VAT payment deadliness in the times of a pandemic

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:

• Deferral of the payment deadline or arranging the VAT payment in instalments;
• Deferral or division into instalments for tax arrears together with interests for late payment or interests charged for late payment of tax advances;
• Write-off of the total or part of tax arrears, interests for late payment or extension fee.

What are indications for submitting an application for tax allowance:

The application can be accepted positively only:

• in the case justified by an important tax-payer’s interest or public interest.

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:

1. in the justification the taxpayer has to convince the authority that this case relates to an important interest of the taxpayer or public interest;
2. presentation of the financial condition;
3. in the case of application for deferral or division into instalments – the tax payer should provide the date or number and amount of instalments, which would enable them to meet the obligation;
4. the tax payer should determine the character of the received help (does not constitute state aid / constitutes state aid / constitutes de minimis aid).

What to attach to the application:

• Mandatory:

1. information, including statements and forms prepared according to applicable models, regarding the receipt or not of de minimis aid and public aid;
2. in the case of de minimis and public aid - financial statements for the last 3 financial years prepared in accordance with the accounting regulations.

• Optionally:

1. a statement on the financial, family and property status of a natural person conducting business activity;
2. a statement on the financial standing of commercial law companies, other legal entities, organizational units without legal personality (except civil law partnerships);
3. a statement on the financial standing of civil law partnerships
4. a statement of real estate and property rights that may be subject to compulsory mortgage, and movables and transferable property rights that may be subject to tax lien;
5. photocopies of documents confirming the current financial standing (including documents confirming the incurred expenses).

Templates of applications:

1. Template of application for write-off of arrears in whole or in part:
2. Template of application for dividing into VAT arrears into instalments:
3. Template of application for deferment of the date VAT payment or tax arrears:

What will be examined when making the decision on the application:

1. If an important taxpayer’s interest or public interest exists - this is the basis for the granting the allowance;
2. The tax-payer financial standing;
3. The tax-payer assets’ situation;
4. If the grant of allowance constitutes public aid;
5. If the applicant has received public aid or de minimis aid and if so, in what amount.

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 1^st 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 25^th March 2020. The same simplifications apply to situations where the taxpayer applies for allowance regarding arrears with the payment deadline falling after the 1^st 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 1^st 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.