MDR – repeated reporting of cross-border arrangements

14 September 2020

As the regulations on reportable tax arrangements were amended again, effective 1 July 2020, the previously assigned reportable cross-border arrangement numbers (NSP) had been invalidated. At the same time, the amendment requires entities obliged to report to the Head of the National Tax Administration (NTA) to re-file MDR forms that have already been submitted once.

Why does an reportable arrangement have to be reported again?

Poland, as an MDR pioneer, was so quick to implement the EU Directive 2018/822 on tax arrangements (DAC-6) that the official forms developed by the Ministry of Finance did not contain all the information required “as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements”.

The Minister of Finance has concluded that the only way to report mandatory information to tax authorities in other EU countries is to once again collect information from entities obligated to file information on reportable cross-border arrangements using modified MDR forms.

Legal basis

The obligation was introduced by virtue of the Act of 28 May 2020 amending the Corporate Income Tax Act, the Value Added Tax Act, and the Act on Exchange of Tax Information with Other States and Some Other Acts (Journal of Laws, item 1106). The provisions came into force on 1 July 2020.

At the same time, in a regulation issued on 30 June 2020 on the extension of certain deadlines for the submission of information on tax arrangements and exchange of tax information with other countries (Journal of Laws, item 1162), the Minister of Finance postponed the deadlines resulting from said amendment.

What reportable arrangements need to be reported again and to whom does the obligation apply?

Reportable are cross-border arrangements in the case of which the first step towards their implementation was performed between 26 June 2018 and 30 June 2020.

The term “first step towards its implementation” might suggest that arrangements already reported but not implemented do not have to be reported again. But this is questionable as, based on the amended law, reportable arrangement numbers (NSP) issued before 1 July 2020 will be invalidated for all cross-border arrangements.

On 1 July, new MDR forms were introduced taking into account additional data required for the exchange of information with other EU member states.

For the determination of the jurisdiction or country applying harmful tax competition, being one of the specific hallmarks of a reportable cross-border arrangement, an updated list of these countries as of 1 July 2020 is to be used.

The obligation applies to all entities that reported (should have reported) a cross-border arrangement: the promoter, the user and the supporter. Moreover, supporters who previously had no obligation to report retrospective arrangements (that came into being between 26 June and 31 December 2018) are now required to report them.

Extension of deadlines for repeated reporting

The Regulation of the Minister of Finance, issued shortly after the promulgation of the amending act, immediately postponed the deadlines resulting from the amendment for the repeated reporting of tax arrangements that came into being between 26 June 2018 and 30 June 2020. The following deadlines have been postponed:

• for promoters with regard to MDR-1 – until 31 December 2020;
• for users with regard to MDR-1 – until 31 January 2021;
• for supporters – until 28 February 2021;
• for promoters with regard to MDR-4 – until 30 April 2021.

Other deadlines for cross-border arrangements

In the issued Regulation, the Minister of Finance has also extended the deadlines for cross-border arrangements that came into being between 1 July 2020 and 31 December 2020. The Minister has postponed the deadlines for reporting tax benefits by users and for quarterly reporting of making the arrangement available by promoters until 30 April 2021:

• for users with regard to MDR-3, if the user has taken steps being part of the arrangement or derived benefit from the arrangement – until 31 December 2020;
• for promoters and supporters with regard to MDR-4, if the promoter or supporter made a standardised cross-border arrangement available [for implementation] to the user – until 31 December 2020.

In addition, in the Regulation, the Minister of Finance has postponed the deadlines for promoters and users to report cross-border arrangements made available between 1 July 2020 and 31 December 2020, or prepared for implementation by that date or in relation to which the first step towards their implementation was performed by that date. The deadlines for filing the MDR-1 will then start to run on 1 January 2021.  The same applies to the deadlines for supporters’ obligations.
 
Thus, if in the second half of 2020 the promoter made a cross-border arrangement available for implementation, or the user prepared for the implementation of such an arrangement or took the first step towards its implementation, then the 30-day deadline for MDR-1 reporting will only start to run on 1 January 2021.

What about the deadlines for reporting domestic arrangements?

The deadlines for reporting domestic arrangements continue to be suspended under the "4.0 anti-crisis package" from 31 March 2020 until the thirtieth day following the date of calling off the state of epidemic emergency and the state of epidemic declared due to COVID-19. As that date is not known, it is necessary to stay up-to-date with government information and press releases.