Polish Deal – changes to the VAT Act

by Adrian Maczura

1 September 2021

A bill amending the Personal Income Tax Act, the Corporate Income Tax and certain other laws as well as details of the planned changes in tax laws to come into force as soon as 1 January 2022 were presented on 26 July 2021.

The bill introduces the following changes to the VAT Act:

1. Joint accounting for VAT by several taxpayers, the so-called VAT group.

Polish Deal introduces the concept of a VAT group allowing a corporate group to consolidate its profit (loss).

The announced tax changes make it possible for related entities within a VAT group to jointly account for VAT. This simplification follows from the VAT Directive. The VAT group will become a VAT taxable person in place of its members and the supply or purchase of goods or services by members of the VAT group will be considered as transactions made by the VAT group.

The VAT group will provide the following benefits to its members:

• no VAT on intra-group transactions;
• joint accounting for VAT and preparing one joint JPK_VAT file for the entire VAT group by one of its members representing the VAT group;
• no requirement to use split payment for intra-group transactions between members of the VAT group.

2. Changes in binding VAT rate information (BVRI).

Polish Deal modifies the Tax Act by introducing a tax compliance agreement, i.e. an agreement between an investor and a tax authority on tax implications of an investment planned in Poland. This agreement will provide a comprehensive interpretation of laws, which may include, among others, a description and classification of goods or services and the applicable VAT rate, i.e. elements covered by the BVRI.

Therefore, to avoid a conflict between these two procedures, the bill says that whenever an application for binding VAT rate information relates to the same thing as an already concluded tax compliance agreement, no BVRI will be issued. You may appeal against such a decision.

3. Optional taxation of financial services.

The published government bill allows taxpayers to pay VAT on selected financial services. The proposed regulation covers:

• transactions, including agency, in currency, bank notes and coins used as legal tender;
• fund management;
• cash lending and agency in cash lending, as well as cash loan management by the lender;
• granting sureties, guarantees and any other collateral for financial and insurance transactions and agency in these services as well as management of credit guarantees by the lender;
• services involving money deposits, keeping bank accounts, making payments, money orders and transfers of cash, debts, cheques and bills of exchange, as well as agency in these services;
• services, including agency, involving shares in companies or other incorporated entities;
• services involving financial instruments and related agency.

Yet, insurance services are excluded from the proposed regulation. Financial services will only be liable to VAT in B2B transactions. Financial services provided to consumers (non-taxable persons) will continue to be legally exempt from VAT. Please also note that if you opt for VAT you will need to apply it to all such services provided to taxpayers. It is not possible to tax only selected services and apply exemption to the rest.

4. Quick VAT refund for certain taxpayers.

• Introduction of a quick VAT refund for non-cash taxpayers – the aim of the proposed change is to popularise non-cash transactions in Poland by creating a tax incentive addressed to “non-cash taxpayers” who accept mostly non-cash payments.
• Temporary restrictions on some VAT preferences for taxpayers who do not comply with the requirement to be ready to accept non-cash payments.