The published draft amendment to the tax Acts of 26 July 2021 includes several important changes for VAT payers. With regard to the VAT Act, the discussed draft introduces:
- possibility of joint settlement by several taxpayers within the so-called "VAT group",
- changes in the form of option to tax financial services,
- quick VAT refund for so-called "non-cash" taxpayers,
- change regarding the binding rate information (BRI).
According to the draft amendments, a VAT group shall mean a group of entities which are bound to one another by with financial, economic and organisational links, registered as a VAT taxpayer. A VAT group may be formed by taxpayers:
- having their seat in the territory of the country or
- not having their seat in the territory of the country with regard to the business activity conducted in the territory of the country through a branch located in the territory of the country.[DD2]
The criterion of financial link will be met if one of the taxable[DD3] persons being a member of the VAT group holds directly more than 50% of participation in the share capital of the other taxable persons that are members of the group.
The criterion of economic link will be met if:
- the principal activities of the members of the VAT group are of the same nature, or
- the activities of the members of the VAT group are complementary and interdependent, or
- a member of the VAT group carries out activities which benefit wholly or mainly other members of the VAT group.
The organisational link criterion will be considered fulfilled if:
- the members are legally or actually, directly or indirectly, under common management, or
- they organise their activities fully or partly in concert with each other.
The conditions for the existence of financial, economic and organisational links between the members of the VAT group shall be fulfilled continuously during the whole period of the group's taxable status.
The VAT group will acquire the status of VAT taxable person on the date specified in the agreement on the formation of the VAT group, but not before the date of its formal registration.
Significantly, an entity may only be a member of one VAT group and a VAT group may not be a member of another VAT group.
Formation of a VAT group means that supplies of goods and performing services by entities belonging to the group do not constitute activities subject to VAT. As we read in the explanatory memorandum to the amendments, the resulting fiscal neutrality will entail mutual benefits for both the entities forming a VAT group and the tax administration. Such benefits include fewer documents to be analysed due to a smaller number of JPK_VAT files containing a VAT return and records, no analysis of intra-group VAT deduction and no internal invoices within the group (for example: issuance of an accounting note will suffice). This is particularly beneficial for entities that do not deduct input VAT at all or only partially. The advantage of forming a VAT group is its beneficial effect on the liquidity of the entities belonging to it.
The change in question is a long awaited proposal by Polish VAT taxpayers and should definitely be welcomed. It is already worth considering whether it is worth creating a VAT group in a given capital group.
Option to tax financial services
The draft Act also includes a proposal to introduce in Poland an option for taxpayers for VAT taxation of financial services provided by them. The proposed change is based on the German model consisting in the possibility to opt for taxation of financial services provided exclusively to taxpayers. Financial services provided to retail customers (non-taxable natural persons) will continue to be, obligatorily, exempt from tax.
According to the draft amendment, a taxpayer will be able to resign from the VAT exemption referred to in Article 43-1 (7), (12), (38), (39), (40), (40a) and (41) of the Polish VAT Act, provided to taxpayers, and choose to tax them, provided that:
- is registered as an active VAT taxpayer;
- will submit to the head of the tax authority a written notice on the choice of taxation of these services before the beginning of the settlement period from which he waives the tax exemption.
Such taxpayer will be able, not earlier than after the lapse of 2 years from the beginning of the settlement period from which he has chosen the taxation of financial services, to apply again the exemption from VAT taxation of these services, provided that he submits to the head of tax authority a written notice on resignation from taxation, before the beginning of the settlement period from which he will again use the exemption.
Quick VAT refund for non-cash taxpayers
The draft amendment to the VAT Act provides for introduction of a tax preference consisting in reimbursement of VAT within 15 days from the date of expiry of the deadline for submission of a declaration / correction to the tax return.
This tax preference for a quick refund of VAT would apply to taxpayers who meet jointly the following criteria:
- high proportion of total sales with tax recorded by means of online/virtual cash registers, which allow for the connection and the transfer of data between the cash register and the Central Repository of Cash Registers referred to in Article 111a-3, in the accounting period in question in relation to total sales with tax, reported in the period for VAT purposes (minimum share is 80%),
- high share of received payments made with the use of payment instruments, including the use of transfer order services on sales with tax recorded with the use of online / virtual cash registers and documented with receipts indicating that the payment was made with the use of a debit card, by mobile payment or transfer order - consistent with the form of payment received, in relation to the total value of sales with tax recorded with the use of these cash registers in the given accounting period (minimum 80% share)
- the amount of the total value of sales with tax recorded with the use of online / virtual cash registers, which in the consecutive 12 months immediately preceding the period for which the taxpayer applies for a refund should not be lower than PLN 50,000.
The taxpayer should meet the above conditions during three consecutive settlement periods, and in the case of a taxpayer settling quarterly for one settlement period, immediately preceding the period for which the taxpayer requests a refund.
Changes in BRI
According to the proposed amendment, the director of the National Tax Information will refuse to issue a BRI when the scope of an application, on the date of submission of that application, is the subject of a concluded investment agreement.
An investment agreement (IA) is a new institution to be introduced into the Tax Ordinance Act in the form of an agreement between an investor and a tax authority on tax consequences of a planned investment in Poland. The IA, as we read in the justification of the draft amendment, is to be a type of comprehensive interpretation of legal regulations, which serves the purpose of implementing the principle of tax law certainty and ensuring a uniform and consistent interpretation of tax law regulations for a specific group of entities.