From 1 January 2022, the amended Value Added Tax Act came into force, which introduced, among other things, shorter deadlines for VAT refunds. This is another improvement for taxpayers after the packages of changes known as SLIM VAT and SLIM VAT 2.
What is a surplus of VAT input tax
Every taxpayer, to the extent that goods and services are used to carry out taxable activities, is entitled to deduct the amount of input tax on the purchase of goods and services from output tax on sales.
When the amount of input tax is higher than the amount of output tax, there is an surplus of tax. The taxpayer has 2 options:
- to carry forward the surplus to the next settlement period,
- request a refund of the surplus directly in the JPK VAT return.
As a rule, refund periods are calculated from the date of sending the return to the tax office.
In addition, the refund deadlines depend on the bank account to which the surplus is to be returned. If the refund is made to a VAT bank account, then the taxpayer may benefit from a reduced VAT refund deadline of 25 days.
In the case of a refund to a bank account belonging to the taxpayer, either held in a Polish bank or to an SKOK bank account until the end of 2021, only three deadlines were in play:
- 60 days – the basic deadline, available to most taxpayers;
- 180 days – an extended deadline, applicable when the taxpayer doesn’t report sales in the return;
- 25 days – a shortened deadline, available to the taxpayer when the conditions set out in the VAT Act are met.
Conditions for the shortened 25-day period for VAT refunds
The use of the shortened time limit is subject to a number of conditions.
The restrictions contained in the Act are:
- a properly documented amount of input tax – in this case, the legislator assumes the obligation to show that the excess arises from invoices documenting receivables paid through the intermediation of a taxpayer’s bank account in the territory of the country or an SKOK, from invoices whose total amount due does not exceed PLN 15,000, from paid customs documents, import declarations and decisions, from imports from intra-Community acquisition of goods or provision of services;
- the amount of input tax or tax difference may not exceed PLN 3,000;
- confirmation of payment of dues, which has to be sent to the tax office;
- registration as an active VAT taxpayer and submission of returns for each settlement period within the 12 months preceding the settlement period.
Until the end of 2021, the deadline of 25 days was the shortest period for returning VAT surplus. However, from 1 January 2022, a new deadline of only 15 days applies.
A revolution for non-cash taxpayers – the 15-day deadline
The 15-day deadline is available for so-called non-cash taxpayers. A non-cash taxpayer is a taxpayer whose sales recorded on a fiscal cash register amount to the equivalent of or more than 80% in total gross sales, over a period of three months (in the case of monthly billing) or a quarter (in the case of quarterly billing).
Conditions for benefiting from the 15-day VAT refund
In order to benefit from the 15-day refund, the following conditions must be met:
- in each of the above-mentioned settlement periods, non-cash payments must represent at least 65% of the payments, and from 1 January 2024, at least 80%;
- the value of sales including tax recorded on a fiscal cash register for a period of 12 months in any settlement period must not be less than PLN 50,000;
- the amount of input tax or VAT unsettled in previous periods can’t exceed PLN 3,000;
- the amount of the tax difference shown by the taxpayer must not exceed twice the amount of tax resulting for this taxpayer from sales recorded in the settlement period with the use of register cash registers;
- in the period of 12 months preceding the settlement period, the taxpayer must:
- be registered as an active VAT taxpayer;
- submit a declaration for each settlement period;
- keep records of sales using only cash registers that allow the connection and transfer of data between the cash register and the Central Repository of Cash Registers.
Deadline for those using the National e-Invoicing System
Taxpayers using a structured invoice, i.e. an invoice issued through a dedicated internet system called the National e-Invoice System (KSeF), can benefit from a return period reduced to 40 days.
Unfortunately, this is not the only condition imposed by the Legislature. In addition to the requirement to use a structured invoice, which excludes the issuance of an ordinary invoice due to non-compliance with the structured invoice template or a receipt with a VAT number, the following conditions must be met:
- the amount of input tax or tax difference not settled in previous periods and shown in the return must not exceed PLN 3000;
- during the 12 months preceding the settlement period, the taxpayer must:
- be registered as an active VAT taxpayer;
- submit a return for each settlement period;
- have a bank account or a named account in a co-operative savings and credit union, which is noted on the white list.
The legislator is trying to meet the expectations of taxpayers and extends the range of time limits for VAT refunds once the conditions set out in the law are met. However, the prerequisites that allow a taxpayer to benefit from a specific refund deadline can be problematic. Should you have any questions regarding this issue, we encourage you to contact the VAT department of our law firm.
Aleksandra Philips, LL.B., VAT-specialist
Maciej Gryka, Junior Tax Consultant