It is 6 September 2021. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.
In today's episode:
- Draft bill implementing the National e-Invoicing System passed by the Council of Ministers
- SLIM VAT 2 signed by the President
- Multinationals may now apply to the International Compliance Assurance Program
- Ministry of Finance changes its reply to an MDR-related inquiry
- Tax clarifications on the principles of applying abolition relief
- Employer should calculate VAT on the total value of co-financed benefits
Draft bill implementing the National e-Invoicing System passed by the Council of Ministers
On 31 August 2021, the Council of Ministers passed the draft bill amending the VAT Act and implementing the National e-Invoicing System (NeIS). In the initial stage, the system can be used on a voluntary basis. Starting from 2023, however, the use of it will become mandatory. Users of e-Invoices will enjoy a reduced standard VAT refund period, i.e. 40 instead of 60 days, provided that the amount of input tax or the amount of the tax difference not settled in previous settlement periods and declared as an amount to be returned will not exceed PLN 3,000 (and that the taxpayer will be registered as an active VAT taxpayer in the 12 months preceding the submission of the refund application and will only issue e-Invoices in the period for which the refund is applied for). Furthermore, when receiving a credit note in form of a structured invoice, the buyer will reduce the amount of input tax in the settlement for the period in which such invoice was received, and the seller, in order to correct the output VAT in the same period, will not be required to hold documentation confirming that an agreement with the buyer on the conditions of reducing the tax base was concluded. E-invoices will be stored in the NeIS database for 10 years and will be issued according to a uniform template. The Act is expected to enter into force on 1 January 2022.
SLIM VAT 2 signed by the President
On 19 August 2021, an act implementing a suite of tax solutions jointly dubbed “Slim VAT 2 package” was signed by the President. Under the amended provisions, to adjust the output VAT, the debtor does not have to be registered for VAT on the date of delivery of goods and/or services and on the day preceding the date of filing the correction, and may be at that time subject to bankruptcy, restructuring or liquidation proceedings; Furthermore, in the context of intra-Community Acquisitions and import of services, the Act provides for abandonment of the condition according to which the input tax can be deducted in the same period in which the output tax is declared only if the output VAT was declared within three months of the end of the month in which the tax obligation arose. The Act also provides for abolition of a number of formalities, the failure to comply with which made invoices defective, for the possibility of issuing an invoice at least 60 days before the delivery of goods, performance of a service or receipt of an advance payment, as well as for extending the possibility of recognizing tickets as VAT invoices or easier path to VAT taxation in real estate transactions.
Multinationals may now apply to the International Compliance Assurance Program
The Ministry of Finance announced that until 30 September 2021 multinationals can apply to join the International Compliance Assurance Program (ICAP) aimed at mitigating tax risks for MNE groups. The program is designed as a voluntary scheme for MNE groups and tax administrations to work together in a co-operative risk assessment and assurance process. It does not provide MNE groups with legal certainty but is intended to give improved security of tax settlements. ICAP was designed to support global tax transparency. Entities belonging to MNE groups will be able to apply to the program annually, from 31 March to 30 September. In Poland, the authority responsible for handling the program is the Head of the National Revenue Administration. The National Revenue Administration in collaboration with the Ministry of Finance launched a dedicated website where detailed information of the program stages, the list of required documents and the application forms can be found.
Ministry of Finance changes its reply to an MDR-related inquiry
The Ministry of Finance unexpectedly modified the content of its reply to one of the most frequently asked questions regarding interpretation of MDR provisions, available on the Ministry’s website. The inquiry relates to situations where the promoter, the user or the supporter submitted a faulty MDR form and noticed their mistake before the Head of the National Revenue Administration called for its correction. Up to now, the Ministry’s viewpoint was that the documents can be corrected by the taxpayers themselves. Now, according to the amended reply, in the event of submitting to the Head of the National Revenue Administration an incorrect information about the scheme or a notification containing errors, the entity is not authorized to submit any supplements on its own initiative, both in the scope of information and notifications about the tax scheme, nor is it allowed to retract the incorrect signature on the form. Making any amendments is only authorized when called upon by the Head of the National Revenue Administration. Any supplement submitted by the entity without the prior request of the Head of the National Revenue Administration will not have any legal effects and will not be further considered. The Ministry’s updated reply, however, goes against the content of MDR tax clarifications dated 31 January 2019 and a taxpayer acting in line with the clarifications shall be protected against any negative consequences thereof under article 14n(4)(1) of the Polish Tax Code.
Tax clarifications on the principles of applying abolition relief
The Ministry of Finance published tax clarifications on how the abolition relief should be used. The document is intended to provide information on the correct manner of applying the relief to personal income earned abroad. It also gives the definition of “land territory of countries”, not provided by the PIT Act. According to the document, the interior of the earth beneath the land territory of the states, the internal sea waters and the territorial sea, and the bottom and interior of the earth beneath them, the air space above the land territory, the internal sea waters and the territorial sea, as well as non-state areas, including areas under limited state jurisdiction remain outside land territory of countries. Consequently, the abolition relief can be fully applied by taxpayers working in professions, e.g. in the air space and in territorial seawaters.
Employer should calculate VAT on the total value of co-financed benefits
In its ruling of 31 August 2021 (case file I FSK 230/18), the Supreme Administrative Court pronounced itself on how the taxable base for employee benefits co-financed by the employer should be calculated for VAT purposes. The case at hand related to a company, a VAT payer, which, under collective labour agreements and industry regulations, is required to provide its employees with fringe benefits, on top of the work remuneration due. The benefits encompassed medical care packages (payable by employees in the amount of PLN 1), employee transportation services, cafeteria meals and miner’s uniforms. The benefits were partially paid for by the employees and the company had doubts what in this situation should be treated as a taxable base in VAT. The SAC ruled that the taxable base for VAT purposes should be the market value of the benefits co-financed by the employer. In the opinion of the Court, it directly follows from the VAT Act that the provision in question concerns the relations resulting from the employment relationship. At the same time, in the Court’s opinion, in the case at hand there is no doubt that the relationships between the company and the employees had a direct impact on the price of the benefits granted.