SLIM VAT 2 package has become law

by Aleksandra Majnusz

2 June 2021

The Council of Ministers adopted a bill amending the Value Added Tax Act and the Banking Act on 26 May 2021.

The changes

The government has prepared the so-called SLIM VAT 2 package to simplify VAT accounting for taxpayers. The proposed changes also respond to the demands addressed to the government by enterprises in connection with the need to mitigate the negative social and economic impacts of the COVID-19 pandemic. The new solutions include, among others, reducing bureaucracy and improving the liquidity of businesses.

Key proposed changes:

• a new rule which says clearly to which supply the dispatch or transport should be attributed in the case of exports or intra-Community supplies of goods;
• waiver of the condition which makes the deduction of input tax in the same period in which output tax is disclosed dependent on the disclosure of output VAT within three months of the end of the month of the tax point; implementation of the judgment of the Court of Justice of the European Union in case no. C-895/19A into the Polish legal system;
• taxpayers who account for tax on import of goods in the tax return directly will be allowed to file an amended return if they disclose an incorrect tax amount;
• bad debt relief;
• modified definition of “Member State” and “European Union territory”;
• 100% deductibility of car operating expenses (extended deadline for reporting the first expense for a car used exclusively for business purposes) in conjunction with the SAF-T filing date for the ended period;
• VAT deductibility after the deadline for deduction in the current period expires – extended number of accounting periods in which taxpayers have the right to deduct by amending the tax return;
• the supplier and buyer may choose to make a joint declaration of intent to pay tax on a real property sale in a notarial act;
• rules for releasing money reposted from a closed VAT account into the so-called technical account;
• option to obtain consent to release of money from a VAT account if the taxpayer’s tax arrears are deferred or broken into instalments.

Key changes to the Banking Act:

• consolidation of money on the VAT account;
• money accumulated on a VAT account can be spent on insurance contributions for farmers;
• money release from technical accounts.

New rules in the context of Brexit

The new laws are important also in the context of the United Kingdom of Great Britain and Northern Ireland leaving the European Union. The exit agreement stipulated a transition period which ended on 31 December 2020. At present, the EU VAT rules do not apply in the UK. As a consequence, there is no such thing as an intra-Community supply/acquisition of goods and mail order sale in dealings between the EU and the UK. That is why lawmakers have found it necessary to pass legislation stipulating how the VAT rules should be applied in relations with the United Kingdom and Northern Ireland after 31 December 2020.

The new laws will enter into force on 1 October 2021.