I. Changes in income tax for individuals not conducting business activity: Raising to PLN 30,000 the annual amount of income tax-free from personal income tax for…
On December 23rd, 2019 the Minister of Finance has published tax explanations. The explanations certain to the rules of using data contained in the VAT List created on September 1st, 2019, hereinafter also referred to as the "White List".
Below you will find review of the most important elements raised in the explanations.
The full text can be found here
Bank accounts of foreign entities
A foreign entity registered in Poland as an active VAT taxpayer, carrying out transactions subject to local VAT - is treated indeed as a Polish VAT taxpayer, whose bank account should be included in the List.
However, a foreign entity using a foreign tax identification number that performs the delivery of goods or services on the territory of another country is not obliged to open a Polish bank account and enter it in the List for the purposes of performing sale of goods or services to the Polish buyer.
If the foreign partner/client does not use the Polish NIP number (Polish Tax Identification Number) for the purposes of given transaction, the provisions regarding the "White List" will not apply to such transaction.
Foreign bank accounts
Accounts maintained by foreign banks that do not operate in Poland through a branch will not be included in the "White List".
Information about accounts in foreign banks is provided by taxpayers in identification/update motions (NIP-2). Therefore, in the case of a payment:
- resulting from an invoice issued by an active VAT taxpayer,
- pertaining to transactions above PLN 15,000 (~3500 Euro)
- to a foreign account (not included in the "White List"),
the taxpayer, in order to avoid negative financial consequences, will be able to submit a notification of payment to this account to the competent head of the tax office, who will verify whether the taxpayer indicated this account in the identification application.
Internal policies bank accounts and so-called assignment accounts
Due to the specifics of their operations and binding legal provisions, banks operate accounts within their own policies utilised by them to perform its own settlements related to the sale of goods and services, as well as to make settlements on account of monetary receivables purchased by the bank (assignments receivables), financial services used for factoring activities conducted by these entities. These accounts, although they have a settlement number in the designated format, do not constitute settlement accounts within the meaning of Art. 49 paragraph 1 point 1 of the Banking Act and therefore are not being entered into the "White List", whereas these account numbers may be indicated on the invoice issued by the bank or indicated as an account paid, e.g. for the transfer of receivables.
Escrow and deposit accounts
When performing payments to escrow or deposit accounts, it is vital to recognise the moment of including the expenditure incurred as tax deductible. Namely the tax deductible expenses may be the expenses actually incurred, while in the case of escrow and deposit accounts, funds are only secured until the contract is completed.
However, if the payment to the escrow and deposit account were confirmed by an invoice by the active VAT taxpayer, the buyer should, in order to avoid negative tax consequences, submit a notification to the competent head of the tax office about the payment being made to an unlisted account.
Transfer order with deferred payment/standing order and direct debit
In the case of a transfer order with a deferred payment date or a standing order, the day of the transfer order will be the day on which the taxpayer ordered the bank to make such a transfer.
The period for which payments have been deferred, or the period covered by the standing order, i.e. the date the account is debited, is irrelevant.
In the case of payment by direct debit, e.g. for electricity, TV license or telecommunications services, billing for received invoices is carried out automatically from the taxpayer's account. The date of the transfer order will be the day the taxpayer indicated to the bank when making this instruction.
It should be noted that in the above cases, the bank is not required to verify the accounts on the "White List". Such verification is always carried out by the taxpayer and he bears responsibility for making the payment to the account not included in the "White List" at the date of the transfer order.
Payments with use of publicly available payment platforms administered by operators, ie. PayPal, PayU or DotPay
Settlements by payment cards or through the use of the pay-by-link service does not fall within the scope of the (changing) definition of the term 'payment made by bank transfer'.
Provisions of the Act on payment services (like payment cards) define these payments as a "payment order", i.e. a statement of the payer or payee addressed to his supplier containing the instruction to execute a payment transaction.
Therefore, since it is not a transfer, making a payment by card or pay-by-link does not fall within the scope of above legal act. Therefore, payment in this way to an account out with the "White List" will not result in bearing negative tax consequences in a form of losing the possibility to classify expenses as tax deductible in PIT and CIT and joint and several liability in VAT. This means that the taxpayer does not have to verify which account his funds will be transferred to and whether the account is on the "White List" if the payment will be made using other payment methods.
If two persons are simultaneously debtors and creditors toward each other, each of them may set off their receivable against the receivable of the other party, if the object of both receivables is monetary or commodity of the same quality, specific type and both receivables are enforceable before a court or before another state authority (Legal basis: art. 498 of the Act of April 23, 1964 – Polish Civil Code).
Both receivables shall cancel each other to the amount of the lower receivable, and if there is remaining amount to be paid, the taxpayer (with remainder amount owed) should pay this amount to the account listed in the White List (naturally, only if the transaction value exceeded PLN 15,000 and the invoice was issued by the active VAT taxpayer).
In the above case the calculation of PLN 15,000 limit (which imposes an obligation to make a non-cash payment) rather than the amount remaining after set-off, the total value of the receivable should be assumed.
Advances or instalments
In the case of payments made in the form of advances or payments in instalments, the limit of PLN 15,000 will apply to the amount of the entire transaction, not to a single payment.
Therefore, even if the instalment or advance payment is agreed with the supplier of the good or service, the method of payment should depend on the amount of the total sum of transactions (gross amounts).
As a result if the total value of the transaction exceeds PLN 15,000, in order to avoid negative tax consequences, the payment cannot be settled in cash, but individual payments should be made by transfer to the account listed in the List, even if their unit value did not exceed this amount (or may be paid using other payment instruments).
Possibility of avoiding negative tax consequences in the event of payment to an account not included in the "White List"
The Act contains provisions enabling the avoidance of negative effects both in PIT and CIT perspectives, as well as within the scope of joint and several liability in VAT when a taxpayer makes a payment by transfer to an account not on the List on the day of transfer order.. It is satisfactory that the taxpayer - within three days from the day of ordering the transfer - notifies about the payment, (as to the amount incoming to the non-Listed account) of the head of the tax office applicable for the invoice issuer (in the case of submitting a notification to another head of the office, that head of office is obliged to forward the notification to the proper head of the tax office).
The notification may be submitted by a proxy with general (PO) or specific (PPS-1) power of attorney.
The notification may be submitted in electronic form via "e-puap"
In the case of sending a notification about payment to an account not included in the "White List", the taxpayer will not be obliged to make such notification again in a situation when the next payment was made to the same account remaining outside the "White List". The taxpayer has already informed the authorities once by submitting the relevant notification. It will be sufficient to make a one-time notification of such an account to the competent head of the tax office.
The formulated document for the notification is contained in the regulation of the Minister of Finance - "on the template for the notification of payment of amounts due to an account other than the one in the List on the day of the transfer order - referred to in Article 96b (1) of the Act on tax on goods and services".