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Newsletter KR Group 06/2017

In this edition:




A draft amendment to the VAT Act was published on the website of the Government Legislative Centre on 12 May 2017, calling for introduction of a voluntary split payment mechanism.

Under the proposal, any bank operating a settlement account (for legal persons, organizational units without legal personality, and individuals doing business as sole traders or partnerships) would be required to establish and operate a separate VAT account at no additional charge.

Generally, taxpayers could elect a split payment mechanism, under which the payments under VAT invoices would be divided between accounts.

The customer would have to pay the net amount directly into the account of the supplier of the goods or services at a bank or savings & loan (SKOK) in Poland, and the amount corresponding to the VAT would be paid into the supplier’s “VAT account.”

It appears that the drafters’ intention is that the VAT account should essentially function like an escrow account. The draft provides that the taxpayer would not be able to dispose independently of the funds in the VAT account.

The proposal also calls for an amendment to the Banking Law to specify which funds could be paid into or out of a VAT account.

Only the following could be paid into a VAT account:

  1. Payment corresponding to the amount of VAT on the acquisition of goods or services
  2. Refunds of VAT:
    1. Pursuant to correcting invoices, or
    2. Transferred by the tax office.


Funds in a VAT account could be paid out only:

  1. For the purpose of:
    1. Payment of VAT to the VAT account of a supplier of goods or services
    2. Refund of VAT pursuant to correcting invoices, or
    3. Tax payments to the account of the tax office
  2. In the event of a change in the bank where the taxpayer maintains its VAT account
  3. To the taxpayer’s account at the consent of the head of the tax office, issued in the form of an order within 90 days after filing of an application
  4. In the event of closing the VAT account, to the account indicated by the head of the tax office, or
  5. In the event of removal of the taxpayer from the register of VAT payers (after deducting tax arrears and interest).

The authors also provide certain incentives for taxpayers to encourage them to use the split payment mechanism. Thus if a taxpayer elects this solution:

  1. Chapter Xa of the VAT Act, concerning the buyer’s tax liability when trading in “sensitive goods” (such as steel products, fuels, and digital equipment), would not apply.
  2. The provisions imposing “additional obligations” (i.e. VAT sanctions) would be excluded.
  3. The regulations concerning increased rates of interest on delay would not apply if 95% of the declared input VAT under invoices was settled using the split payment mechanism.
  4. Bonus for early tax payment — if the tax obligation were paid before the statutory deadline (ordinarily the 25th day of the following month), the amount would be reduced according to the following formula:

Z x R x N/360


O = tax obligation according to the VAT return

R = reference rate of the National Bank of Poland in force two business days before payment

N = number of days of payment prior to the statutory payment deadline

The proposed solution admittedly appears very interesting, particularly in light of the incentives offered. It may be assumed that taxpayers from the fuels, metals or electronics industry would select the split payment method to limit the cost of securing their risk (security deposits running as high as PLN 10 million).

The bonus provided for in the proposal could also mobilize large taxpayers to make VAT payments to the tax office more quickly, in exchange for tax savings (currently the NBP reference rate is 1.5%).


According to a proposal published on the website of the Government Legislative Centre, from 1 September 2017 businesses will have a new obligation to submit information to the National Revenue Administration.

In its current form, there is only a proposal dated 19 May 2017 of an act that, if adopted, would enter into force on 1 September 2017. The aim of the proposal is to plug gaps in the tax system, particularly against VAT fraud. Under the proposal, business entities using banks operating in Poland would only have to authorize their financial institution to transmit the relevant information on their behalf. Reports on activity in their bank accounts would be generated at the end of each day. This would no doubt increase the costs for financial institutions serving businesses.

Businesses holding foreign accounts would face much greater problems. In such instances, the foreign financial institutions would not be required to transmit such reports. Consequently, this would be the sole obligation of the taxpayer. The reports would have to be submitted to the National Revenue Administration (KAS) in a strictly defined logical structure of a standard audit file for bank statements (JPK_WB), and the time required to make the relevant updates to firms’ accounting software to comply with the new requirements could well run beyond the proposed statutory deadline. Moreover, the data provided in bank statements might prove inadequate to prepare a full JPK_WB file.

For now we can only examine the draft bill. Our tax department will monitor this issue and keep our clients informed of developments on a current basis.


Business-related real estate development projects often include construction or upgrading of technical infrastructure for transmission of energy.

The grid connection agreement with the energy supplier specifies the conditions for the connection, laying out for the investor the scope of design and construction work and the mutual arrangements necessary for connection to the grid managed by the given operator.

Performance of the grid connection agreement ends with formal delivery of the infrastructure (usually free of charge) from the investor to the grid operator. Upon connection to the grid, the grid operator becomes the owner of the installations and equipment, including those permanently affixed to the ground.

The transfer of ownership of infrastructure (generally in performance of statutory obligations) has obvious consequences for the correct income tax treatment of the cost of creation of the infrastructure. These costs do not constitute an investment in fixed assets belonging to another entity, nor do they constitute costs of creation of a fixed asset belonging to the taxpayer.

Undoubtedly these expenses meet the criterion of being incurred for the purpose of generating revenue, but doubts arise surrounding their qualification as costs directly related to revenue. It should rather be assumed that these are indirect costs which under Art. 15(4d) of the Corporate Income Tax Act can be deducted at the time they are incurred. Both the legal literature and the case law indicate that the date when such cost is deemed to be actually incurred is the date of delivery of the infrastructure to the grid operator, because at that time the totality of the costs can be precisely determined, and the formal and final transfer of the incurred expenditures generally occurs upon signing of the protocol of delivery and acceptance.

A separate question is settlement of the expenditures when completion of a development project requires expansion or reconstruction of the transmission system belonging to the operator (apart from the connection itself) and is a necessary condition for carrying out the project. In that situation, the opinion may be encountered that since the purchase price and the cost of producing the fixed assets under construction contains the totality of costs incurred by the taxpayer during the period of construction, installation, adaptation and improvement, from the date of the balance sheet or delivery, the costs necessary to complete the project should be included in the initial value of the fixed assets or project. This has been confirmed in judicial decisions (Warsaw Administrative Court judgment of 12 November 2007, Case III SA/Wa 1480/07) and official interpretations (Second Silesian Tax Office, Bielsko-Biała, no. PDP/423-21/06/13356/06 of 27 February 2006).


Improper determination by the taxpayer of the date when the VAT obligation arises for services performed by the taxpayer may lead to tax arrears owed to the State Treasury and create a risk of being charged with tax sanctions.

Given the nature of the construction industry, VAT invoices are often issued by service providers for large sums, meaning that a mistake in identifying when the VAT obligation arises can generate equally high sanctions.

Under Art. 19a(5)(3)(a) of the VAT Act, the date when the tax obligation arises in the case of construction services is the date of issuance of a VAT invoice, while under Art. 106i(3)(1) an invoice should be issued no later than 30 days after performance of the service indicated in the invoice. Thus in this case the key question is determining when the service was performed.

In the past, a practice followed by taxpayers was to equate the date of performance of the service with the date of signing of the protocol of delivery and acceptance by the service recipient. But this practice has been questioned by the tax authorities and the administrative courts. For example, in the judgment of 14 April 2015 (Case I SA/BD 190/15), the Bydgoszcz Administrative Court agreed with the tax authority that the protocol of delivery and acceptance does not generate any rights and the date it is signed should not be regarded by the taxpayer as the date of performance of the construction services. This judgment was upheld by the Supreme Administrative Court in its judgment of 20 April 2017 (Case I FSK 1811/15).

To clarify these doubts, on 5 April 2016 the Minister of Finance issued general interpretation no. PT3.8101.41.2015.AEW.2016.AMT.141, specifying how the tax point should be correctly identified in such cases. According to the minister, the date of performance of a construction service is the date of submission of the work for acceptance. In his view, this date should be regarded as the date of performance of the service because submission of the work for acceptance means that in the contractor’s opinion, the services are ready to be accepted by the recipient.

Moreover, in the case of construction services delivered in part for which a partial payment is specified, the date of performance of the service will also be the date when the contractor submits the service to the recipient for acceptance. It should be borne in mind that under Art. 19a(8) of the VAT Act, in the case of receipt of all or part of the payment before the construction service is performed, the tax obligation arises upon receipt of payment, with respect to the amount received.

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