The regulations concerning tax scheme reporting (MDR) have been in force since 2019; however, they remain unclear due to Poland’s more complex and broader reporting system compared to the EU directive. Another issue arises from the professional secrecy obligations of tax advisors, leading to a widely discussed ruling by the Constitutional Tribunal. At least on a declarative level, the government is determined to address this issue. Reports suggest that Minister Andrzej Domański is committed to reducing domestic scheme reporting obligations by up to 70%.
Entering into an Operating Lease Agreement as an Arrangement Potentially Constituting a Tax Scheme
As indicated by the Minister of Finance, lease agreements are often incorrectly classified by entities submitting tax scheme information (lessors, lessees) as arrangements subject to reporting due to meeting the general hallmark described in Article 86a § 1 point 6 letter d of the Tax Ordinance Act. Operating lease agreements, particularly those offered by leasing companies or entities specializing in such agreements, are typically based on standardized contract templates. The modifications introduced during negotiations usually do not alter the essential provisions of these templates. Consequently, such agreements may meet the general hallmark specified in Article 86a § 1 point 6 letter d of the Tax Ordinance Act.
For an arrangement to be considered a tax scheme, it must meet the main benefit test. This means that even if lease agreements are standardized, they will only be recognized as a tax scheme if the primary purpose of entering into the agreement for the lessee is obtaining a tax advantage.
Important!
Lessor's Obligations Regarding Tax Scheme Reporting
Articles 86a–86o of the Tax Ordinance Act do not require entities to exercise a higher degree of diligence than what is typically expected in the industry (e.g., the leasing market). Both promoters and supporters (lessors) are not obliged to actively seek information to determine whether a tax scheme reporting obligation exists.
Thus, according to the general interpretation, it is unjustified for lessors to report tax schemes in cases where:
- The main benefit test is not met (i.e., the event does not qualify as a tax scheme under the definition in Article 86a § 1 point 10 of the Tax Ordinance Act);
- The lessor, as a rule, does not possess knowledge of whether the main benefit test is met and only knows that entering into such an agreement may potentially impact the lessee’s tax obligations.
The conclusions from the general interpretation indicate that many financing entities reported lease agreements as tax schemes "out of caution," interpreting the regulations too strictly and reporting events that did not require such reporting. In practice, this means that if a Tax Scheme Number (NSP) was obtained from the lessor as a Supporter, the Beneficiary (lessee) is not required to file an MDR-3 declaration (unless they have information confirming that the main benefit test is met).
Important!
However, it should be recognized that the main benefit test may be satisfied, and the tax scheme must be reported if the lessor:
- Offered the client this financing model (despite the client initially planning to enter into a different type of agreement) and, due to presenting tax benefits, the client ultimately opted for an operating lease;
- Has information indicating that the agreement was entered into primarily for tax benefits (e.g., the client explicitly stated so or the lessor is affiliated with the lessee);
- Is aware (or should be aware) that the client requests contractual terms that clearly indicate a tax-motivated purpose (e.g., by setting an unusually high initial fee that a rational business operator would not typically expect).
Lessee’s Obligations Regarding Tax Scheme Reporting
The lessee (beneficiary), as the entity that will always have full knowledge of the motivations and objectives behind entering into a given lease agreement, may be required to report the tax scheme in the form of an operating lease agreement.
Therefore, to determine whether the lessee has a reporting obligation, it is necessary to assess whether the main benefit test is met:
- Whether this type of financing was chosen for economic purposes or primarily for tax purposes;
- Whether reducing the tax liability by recognizing higher tax-deductible costs from lease payments in a given tax year than depreciation charges was the primary reason for entering into the agreement.
To avoid uncertainties regarding tax schemes, it is advisable to conduct an MDR audit, which will identify risks and raise awareness about the significance and consequences of tax scheme reporting.
We will keep you informed of further developments regarding tax schemes.