Amendments to VAT legislation in Poland you need to be aware of if you have a Polish company

By Marco de Kock – 21st March 2014

In January 2014, big changes were made to VAT legislation in Poland. These changes brought about a big effect for VAT settlements meaning that some Polish companies and taxpayers would need to make changes to their accounts. It’s key to give a thorough review of each of the changes so that you do not have problems with the tax authorities. The following article gives a summary of the most important amendments to the Polish VAT provisions coming into effect on January 1, 2014.

1) Dates for Tax points

As of January 1, 2014, the date the invoices are issued have no bearing on the date of the tax point.

Generally speaking, the tax point starts at the date when the goods are supplied or the services have been completely rendered, although there is some variation. An example of this would be supplies and services that are needed on an ongoing basis, such as telecommunication services and leases. Furthermore, when it comes to paying in advance, the tax point comes into place on the day one receives the advance payment.

The majority of provisions that have to do with exceptional tax point dates are going to be waived in place of newer rules (that is, use of sewage or water, electricity, buildings and lease or telecom services.)

There will not be any exceptional tax point dates for issuing services for transportation or a license under these new regulations.

2) Taxable Base

These amendments aim to introduce the revised taxable base definition. Included will be everything constituting remuneration that has been obtained or will be obtained from a third party or the purchaser. This is to include grants, subsidies and/or any alternate payments of such, as these that directly impact on the cost of services rendered or supply of goods by the taxpayer. Changing that brings the definition of a taxable base more into line with the VAT Directive.

Said taxable basis will not include reimbursement of expenses that are properly presented by a customer or purchaser. These would consist of expenses incurred on behalf of a customer or purchaser. This type of expense is temporally accounted by a taxpayer for the purposes of VAT.

In cases in which a corrective invoice is issued decreasing VAT, a reduction of taxable base is allowed. This is based upon the provision that the taxpayer is able to get the acknowledgement of the contractor who is in receipt of the correction. There are some exceptions to this scenario. With regard to transactions that were done prior to January 1, 2014, the determination of taxable base will be determined on current provisions.

3) VAT Deduction

Under new regulations, VAT deduction and input VAT will become deductible during the settlement for the period. Alternately, this could occur during one of the two following settlement periods. These would be defined as time periods during which the tax obligation arose regarding the purchased or imported goods; however, it could not be earlier than the settlement period when the taxpayer received the customs document or purchase invoice.

In the final analysis, these rules won’t be very different from the current ones, and practically speaking, input VAT will get deducted as soon as the purchase invoice is received, but there must be checking to ensure that the items were actually supplied or the services rendered.

4) Information regarding the intra-community acquisition of goods

Input VAT that results from intra community acquisition of goods (ICA) is deductible during the settlement for period when the tax point arose. This is dependent upon the provision that the taxpayer:

•is in receipt of the invoice within three months after the month during which the tax point arose, additionally,

•the receipt must include the amount of output VAT in the VAT return corresponding with the month in which the taxpayer is obligated to settle the transaction in question.

The taxpayer must decrease the amount of VAT input included in the settlement for the exempted period if the invoice has not been received within 3 months’ time. Following this, in the event the invoice that documents the ICA is received post-deadline, the taxpayer could report the input VAT that resulted from the invoice in question for the VAT settlement that occurred during the period in which the invoice was received.

Regular ICAs are subject to both conditions the first and the second conditions. Just the second condition applies when it comes to an ICA of what the taxpayer already owns.

5) Partial Deduction

According to the provisions that will be in force beginning 1st January, the only way to determine the proportion for a partial deduction of VAT from the taxable base must be excluded auxiliary transactions in regards to auxiliary financial transactions and real estates, and other services mentioned in Art. 43 (1) (17, 12, 38-41) of VATs act reflects thus the underlying nature of these dealings to the extent that occasionally there’s a determinant due to these above mentioned transactions.

6) Exempt from VAT

Starting in January 2014: VAT exemptions will no longer be supervising the supply of second-hand items. The VAT Act amendment introduces an exemption for supply of goods used for the non VAT purposes. This exemption rests upon the provision that when the acquisition, production or import of these goods takes place, no taxpayer had a right to claim input VAT credit.

7) Invoices

Based on the amendments: VAT invoices must be issued by the 15th day of the month that follows the month during which the service was performed, the goods were delivered or the advance payment was received from the purchaser.

That means the deadline of seven days (following the supply date) won’t be valid any more.

In addition, these invoices can’t be issued before the 30th day prior to the goods being delivered or the services rendered, or at least partial payment being received, although there are some variations.