Right after the tension of the first package of facilitations for VAT taxpayers ‘SLIM VAT’, which came into force on 1 January 2021, went down, the Ministry of Finance published the assumptions for the next package ‘SLIM VAT 2’. From 18 February 2021 to 1 March 2021, pre-consultations were held for the package ‘SLIM VAT 2’. The package, according to preliminary assumptions, should become effective from 1 October 2021 or 1 January 2022.
Basic objectives of the package
The SLIM VAT package, which became effective since January 2021 included changes to:
- corrective invoices;
- exports and the 0% VAT rate;
- conversion of invoices in foreign currencies;
- deadlines for input VAT settlement;
- reinvoicing of accommodation services;
- limit for gifts of small value.
Whereas, the ‘SLIM VAT 2’ project is divided into 5 areas:
- simpler invoicing;
- friendly VAT deduction;
- VAT in international trade – benefits and legal certainty;
- VAT – easier real estate transactions;
- improving cash flow of split payment mechanism and bad debt relief.
The Ministry of Finance has set out sample solutions to make invoicing easier. The main goal of this proposal is to reduce the amount of data on correction invoices, hitherto obligatory, e.g.:
- names: correction invoice or correction;
- date of supply or service;
- indication of the reasons for the correction.
Also, original invoices and the obligations related to issuing them are to be ‘slimmed down’, e.g. by:
- abolition of the obligation to issue duplicates;
- introduction of the possibility to issue collective invoices in respect of discounts granted.
The period in which it is possible to issue VAT invoices before the supply is made will also be extended from 30 to 60 days.
Another simplification in the area of invoicing will be the recognition of a bus or train ticket as an invoice documenting a journey of less than 50 km.
Friendly deduction of VAT
From 1 January 2021, as a result of the entry into force of simplifications for taxpayers under the ‘SLIM VAT’ package, the deadline for the deduction of input tax on domestic purchases has been extended from 3 to 4 cumulative accounting periods. In the ‘SLIM VAT 2’ package, the Ministry of Finance has proposed another simplification. Thanks to it, if a taxpayer has not deducted input tax for one of the four settlement periods, it is possible to correct the return, at the option of the taxpayer, for one period out of those four settlement periods and not only for the period in which the right of deduction arose.
The Ministry of Finance has also announced the extension of the deadline for full deduction of input tax on the use of a car for business activity in the VAT-26 return. Instead of 7 days from the date of incurring the first expense, the period will be exceeded until the 25th day of the month following the month in which the first expense was incurred.
VAT in international trade
Within the group of facilitations in international trade, the long-awaited abolition of the necessity to settle the output VAT on the import of services within 3 months from the end of the month in which the tax obligation arose, has been pointed out. This simplification will enable taxpayers to settle VAT output and VAT input on import of services in the same reporting period. I hope that similar facilitation will cover intra-Community acquisitions of goods soon. We do not know how quickly the Ministry of Finance will act to implement the CJEU judgment of 18 March 2021, ref. C-895/19. The new changes also apply to imports of goods in a simplified form. Customs agents will be jointly and severally liable if they fail to settle the import within 4 months after the month in which the tax obligation for import of goods arose. Taxable persons will also be able to correct any erroneously reported amount of tax in the initial declaration within a period of four months after the month in which the import tax liability arose.
Finally, in my opinion, it will be very important to clarify the rules for allocating movable supplies in chain transactions (both export and ICS). If goods are dispatched or transported by the first supplier, the mobile supply will be attributed to the first supplier.
VAT – easier real estate transactions
The Ministry of Finance has also proposed a change in the scope of facilitating trade in real estate. It will consist in abolishing the obligation to submit to the tax authorities a statement on waiving the right to exempt the supply of real estate from VAT one day prior to such supply. Instead, it should be sufficient to include the content of the statement in the notarial deed.
Relief for bad debts
The ‘SLIM VAT 2’ package adjusts polish legislation to the realities of the CJEU judgment of 15 October 2020 in case C-335/19. The Court found therein the incompatibility of polish regulations in the area of relief for bad debts with the Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax. Thus, the amendments provide for the repeal of the obligation to register the debtor for VAT on the day preceding the day of filing a correction to the tax return by the creditor.
In addition, in the case of relief for bad debts made by the creditor or the debtor, the requirement that no restructuring, bankruptcy or liquidation proceedings have been initiated against the debtor will be abolished. Extension of the deadline for taking advantage of the bad debt relief from 2 to 3 years will also be very important.
‘SLIM VAT 2’ package – assessment of the draft
Undoubtedly, the proposed changes, although insufficient, should be evaluated positively. However, taking into account the number of doubts that have arisen with the entry into force of the provisions of the “SLIM VAT” package, the final assessment of the above assumptions should be withheld. The validation of the changes will be possible only after the amendments to the VAT Act are passed by the Parliament.
Maciej Kozub, VAT specialist, Poznań