As of 1 January 2022, amendment to the VAT-Act came into force which may have significant implications for the conduct of VAT settlements in Poland. The changes primarily concern the new method of invoicing, rules regarding settlement of correcting invoices, rules for issuing primary and correcting invoices.
Category: Value added tax
According to a ruling by the Provincial Administrative Court ( WSA ) in Warsaw, errors made by foreign entities in the content of applications for VAT refunds charged in Poland cannot constitute grounds for refusing to grant VAT refunds. Polish regulations depriving foreign taxpayers of the right to a VAT refund due to errors committed in the application, consisting in incorrect indication of the timeframe of the refund requested, are contrary to Directive 2008/9/EC.
Most of the changes envisaged in the second part of the VAT simplification package, so called SLIM VAT ( S- simple, L-local, M-modern) will come into force on 1st October this year. The President has already signed the bill. In this blog post I analyze the 6 most important changes that will soon come into effect, regarding chain transactions, intra-community acquisitions of goods and import of services, bad debt relief, input tax deduction, voluntary real estate sales tax, extension of time to correct imports in simplified procedure and split payment mechanism.
On 18 March 2021, the Court of Justice of the European Union (CJEU) handed down a favourable judgment for Polish taxpayers (C-895/19) regarding VAT on intra-Community acquisitions of goods (IC-a). I have already informed about the ruling in the blog post „Favourable CJEU ruling on turnover tax on intra-Community acquisition of goods” in April this year, in which I analysed in detail the essence of the dispute between the taxpayer and the director of the National Tax Chamber (KIS). After the publication of the justification of the CJEU judgment in May 2021, taxpayers began to file applications for acknowledgment of overpayment an masse in order to be on time before 9 June 2021, as on that day the deadline for filing the application together with the overpayment interest due expired. It is worth remembering that the expiry of this deadline, however, does not close the way to recover the interest paid on the untimely filed IC-a.
Further work is underway on the amendment of the VAT Act with regard to the introduction of e-invoices to legal transactions. We have already reported on the ongoing consultations in this area in our blog post “New e-invoices – structured invoices and the National System of e-invoices“. E-invoices will serve to further tighten the tax system and prevent tax fraud.
On 1 July 2021, new requirements for VAT settlement in JPK_V7 came into force. The exception are regulations related to the e-commerce package and the obligation to mark in the sales register the date of payment or the date of payment in the bad debt relief, which come into force on 1 January 2022.
The CJEU in the judgment issued on 15 April 2021 indicates that penalties concerning irregularities in VAT settlements must take into account of all the circumstances of the case. They cannot be applied where it is impossible to estimate the negative effects of an action and without verifying the intentions of the taxpayer. Penalties are intended to prevent fraud and tax offences, and therefore cannot be an expression of oppressive treatment of entrepreneurs by the state authorities.
Taxpayers using fuel cards are unsure when they will be entitled to deduct VAT and when their purchase of fuel will be exempt from this tax. The problem relates to the lack of clarity regarding the classification of such purchase as a supply of goods or provision of a financial service. The Ministry of Finance, after long consultations, issued on 16 February 2021 a general ruling concerning transactions performed with the use of the so-called fuel cards. The interpretation was intended to finally clarify doubts of taxpayers as to when refuelling with fuel cards is a supply of goods and when it is a service.
The consultations of the Ministry of Finance on the draft amendment to the VAT Act to introduce e-invoicing have ended. Poland will join countries like Spain, Portugal or Italy that have already introduced this innovation. It means not only facilitation for entrepreneurs, but also greater control over their transactions.
Taxpayers can reclaim interest for failing to declare intra-Community acquisitions of goods on time. According to the Court of Justice of the European Union, Polish rules on the right to deduct VAT on intra-Community acquisitions of goods are in breach of EU rules. The CJEU ruled that the right to account for tax due and input tax in the same period should not be subject to any time limit. Furthermore, IC-acquisition must always constitute a tax-neutral transaction, which means that the tax authorities are not entitled to interest for a late declaration of the transaction.