-class relief in monthly settlements, or not.
The remitter of PIT advances (i.e. the employer) will not be required to apply the middle-class relief only if the employee requests the employer not to reduce the employee’s net income (PIT Act Art. 32(2b)). Waiver of middle-class relief may be a good solution if the taxpayer can predict that the final annual income from work will exceed PLN 133,692, or does not wish to risk crossing that line. If the final settlement shows that the employee nonetheless is entitled to middle-class relief, the taxpayer can recover the unclaimed relief along with his or her annual PIT return.
But if the employee fails to request that the employer not reduce the employee’s net income to reflect the middle-class relief, the employer will have no option but will have to factor in the relief in any month in which the employee’s income from employment (including supplements and other taxable benefits) falls within the statutory range of PLN 5,701–11,141.
The workers listed above will not pay tax on annual income up to PLN 85,528. Adding in the increased tax-free exemption of PLN 30,000, in the case of persons settling under the tax scale this relief will cover a total income of PLN 115,528 per year.
In the case of parents of four or more children filing jointly, the total exclusion will be PLN 231,056 per year. Such parents will not pay income tax until they cross the limit of PLN 231,056, and then the 17% rate will apply, and the 32% rate will apply from the point where their taxable income exceeds PLN 120,000.
If the taxpayer is eligible for exemption on more than one basis, the total tax-free amount for all such income cannot exceed PLN 85,528 (plus the tax-free amount up to PLN 30,000 for taxpayers settling under the tax scale).
When analysing the new regulations for persons from the foregoing social groups, who from January 2022 will be covered by a tax exemption, many doubts arose surrounding the proper calculation of the amount of the health insurance contributions for those taxpayers. A gap in the regulations was discovered in this respect. Thus these provisions were clarified in the final parliamentary amendment to the bill on 17 November 2021. Consequently, with respect to these persons, the same rule for calculation of the health insurance contribution will apply as in the case of persons up to age 26 exempt from income tax under PIT Act Art. 21(1)(148). This refers to a special provision, Art. 83(2a) of the Healthcare Act. It provides for calculation of the health insurance contribution up to the amount of the hypothetical PIT advance. This provision states that “if the contribution for health insurance calculated on income exempt from income tax under Art. 21(1)(148) of [the PIT Act] is higher than the advance against personal income tax which the remitter would calculate if the income of the insured were not exempt from income tax under that provision, the contribution calculated for specific months shall be reduced to the amount of such advance.”
We have prepared sample pay calculations for 2021 and 2022, to depict calculations of workers’ pay according to the new regulations and help estimate who will gain under the Polish Order, and at what levels of income, who will lose, and for whom the changes will have a neutral effect.
Analysis of income at which employees gain from the Polish Deal, and income from which they begin to lose on the Polish Deal
Assumptions: An employee under an employment contract, earning the monthly pay indicated in the table, with revenue-earning costs of PLN 250 per month, settling income tax individually, not claiming relief for children, and not participating in an employment capital plan (PPK).
Monthly gross pay |
Gain/(loss) in 2022 compared to 2021 |
||
Monthly |
Annually |
Comments |
|
3,010.00 |
154.00 |
1,848.00 |
|
4,000.00 |
114.00 |
1,368.00 |
|
5,000.00 |
47.00 |
564.00 |
|
5,701.00 |
- |
- |
Middle-class tax relief |
7,000.00 |
- |
- |
Middle-class tax relief |
8,000.00 |
- |
- |
Middle-class tax relief |
8,916.00 |
(-52.00) |
(-10.00) |
Middle-class tax relief. Smaller loss annually than monthly (*) |
10,000.00 |
(-203.00) |
(-95.00) |
Middle-class tax relief. Smaller loss annually than monthly (*) |
11,141.00 |
(-364.00) |
(-211.00) |
Middle-class tax relief. Smaller loss annually than monthly (*) |
11,350.00 |
(-377.00) |
- |
Smaller loss annually than monthly (*) |
11,400.00 |
(-381.00) |
28.00 |
Smaller loss annually than monthly (*) |
12,000.00 |
(-421.00) |
292.00 |
Smaller loss annually than monthly (*) |
12,300.00 |
(-441.00) |
53.00 |
Smaller loss annually than monthly (*) |
12,360.00 |
(-446.00) |
(-6.00) |
Smaller loss annually than monthly (*) |
13,000.00 |
(-489.00) |
(-477.00) |
Smaller loss annually than monthly (*) |
14,000.00 |
(-555.00) |
(-1,357.00) |
Smaller loss annually than monthly (*) |
15,000.00 |
(-622.00) |
(-2,225.00) |
Smaller loss annually than monthly (*) |
18,000.00 |
(-823.00) |
(-4,905.00) |
Smaller loss annually than monthly (*) |
20,000.00 |
(-956.00) |
(-6,713.00) |
Smaller loss annually than monthly (*) |
(*) as a result of the higher tax threshold and tax-free amount in 2022 compared to 2021
Example 1. Calculation of the pay of an employee who is not entitled to middle-class tax relief or has waived middle-class tax relief
Assumptions: An employee under an employment contract, earning the monthly pay indicated in the table, with revenue-earning costs of PLN 250 per month, settling income tax individually, not claiming relief for children, and not participating in an employment capital plan (PPK).
Elements |
Formula for calculation |
2021 |
2022 |
|
1. |
Monthly gross pay |
|
3,010.00 |
3,010.00 |
2. |
Retirement pension insurance contribution |
Item 1 × 9.76% |
293.78 |
293.78 |
3. |
Disability pension insurance contribution |
Item 1 × 1.5% |
45.15 |
45.15 |
4. |
Sickness insurance contribution |
Item 1 × 2.45% |
73.75 |
73.75 |
5. |
Employee’s total social insurance (ZUS) contributions |
Item 2 + item 3 + item 4 |
412.67 |
412.67 |
6. |
Basis for health insurance contribution |
Item 1 – item 5 |
2,597.33 |
2,597.33 |
7. |
Health insurance contribution (9%) |
Item 6 × 9% |
233.76 |
233.76 |
8. |
Portion of health insurance contribution to be deducted from income tax (7.75%) |
Item 6 × 7.75% |
201.29 |
eliminated |
9. |
Revenue-earning costs (PLN 250 or 300) |
|
250.00 |
250.00 |
10. |
Middle-class tax relief (not eligible) |
|
N/A |
- |
11. |
Net income for taxation |
Item 1 – item 5 – item 9 (result rounded to a whole zloty) |
2,347.00 |
2,347.00 |
12. |
Tax relief (tax-free amount) |
|
43.76 |
425.00 |
13. |
Income tax advance before rounding |
(item 11 × 17%) – item 12 |
355.23 |
(- 26.01) |
14. |
Income tax advance |
Item 13 – item 8 (result rounded to a whole zloty) |
154.00 |
- |
15. |
Net pay |
Item 1 – item 5 – item 7 – item 14 |
2,209.57 |
2,363.57 |
16. |
Increase/(decline) in net income |
|
|
154.00 |
Example 2. Calculation of the pay of an employee who is entitled to middle-class tax relief in the 1st group of income range, i.e. earns income of PLN 5,701.00 to 8,549.00 per month
Assumptions: An employee under an employment contract, earning the monthly pay indicated in the table, with revenue-earning costs of PLN 250 per month, settling income tax individually, not claiming relief for children, and not participating in an employment capital plan (PPK).
Elements |
Formula for calculation |
2021 |
2022 |
|
1. |
Monthly gross pay |
|
5,702.00 |
5,702.00 |
2. |
Retirement pension insurance contribution |
Item 1 × 9.76% |
556.52 |
556.52 |
3. |
Disability pension insurance contribution |
Item 1 × 1.5% |
85.53 |
85.53 |
4. |
Sickness insurance contribution |
Item 1 × 2.45% |
139.70 |
139.70 |
5. |
Employee’s total social insurance (ZUS) contributions |
Item 2 + item 3 + item 4 |
781.74 |
781.74 |
6. |
Basis for health insurance contribution |
Item 1 – item 5 |
4,920.26 |
4,920.26 |
7. |
Health insurance contribution (9%) |
Item 6 × 9% |
442.82 |
442.82 |
8. |
Portion of health insurance contribution to be deducted from income tax (7.75%) |
Item 6 × 7.75% |
381.32 |
eliminated |
9. |
Revenue-earning costs (PLN 250 or 300) |
|
250.00 |
250.00 |
10. |
Middle-class tax relief (income from PLN 5,701.00 to 8,549.00 monthly) |
(Income x 6.68% - PLN 380.50)/0.17 |
N/A |
2.32 |
11. |
Net income for taxation |
Item 1 – item 5 – item 9 – item 10 (result rounded to a whole zloty) |
4,670.00 |
4,668.00 |
12. |
Tax relief (tax-free amount) |
|
43.76 |
425.00 |
13. |
Income tax advance before rounding |
(item 11 × 17%) – item 12 |
750.14 |
368.56 |
14. |
Income tax advance |
Item 13 – item 8 (result rounded to a whole zloty) |
369.00 |
369.00 |
15. |
Net pay |
Item 1 – item 5 – item 7 – item 14 |
4,108.43 |
4,108.43 |
16. |
Increase/(decline) in net income |
|
|
0 |
Example 3. Calculation of pay of an employee who is entitled to middle-class tax relief in the 2nd group of income range, i.e. earns income of PLN 8,549.01 to 11,141.00 per month
Assumptions: An employee under an employment contract, earning the monthly pay indicated in the table, with revenue-earning costs of PLN 250 per month, settling income tax individually, not claiming relief for children, and not participating in an employment capital plan (PPK).
Elements |
Formula for calculation |
2021 |
2022 |
|
1. |
Monthly gross pay |
|
10,000.00 |
10,000.00 |
2. |
Retirement pension insurance contribution |
Item 1 × 9.76% |
976.00 |
976.00 |
3. |
Disability pension insurance contribution |
Item 1 × 1.5% |
150.00 |
150.00 |
4. |
Sickness insurance contribution |
Item 1 × 2.45% |
245.00 |
245.00 |
5. |
Employee’s total social insurance (ZUS) contributions |
Item 2 + item 3 + item 4 |
1,371.00 |
1,371.00 |
6. |
Basis for health insurance contribution |
Item 1 – item 5 |
8,629.00 |
8,629.00 |
7. |
Health insurance contribution (9%) |
Item 6 × 9% |
776.61 |
776.61 |
8. |
Portion of health insurance contribution to be deducted from income tax (7.75%) |
Item 6 × 7.75% |
668.75 |
eliminated |
9. |
Revenue-earning costs (PLN 250 or 300) |
|
250.00 |
250.00 |
10. |
Middle-class tax relief (income from PLN 8,549.01 to 11,141.00 monthly) |
(Income x (-7.35%) + PLN 819.08)/0.17 |
N/A |
494.59 |
11. |
Net income for taxation |
Item 1 – item 5 – item 9 – item 10 (result rounded to a whole zloty) |
8,379.00 |
7,884.00 |
12. |
Tax relief (tax-free amount) |
|
43.76 |
425.00 |
13. |
Income tax advance before rounding |
(item 11 × 17%) – item 12 |
1,380.67 |
915.28 |
14. |
Income tax advance |
Item 13 – item 8 (result rounded to a whole zloty) |
712.00 |
915.00 |
15. |
Net pay |
Item 1 – item 5 – item 7 – item 14 |
7,140.39 |
6,937.39 |
16. |
Increase/(decline) in net income |
|
|
(- 203.00) |
Potential fines for non-compliance with transfer pricing obligations
Fines are imposed as multiples of “per diem” charges. Under Art. 23 §3 of the Fiscal Penal Code, a single per diem charge cannot be lower than 1/30th of the minimum monthly wage in Poland or higher than 400 times 1/30th of the minimum monthly wage. Consequently, in 2021 the per diem charge can range between PLN 93.33 and PLN 37,333.33.
The Polish Deal and criminal sanctions for transfer pricing compliance
The Polish Deal package introduces several key tax changes, but in this context the changes in sanctions under the Fiscal Penal Code are particularly notable.
Increase of the gross minimum monthly wage to PLN 3,010 will change the level of per diem charges, which from the start of 2022 will range from PLN 100.33 to PLN 40,133.33.
The fine for failure to prepare local transfer pricing documentation (known as a “local file”) even though the taxpayer has reached the documentation requirement will be up to 720 per diem charges. The same fine will potentially apply to the duty to prepare group transfer pricing documentation (master file). Consequently, the maximum fine for the taxpayer’s failure to prepare transfer pricing documentation starting from 2022 may be as high as nearly PLN 29 million.
Preparing local or group transfer pricing documentation after the statutory deadlines will entail a risk of a fine of up to 240 per diem charges, which in an extreme case from 2022 may be as high as more than PLN 9.5 million. The same penalty will be possible also in the case of filing transfer pricing information after the deadline specified in the Corporate Income Tax Act.
The Polish Deal regulations greatly increase the scope of liability of taxpayers’ management board members, and can also increase the scope of liability for noncompliance with transfer pricing obligations.
The act was signed into law by the President and enters into force at the start of 2022.
Assumptions of the e-commerce package
Currently, most EU countries apply a tax exemption for overseas small-value shipments (up to €22). Too-liberal laws have resulted in a growing scale of abuses in this field, especially in an era of rapid growth in international online trade. European consumers receive huge numbers of parcels imported from third countries that are undervalued by sellers so they can benefit from the exemption. As a result, VAT is not paid into state budgets, even for more expensive packages. The EU estimates €5 billion of VAT is lost each year due to non-compliant practices of online sellers using global shopping portals such as AliExpress, Amazon and eBay.
This is why introduction of appropriate changes and simplification of the taxation system for online trade has now become a top priority for governments and authorities across the EU. The deadline for national implementation of the new legal solutions is 30 June 2021, so there is not much time left. In Poland the main assumptions of the e-commerce package proposal are as follows:
Check our offer: VAT services for distance sellers of goods and services
Obligation to collect VAT
It seems that under the forthcoming regulations the most significant changes will apply to online marketplace facilitators. This means that in certain cases they will be forced to assume the burden of paying VAT on behalf of sellers who are usually not established in the EU, which is the main source of problems in the process of enforcing VAT liabilities. It will be much easier to enforce tax payment from one entity, instead of dozens of small suppliers established outside the EU. This should boost VAT revenue from online sales and increase the efficiency of the EU tax administration. The Polish Ministry of Finance indicates that thanks to the proposed solution, revenues to the national budget may increase by as much as PLN1.2 billion annually. In the ministry’s opinion, such online marketplace facilitators have more resources than the base suppliers who sell through online platforms, so it will be much easier for them to meet the VAT collection requirements.
From 1 July 2021, new obligations may also apply to courier companies and postal services, which will have to collect and pay the VAT due for shipments with a value up to €150, when the supplier of the goods decides not to use IOSS. This will also mean additional administrative obligations, like keeping special import records.
One-stop shop
Pursuant to the proposed EU regulations, the MOSS special procedure will be updated and extended, which will greatly simplify the tax obligations of EU entities conducting online businesses. Thanks to the new one-stop shop (OSS) procedure, taxpayers providing specific services or delivering goods to European consumers will not have to be VAT-registered in all member states where their e-recipients are located. Instead, they will be able to declare and pay VAT in just one country of their choice.
Revolution in e-commerce
Looking ahead, the new year will bring a real revolution for all entities operating in the e-commerce industry. Experts already predict price increases for goods imported from non-EU countries, as well as for courier and logistics services. Nevertheless, the changes are widely anticipated by national fiscal authorities and by distance sellers themselves, whose tax existence should soon be much easier. A draft of the Polish implementing regulations has been circulated for public consultation. Comments can be submitted through 19 November 2020. The changes are to enter into force on 1 July 2021.
Value of transactions
It is planned to correlate the value of controlled transactions with whether the taxpayer is an active VAT payer. If the taxpayer is an active VAT payer, VAT is neutral for the taxpayer, and under the proposed amendment, the value of VAT on a controlled transaction would not be included in calculating the value of the transaction. On the other hand, for taxpayers who are not active VAT payers, VAT is not neutral, and thus, for them, the value of VAT on a controlled transaction would be included in calculating the value of the transaction.
The bill also provides for a more precise manner of calculating the value of a controlled transaction for a deposit, insurance or reinsurance agreement, or a partnership agreement (for an entity that is not a legal person).
The proposed method for determining the value of such transactions is as follows:
Deadlines
The bill provides for a number of extensions of deadlines related to transfer pricing obligations. First, the bill would extend the deadline for preparing local transfer pricing documentation through the end of the 10th month, and for submitting the TPR form through the end of the 11th month, after the end of the taxpayer’s tax year. Currently the deadline for local transfer pricing documentation and the TPR form is 9 months.
The deadline for presenting the transfer pricing documentation to the tax authority in case of an audit is to be changed from the current 7 days to 14 days.
Statement
The proposal includes elimination of the separate statement on preparation of transfer pricing documentation and maintenance of the market nature of transactions. Instead, the statement would be included in a modified form applicable to the taxpayer, TPR-C for a corporate income tax payer or TPR-P for a personal income tax payer.
Taxpayers would declare in the statement on preparing local transfer pricing documentation that the local transfer pricing documentation was prepared in accordance with the actual state of affairs and that the transfer prices subject to the documentation were established under terms and conditions that would be agreed between unrelated parties.
According to the proposal, the arm’s-length nature of a transaction to be declared under the relevant TPR form would also need to be maintained where tax revenue is recognized from services that are gratuitous or partially gratuitous, or other benefits in kind that constitute revenue. Income from such transactions would have to be recognized for tax purposes in accordance with the arm’s-length principle.
Transfer pricing information (Form TPR-C/TPR-P)
According to the bill, taxpayers would submit transfer pricing information, i.e. the appropriate TPR form, to the head of the tax office appropriate to the taxpayer. (Currently the TPR form is submitted to the head of the National Revenue Administration.) Under the proposed changes, partnerships (not legal persons) would also be obliged to file transfer pricing information. Such entities would submit the TPR form to the head of the tax office for the registered office or place of business of the partnership. Now this is done by a designated partner of the partnership.
The TPR form is to be filed based on the local transfer pricing documentation, if the taxpayer is obliged to prepare it. In other cases, the TPR form is to be filed based on information in the taxpayer’s financial statements.
According to the bill, the TPR form would be signed in the case of an affiliate that is a natural person by that natural person. However, in the case of a foreign company with a branch in Poland, the person authorized to sign the TPR will be a person authorized to represent the company in the branch.
In addition to the head of the entity or a person authorized to represent it, a proxy acting in accordance with the rules of representation or an attorney for the taxpayer who is an advocate, an attorney-at-law, a tax adviser, or an auditor would also be allowed to sign the transfer pricing information on behalf of the taxpayer.
It is also proposed to abandon the obligation to appoint a partner of a partnership (not a legal person) obliged to submit the transfer pricing information for the partnership. According to the bill, the transfer pricing information would be filed by the partnership, not by a designated partner.
The most important change is the one that, according to the justification for the bill, is intended to end the dispute that has arisen under the current regulations between taxpayers and tax authorities on whether the limit on debt financing costs that can be recognized as tax-deductible costs covers either the “safe harbour” of PLN 3 million or an amount equal to 30% of EBITDA (as the tax authorities hold), or includes the amount of the safe harbour plus 30% of EBITDA (as taxpayers and the administrative courts hold).
Existing position of taxpayers and administrative courts
In the view of taxpayers, mainly shared by the administrative courts, adoption of the higher limit is supported by the literal wording of the current regulations, indicating that the limit does not apply to the surplus of debt financing costs in the portion not exceeding PLN 3 million. Thus, a contrario, the limit should apply only to the surplus above that amount. Despite favourable rulings by the courts, the position of the tax authorities on this issue remains unchanged—they continue to rely on the provisions of the Anti Tax Avoidance Directive, which are different.
Proposed changes in the Polish Deal
To avoid further disputes, an amendment proposed in the Polish Deal expressly states that the taxpayer may include among its revenue-earning costs the surplus of debt financing costs within the limit indicated by the value of 30% of the EBITDA generated during the tax year, or may claim the “safe harbour.” But the taxpayer may not combine these two limits and claim both at the same time. Thus the proponents regard as correct the position of the tax authorities discussed above in the ongoing dispute.
A more technical change is also proposed. It is aimed at increasing the transparency and ease of determining the amount of the EBITDA ratio. The proposal would include an algorithm in the CIT Act for calculating this ratio.
Proposed algorithm: The amount of the surplus will thus be calculated using the ratio resulting from the formula [(R ˗ I) ˗ (C ˗ Am ˗ Cdf)] × 30%, where: R = total revenue from all sources subject to income tax I = interest income C = total revenue-earning costs without reductions resulting from the limit on inclusion of debt financing costs among such costs (CIT Act Art. 15c) Am = amortization deductions recognized in the tax year among revenue-earning costs Cdf = costs of debt financing recognized in the tax year among revenue-earning costs not reflected in the initial value of fixed assets or intangibles prior to the reduction resulting from the limit on inclusion of debt financing costs among such costs (CIT Act Art. 15c). |
It should be pointed out that the foregoing does not contain an exclusion within the formula for the limitation on inclusion among revenue-earning costs of certain intangible services acquired from related entities, currently set forth in CIT Act Art. 15e. This is because, in light of inclusion in the Polish Deal of the latest concept for a minimum tax on big corporations, Art. 15e is to be repealed, as the amount of the costs that were excluded from deductible revenue-earning costs under that provision would, under the new Art. 24ca, become the basis for taxation with the alternative minimum tax.
Further changes—expanded catalogue of exclusions
Another change that introduced by the Polish Deal in relation to the restriction on debt financing costs should also be mentioned. This is a change adding to the catalogue of exclusions from revenue-earning costs set forth in Art. 16(1) of the CIT Act a provision (new point 13f) indicating that the costs of debt financing obtained from a related entity would not constitute revenue-earning costs at all in the portion earmarked directly or indirectly for capital transactions, in particular acquisition or taking up of shares, acquisition of the totality of rights and obligations in a partnership (without legal personality), surcharges on shares, increase of share capital, or buyout of the company’s own shares for the purpose of redeeming them.
According to the proponents, this change is intended to combat situations where taxable income is reduced within groups of related entities as a result of conversion of debt financing (e.g. in the form of a loan) into equity financing. This results in erosion of the tax base, because the interest on debt financing reduces the income of the taxpayer receiving the financing, but the borrower also does not report income on this basis as a result of reclassification as equity financing.
The regulations have not yet entered into force. Parliamentary work on the bill is ongoing, so the final wording of the proposed changes is not yet known. If further positions and proposals arise, we will track the situation and inform you of the changes.
As regards the VAT Act, the proposed changes to the regulations concern:
Today we describe the changes regarding VAT Groups.
Pursuant to the existing regulations in force in Poland, unlike corporate income tax payers, VAT payers cannot settle their accounts jointly, regardless of the financial, economic and organizational relations between them. As a rule, Polish VAT payers settle this tax individually, and each of them separately submits VAT SAF-T files (JPK_VAT), while transactions between related entities are documented with invoices. The Polish Deal bill would introduce into the VAT Act of 11 March 2004 the possibility of joint accounting by several taxpayers within so-called VAT groups.
Under the proposal, a VAT group could be created by taxpayers:
Pursuant to the Act on Rules for Participation of Foreign Undertakings and Other Foreign Persons in Economic Turnover in the Territory of the Republic of Poland of 6 March 2018, regulating the issue of establishing branches, a branch is a separate and organizationally independent part of economic activity, performed by an undertaking outside the undertaking’s registered office or principal place of business.
As the act does not prohibit the establishment of branches by foreign entities from outside the EU (on the basis of reciprocity), it should be assumed that such branches can function and could also be part of a VAT group.
In our view, this does not present any difficulties, and it is obvious that in most if not all cases such a branch would meet the requirements specified in the definition of a “fixed establishment” under Art. 11 of Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax.
In addition to the aforementioned conditions, a VAT group could be created by entities meeting additional conditions, namely that they are related:
The conditions for the existence of financial, economic and organizational links between members of a VAT group would have to be met continuously for the period in which the group has the status of a VAT payer.
Another requirement is that these entities have their headquarters in Poland. Taxpayers who do not meet this criterion could also establish it to the extent that they run a business via a branch located in Poland.
The amendment to the regulations also introduces certain restrictions, such as:
Generally, introduction of the possibility of joint VAT accounting should be considered a step in the right direction. Because only the group would be the taxpayer, intra-group transactions would not be subject to taxation, invoicing or the split-payment mechanism. In addition, the VAT group would submit one VAT declaration and would need only one bank account to process VAT returns and accept payments.
A disadvantage of this solution is undoubtedly the joint and several liability of the group members for its obligations during the period when the VAT group is the taxpayer and after the group loses this status. In addition, despite elimination of some obligations, new ones have been introduced, such as allocating the proportion of intra-group VAT to taxed and untaxed activities. Additionally, matters are complicated by the fact that a group could be required to establish a proportion within the group and another proportion for the group as a whole. The group would also have to keep records of transactions within it.
What is new?
Entry into force of the new JPK_VAT requires appropriate preparation on the part of taxpayers, who will be obliged to report a wider range of data than before.
The new JPK_VAT structure contains data on purchase and sale transactions, detailing the value, amounts and rates of VAT, and data of individual contractors. In addition, the new JPK_VAT structure introduces the obligation to provide, among other things, the following information:
The file consists of two structures:
Deadlines
The file is to be submitted by the current deadlines for VAT returns, i.e. by the 25th day of the month following the settlement period (monthly or quarterly). Taxpayers with quarterly settlements will also be required to send only the completed registration part of the JPK_VAT file by the 25th day of the month following the month to which the records relate.
Support from KR Group
If you have any problems fulfilling these new obligations, or wish to entrust these duties to a professional partner, please contact us. KR Group has provided services in this area since the initial introduction of the obligation to submit SAF-T files.