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VAT changes 2017

5 grudnia 2016

Dear All,

Please be informed that the amendments to the VAT Act has been accepted by the Polish Parliament. A great part of them is to come into force on 1st January 2017. The purpose of the amendments is to enhance the tightness of the VAT system in Poland and to make the fight against VAT frauds more efficient.

Below please find our summary of the most important changes to the VAT Act:

FIELD OF CHANGE

CONTENT OF CHANGE

POTENTIAL CONSEQUENCES

 

 

VAT refund – additional verification


  • The Polish tax authority will be entitled to verify not only the settlements of a taxpayer who applies for the VAT refund, but also the settlements of other entities who take part in the delivery of goods or in the provision of services which affect the VAT refund being verified.

 


  • The verification may concern not only the settlements of the audited taxpayer who applies for the VAT refund, but also direct and indirect contractors involved in the chain transaction of particular good or service.
  • In practice, the average term for getting the refund will probably get prolonged, which may affect companies’ cash flow.

 

 

VAT refund – timing  


  • Introduction of additional requirements to be fulfilled in order to get the VAT refund within 25 days, especially:
  • payments for purchase invoices via a bank account in bank seated in Poland;
  • PLN 15.000 limit for cash payments (or other than via a bank account) resulting from purchase invoices;
  • PLN 3.000 limit for input VAT which was not settled in the previous settlement periods and which is shown in the tax return that is a base for VAT refund application;
  • obligation to be an active VAT payer at least within 12 months.

  •  It will become more difficult to obtain the VAT refund within 25 days and still the tax authority will be entitled to verify if the early recovery is justified.

 

 

New VAT sanctions

  • A taxpayer who shows in its VAT return an underestimated amount of the output VAT or an overestimated amount of the input VAT risks of being obliged to pay additionally 30% of (adequately) the underestimated or the overestimated amount.
  • A tax payers who uses so-called “empty invoices” or invoices with amounts incompatible with the economic reality in order to underestimate the output VAT or to overestimate the input VAT risks of being obliged to pay additionally 100% of the amount of the input VAT resulting from these invoices.
  •  The change may affect company’s cash flow  – since additional tax liability should be paid (along with default interest), which will have financial impact due to the obligation to pay additional tax.

 

 

Auxiliary financial services in the light of VAT exemption

 

  • As of 1st July 2017 the exemption from the VAT for the auxiliary financial services will expire.
 
  • All the tax rulings issued based on the provision that will expire (Article 43 (13) of the VAT Act) will no longer have the protective value.
  • It will be recommended to analyse the possibility of using the exemption for the financial services.
  • Some provisions of services that are now subject to VAT exemption may not be further exempted, which means that the providers and recipients will have to bear the VAT burden.

 

 

Removal from the VAT register


  • The amendments introduce new conditions for the removal of a taxpayer from the VAT register (for instance in case the taxpayer has grounds to suspect that a supplier or a purchaser takes part in a VAT fraud).
 
  • A taxpayer may be required to analyse thoroughly the VAT business activity of its contractor.
  • Risk of removing taxpayers who are not aware of the unfair business practices of their contractors.

 

Construction services/processors


  • Introduction of new goods and services to be settled under domestic reverse charge mechanism.

 

  • A taxpayer who issues invoices on reverse charge may regularly have VAT to be refunded, which will most probably result in regular tax audits.

Intra-Community supplies and import of services/ domestic reverse charge transactions


  • Modification of settling the input VAT rules.

  • Possible negative impact on VAT neutrality of purchase transactions recognized on reverse charge mechanism.

 

 

 

Other significant changes


  • Removal of quarterly VAT reporting (i.e. quarterly VAT returns).
  • Introduction of the obligation to file VAT returns and recapitulative statements (VAT-UE) via Internet.
  • Changes in the VAT registration procedures.
  • Changes in the joint responsibility for VAT payments (both for the purchaser and a supplier of goods).

 

  • The changes may have an impact on time involvement in VAT settlements – VAT taxpayers should pay more attention for VAT reporting in a proper time and amount.

 We hope that our information will be helpful.

In case of any questions or doubts, please do not hesitate to contact us.

 

Roman Namysłowski

Managing Partner
Tax Advisory Services

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