In the new SAF-T file we do not report receipts with tax identification number of purchaser (NIP) being simplified invoices.
Since the 1st of January 2020, entrepreneurs in Poland may issue an invoice to the receipt only if the seller includes the buyer's tax identification number on the receipt.
However, as it results from the Polish regulations, in some cases the receipt containing the tax identification number meets the conditions to be considered as a simplified invoice. It applies to receipts with a tax identification number up to EUR 100/PLN 450. It also means that the invoice cannot be issued to such a receipt, because it is the invoice.
How to report such a document in SAF-T file?
As a rule, receipts should be included SAT-T file in the form of a summary cash register report.
However, if the receipt is also the invoice, it should also be shown separately. Unfortunately, this is quite difficult, because the seller would have to reduce the report each time by receipts that meet the requirements to be considered as invoices and show them separately as separate transactions.
Therefore, from 1st of July 2020, till the end of December 2020, the taxpayer will not be required to provide simplified invoices in the VAT register and in the new SAF-T file, provided that these receipts are included in the fiscal report.
Dates of VAT payments
The adopted provisions of law concerning operations related to protection of entrepreneurs in view of the COVID-19 pandemic do not postpone and do not suspend deadlines of VAT payment in Poland.
Therefore, as it has been the case until now, the deadline of VAT payment falls on the 25th day of the month or quarter (in the case of tax payers that use that method of VAT settlement) following the month or quarter when the tax obligation arose.
Lack of payment in due time results in VAT arrears, which are subject to penalty interest charged till the day of actual VAT payment.
What to do if we have problems with VAT payment?
The only way to postpone the date of VAT payment is to submit an application for deferral of the VAT payment or division into instalments.
Apart from the above-mentioned option, provisions of law do not grant any other forms of tax allowance for VAT payment.
The allowances might be granted in terms of:
What are indications for submitting an application for tax allowance:
The application can be accepted positively only:
Where and when to submit the application?
The application shall be submitted to head of tax office where the tax-payer submits the VAT declaration.
If the tax-payer applies for deferral of VAT payment deadline or division into instalments, the application shall be submitted before the VAT payment deadline.
If the application concerns VAT not paid in due time (tax arrears), an application may be submitted on the first day following VAT payment deadline at the earliest.
What shall the application contain:
What to attach to the application:
Templates of applications:
What will be examined when making the decision on the application:
What simplifications have been introduced in view of the COVID-19 pandemic?
The Ministry of Finance has provided the Directors of Tax Chambers with special guidelines to facilitate applying for allowance or deferral of tax arrears to entrepreneurs who have problems with timely payment of tax liabilities due to the coronavirus.
The most important simplifications concern tax arrears, for which the payment deadline falls after the 1st March 2020, in the case of VAT the obligations arising from the VAT-7 declaration submitted for February 2020, for which the payment deadline is 25th March 2020. The same simplifications apply to situations where the taxpayer applies for allowance regarding arrears with the payment deadline falling after the 1st March and earlier. However, in this case the value of the March arrears must account for over 50% of all arrears claimed by the entity. Then, provided that the tax payer has no other arrears and has not used public aid, the application takes a very simplified form, which does not require examination of the applicant's financial standing, and the presence of public aid is assessed on the basis of a statement.
However, if the entrepreneur has used the public aid, the procedure is followed in the standard way. The same applies to taxpayers from sectors which are at risk due to COVID-19 (transport, tourism, culture, gastronomy, hair and beauty services, physical culture, wellness salons, fitness etc.), whose arrears in more than 50% arose before 1st March .
The guidelines of the Ministry of Finance are so general that it is difficult to determine on their basis what will be actually examined by the authorities. Only the practice can show to what extent these guidelines will simplify this procedure.
This was the holding by the Court of Justice in UAB “P.” v Dyrektor Izby Skarbowej w B. (Case C-48/20), in its judgment of 18 March 2021, issued pursuant to a reference for a preliminary ruling by the Supreme Administrative Court of Poland of 15 November 2019 (case no. I FSK 1535/17).
The Supreme Administrative Court asked the Court of Justice to determine whether Art. 203 of the VAT Directive (2006/112/EC) and the principle of proportionality must be interpreted as precluding the application, in a situation such as that in the main proceedings, of a national provision such as Art. 108(1) of the Polish VAT Act to invoices with VAT incorrectly indicated, issued by a taxpayer acting in good faith, if:
- The taxpayer’s actions did not involve tax fraud, but resulted from an erroneous interpretation of the law by the parties to the transaction, based on an interpretation given by the tax authorities and a common practice in that respect at the time of the transaction, which incorrectly assumed that the issuer of the invoice was supplying goods when in fact it was providing a VAT-exempt financial intermediation service, and
- The recipient of the invoice incorrectly indicating VAT would have been entitled to claim a refund of the VAT if the taxpayer who actually supplied the goods to it had duly invoiced the transaction.
The case in which the Supreme Administrative Court turned to the Court of Justice concerned a company which mistakenly believed that by financing the purchase of fuel by its customers on the basis of fuel cards, it was actually supplying fuel to its customers. As a result, it was treated severely by the Polish tax office. Apart from denying the taxpayer the right to deduct input tax from invoices received by it from petrol stations, the tax authorities also found that the company was obliged to pay the VAT stated in the invoices issued to its customers.
In support of its reference for a preliminary ruling, the Supreme Administrative Court pointed out that the taxpayer’s good faith was supported by the fact that it acted on the basis of the practice of the Polish tax authorities, under which transactions such as those in dispute were considered as a chain sale of fuel to transport companies. As part of this practice, it was assumed that each of the entities participating in the fuel supply chain carried out a paid supply of goods, i.e. fuel, although in fact only one physical release of the goods took place. It was only after the Court of Justice issued its judgments of 6 February 2003 in Auto Lease Holland (C 185/01) and 15 May 2019 in Vega International Car Transport and Logistic (C 235/18) that this practice changed.
On those grounds, the Court of Justice (Sixth Chamber) ruled: “Article 203 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and the principles of proportionality and neutrality of VAT must be interpreted as precluding national legislation which does not allow a taxable person acting in good faith to adjust invoices improperly indicating VAT following the initiation of a tax investigation procedure, even though the recipient of those invoices would have been entitled to reimbursement of that tax if the transactions which were the subject of those invoices had been duly declared.”
If you require analysis of your case, please contact us.
On 18 March 2021, in A. v Dyrektor Krajowej Informacji Skarbowej (Case C-895/19), the Court of Justice of the European Union held that Art. 167 and 178 of the VAT Directive (2006/112/EC) should be interpreted as precluding national legislation which makes the exercise of the right to deduct input VAT in the same reporting period as that in which output VAT was due on intra-Community acquisitions of goods subject to settlement the output VAT in the appropriate reporting period within a mandatory period (three months) following the end of the month in which the tax liability arose in relation to the goods and services acquired.
In our opinion, although the judgment concerns the provisions on intra-Community acquisition of goods (ICA), it should apply to all transactions subject to reverse charge mechanism, because in this respect these provisions are formulated in the same way, and the court’s reasoning is universal and undermines such a structure in principle.
The judgment therefore shows that VAT arrears due to ICA since 2017 should never have arisen, and thus interest paid was not owed to the tax authorities. The judgment opens the way to recovery of undue interest on VAT for intra-Community acquisition of goods, and it is also possible to reopen tax and court proceedings if such settlements were the subject of a dispute with the tax authorities or were resolved by the courts.
In a situation where there was no dispute with the tax authorities, an application should be submitted for recovery of a tax overpayment along with a correction of the VAT return for the periods in which the output tax was shown and for the periods in which the taxpayer showed input VAT. If these adjustments affect the accounts between these periods, those returns may have to be adjusted as well. As a rule, an application to recover an overpayment may be submitted until the tax liability expires. Apart from reimbursement of undue interest and overpayment of tax, taxpayers are also entitled to interest at a rate of 8% per annum. The interest accrues from the date of the overpayment through:
• The date of return of the overpayment, provided that the taxpayer submits an application for reimbursement of the overpayment before the deadline or within 30 days after publication of the operative part of the Court of Justice ruling in the Official Journal of the European Union, or
• 30 days from the date of publication of the operative part of the judgment, if the application for reimbursement of the overpayment was submitted more than 30 days after publication of the operative part of the judgment.
If settlements for ICA were the subject of a dispute and a final decision was issued in the case (final administrative decision or administrative court judgment), then, to recover undue interest, the proceedings should be reopened by submitting an application:
• In the case of reopening of administrative proceedings, within one month from publication of the operative part of the Court of Justice ruling in the Official Journal of the European Union
• In the case of reopening of court proceedings, within three months from publication of the operative part of the judgment.
If you require analysis of your case, please contact us.
The desire to pursue an individual economic policy was the main reason for the UK’s withdrawal from the EU. Thus it was obvious that the divorce would bring a number of changes, including in the trade in goods. Nevertheless, the protracted negotiations on a trade and cooperation agreement kept businesses and consumers on their toes on both sides of the English Channel. The spectre of having to base trade on the rules of the World Trade Organization (WTO) receded only at the end of December 2020, when British and EU negotiators finally managed to work out a common position. The EU–UK Trade and Cooperation Agreement, setting out the principles for cooperation after the end of the transition period, was published on 24 December 2020. The agreement is now subject to the ratification procedure, and until 28 February 2021 its duration is temporary.
Below we discuss the most important rules applying to trade in goods between the United Kingdom and the European Union from 1 January 2021.
Customs
From the standpoint of trade in commodities, the most important regulation of the EU–UK Trade and Cooperation Agreement is the introduction of 0% customs tariffs and simplifications in trade. Although the introduction of 0% duty rates has reduced the risk of lowering the profitability of trade between the UK and the EU, businesses must adapt to many changes.
Application of customs exemptions is subject to certain conditions. An essential one is that the product meets the rules of origin. These rules clarify which products can be considered as originating in EU or UK territory, namely:
If materials from third countries were used for the production of a given product and their use exceeds the levels specified in the agreement, they may be subject to customs duty, set by the WTO. Therefore, the origin and content of the components of a given commodity are important in determining the duty rate.
The applicant claiming preferential tariff treatment is the importer of the goods. Such a claim shall be based on a statement where the product originates from. This statement should be made out by the exporter or else based on the importer’s knowledge of where the product is originating from.The statement must provide sufficient information on the commodity to enable precise identification. Both the importer and the exporter must keep the required documentation confirming fulfilment of the conditions for application of 0% duty rates.
Although as a rule the exchange of goods will not be subject to customs duties, it will be necessary to complete the customs formalities related to crossing the border between the EU and the UK. Businesses that have so far traded only with EU countries should obtain a special EORI number.
EXCISE DUTY
Import of excise goods from the UK into EU territory (i.e. alcoholic beverages, tobacco products, electricity and energy products, raw tobacco, liquid for electronic cigarettes, innovative products, and passenger cars) requires the payment of excise duty before the goods are released for trading.
With regard to the movement of excise goods between the UK and the EU which started by 31 December 2020 and will end by 31 May 2021, the EU regulations on intra-Community movement will apply, also under the excise duty suspension procedure. It will not be possible to apply EU rules for movement of excise goods starting on or after 1 January 2021.
VAT
Changes in the trade in goods also apply to VAT settlements. Deliveries of goods between the UK and Poland—or more broadly the EU—will no longer be accounted for as intra-Community supplies and acquisitions (B2B transactions) or mail-order sales (B2C transactions), but as exports and imports of goods. For goods imported from the UK, this means VAT settlement in the EU country to which the goods are imported. On the other hand, goods exported to the UK will be subject to a 0% VAT rate in the EU, but will be subject to UK VAT requirements.
• Import of goods from the UK into the territory of an EU country
The most important change when importing goods from the UK to Poland is the need for the importer to settle the output VAT. The deadline for payment of output VAT (and customs duties) is 10 days from the date of notification of the amount of customs and tax duties by the customs authority. On the other hand, the taxpayer will be able to deduct import VAT in the VAT declaration submitted by the 25th day of the month following the month of import. This method of settling VAT on the import of goods results in a temporary freezing of cash on the importer’s side and may contribute to the deterioration of their financial liquidity.
However, importers may enjoy the simplified method of settling VAT in the import declaration (and not during clearance). Such a possibility is granted, among others, to companies obtaining the status of an Authorised Economic Operator (AEO). Details of settling VAT on import in the declaration are regulated by Art. 33a and 33b of the Polish VAT Act.
VAT refunds will be subject to the rules currently applicable to entities from third countries, i.e. primarily based on the principle of reciprocity.
• Export of goods to the UK
When exporting goods from the territory of Poland to the UK on or after 1 January 2021, it should be remembered that in exports, the VAT point arises at the time of delivery of the goods (or at the time of payment of all or part of the entire price, if it occurred before delivery of the goods), and not when the invoice is issued (as for intra-Community supplies of goods). Such a delivery may enjoy a 0% VAT rate, provided that the exporter possesses customs documents confirming export of the goods. These rules apply regardless of whether another business or a consumer is the recipient of the goods.
The settlement of chain transactions in which entities from the UK participate will be more burdensome.
Trade with Northern Ireland
The regulations described above apply to trade with partners from England, Scotland or Wales. Under the protocol on Ireland and Northern Ireland, trade with Northern Ireland will remain unchanged: Northern Ireland will still be treated like a member of the single European market and Customs Union, and EU VAT regulations will apply to trade in goods with it. Therefore, intra-Community acquisition of goods will continue to be recognised in Northern Ireland and customs duty will not apply.
Taking into account some simplifications, such as the duty exemption, the EU–UK Trade and Cooperation Agreement aims to facilitate the flow of trade between the United Kingdom and the European Union. Nevertheless, Brexit introduces barriers that can be problematic for many businesses. If you are looking for support in the correct settlement of trade in goods from the UK to Poland, please contact us. KR Group has vast experience providing tax support for transactions with third countries outside the EU.
What does the Slim VAT bill cover?
1. Extension of the period for export of goods while maintaining the 0% rate with taxation of advances for export of goods, from two to six months.
2. Extension of the period for deducting VAT from two to three successive settlement periods. In the case of taxpayers settling VAT on a quarterly basis, the rule will remain unchanged, meaning that they can make a current deduction of input VAT during the settlement period in which they acquired the right of deduction, or during the two following settlement periods.
3. Consistent exchange rates – Taxpayers are given the optional solution, for determining the tax basis expressed in foreign currency, of using conversion into PLN according to the rules for conversion of revenue under the income tax regulations applicable to the taxpayer, for the purpose of settling a given transaction. (After election of this option, the taxpayer is required to apply it for at least 12 months from the start of the month in which the taxpayer made the election.) This solution applies only to taxpayers subject to income tax in Poland.
4. Introduction of the possibility of deducting input VAT under invoices documenting the purchase of lodging services for the purpose of reselling them.
5. Raising the limit for unrecorded presents of low value from PLN 10 to PLN 20.
6. No need to obtain confirmation of receipt of correcting invoices issued by the seller on the minus side. From the new year, a reduction in output VAT arising under a correcting invoice can be made during the period in which the taxpayer issued the correcting invoice, on condition that:
a. The documentation in the taxpayer’s possession shows that the conditions for reduction of the tax base specified in the correcting invoice were agreed with the buyer, and
b. These conditions were fulfilled, and the correcting invoice is consistent with the documentation in the taxpayer’s possession.
The buyer will also be required to correct the input VAT during the settlement period in which these agreed conditions were fulfilled.
According to the justification for the bill, such documentation might include commercial documents, such as annexes to contracts, commercial correspondence, proof of payment, rebates, etc, confirming that both parties to the transaction are aware of and accept the new, revised terms of the transaction. In our opinion the easier method for confirming these conditions will be documents showing payment or refund of payment. Because this provision is not precise, only the practice of the tax authorities will reveal what documents they find acceptable.
However, these conditions do not apply inter alia in the case of export of goods, intra-Community supply of goods, and supply of goods and performance of services where the place of taxation is outside Poland.
According to the interim provisions, the taxpayer may continue to apply the existing regulations through the end of 2021, but on the condition that prior to issuing the first correcting invoice in 2021 the taxpayer enters into a written agreement with the buyer on this issue. The taxpayer may resign from this election at the earliest three months from the end of the month in which the election was made, also on the condition of concluding a written agreement.
7. Inclusion in the act of a provision on settlement of correcting invoices raising the price. This solution confirms the existing practice under which when the tax basis is increased, the correction of the basis is made in the settlement for the period in which the reason for increasing the tax basis arose.
8. Exemption from the use of the mandatory split payment mechanism in the case of making setoff of receivables, in the extent to which the amounts of the receivables are set off.