Changes to the MDR regime – cross-border schemes to be reported again

by Agnieszka Gliwińska

23 March 2020

Work on amended MDR legislation is pending. The most important consequence of the planned amendments will be the necessity to report cross-border schemes again. The obligation will apply also to supporters who have so far not needed to report tax schemes developed between 26 June and 31 December 2018 retrospectively.

Also one of the factors triggering the reporting of cross-border schemes will change – reportable will be payments to entities from tax havens listed in the PIT Act and CIT Act, as well as those included in the Community's list of non-cooperative jurisdictions for tax purposes.

The objective – further implementation of the directive

The statement of reasons behind the amendment says that the new rules aim at further implementing the MDR Directive and at refining the already applicable regulations (Council Directive (EU) 2018/822 of 25 May 2018 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements).

The new provisions will facilitate exchange of tax information with other European Union Member States and streamline the fulfilment of respective obligations of the Head of National Tax Administration.

The amendments are pending legislative work in the Parliament and are slated to come into force on 1 April 2020.

Re-reporting

The already reported schemes will have to be reported again because the MDR legislation has been implemented in Poland too soon. The current MDR forms do not include all the details required by the standard form developed by the European Commission for exchange of information among the EU Member States. Without certain details tax information cannot be exchanged automatically, and the first deadline for data filing is on 31 October 2020.

The lawmakers have decided that the simplest and fastest way to obtain the missing information from those who have already filed the forms will be to make them file them again, this time in accordance with the EU requirements. The new forms will be in use from the beginning of April 2020.

Re-reportable will be only cross-border tax schemes if the first step of their implementation was taken between 26 June and 31 March 2020.

By operation of law, TSNs (tax scheme numbers) already assigned to such cross-border schemes will become invalid and unusable on 1 April 2020. You should keep this in mind when you file the MDR-3 form to report tax advantages obtained and steps taken as part of the tax scheme. The Head of the National Tax Administration will assign new TSNs to the re-reported cross-border schemes again in accordance with the EU requirements.

Deadlines for the re-reporting of tax schemes are as follows:

– promoters – by 31 May 2020;
– users – by 30 July 2020, if they have not been notified of the TSN or a scheme does not have a TSN;
– supporters – by 31 August 2020, if they have not been notified of the scheme's TSN but have noticed or should have noticed that an arrangement is a tax scheme (if they have taken due care generally required in their services taking into account the professional nature of their business, the area of specialty and the type of services they perform).

As regards the supporters, this is a completely new obligation to retrospectively report schemes dating from the period from 25 June 2019 to 31 December 2018. They have been exempt from that obligation so far. 

Extended definition of hallmarks

The extension applies to the definition of a specific hallmark of cross-border payments (included in tax-deductible costs) to an associated enterprise established in a country pursuing harmful tax competition. Reportable will be also payments to countries on the list of non-cooperative jurisdictions for tax purposes established by the Council of the European Union. The Minister of Finance will publish the first list by 15 April 2020 with the status as of 1 April 2020.

Other Amendments

The new regulations implement also the so-called Cross-Border Scheme Notification Number (Polish: NZSPT) assigned by the Head of the National Tax Administration for exchange of tax information with EU Member States.

The Minister of Finance will be able to shift the duties fulfilled by the Head of the National Tax Administration in respect of MDR to another body of the National Tax Administration.

The requirement to submit the MDR-3 form electronically by one of the management board members who has signed it will be removed from the statute. This opens up the opportunity to have that form submitted by an attorney.

The new regulations extend the scope of the special power of attorney for MDR purposes stating explicitly that a special PoA authorises holders also to act in other matters in the same scope, unless the PoA stipulates otherwise. This change affects also powers of attorney granted before 31 March 2020.

Our experts would be glad to answer all your questions about the Mandatory Disclosure Rules. Come and meet us in our offices in Gdansk, Gliwice, Cracow, Poznan, Warsaw and Wroclaw.