18.03.2020 Foreign transactions reporting (ORD-U and IFT-2R) for 2019
Please be informed of the obligation to submit information about contracts with non-residents in 2019 to the competent tax authorities on the ORD-U form, within 3 months after the end of the tax year. Thus, if your tax year ended on 31 December 2019, relevant information should be submitted by 31 March 2020.
The obligation to file ORD-U reports was restored pursuant to repealing as of 1 January 2019, Article 82 § 1a of the Tax Ordinance Act, stipulating an exclusion of reporting for related parties submitting simplified CIT-TP and PIT-TP reports.
Therefore, please be reminded that the obligation to file ORD-U reports concerns:
contracts between related parties of which one participates in management or control of the other party or holds a share in capital carrying at least 5% of all votes;
contracts between parties with regard to which another entity, not being a party to the contract, participates at the same time, directly or indirectly, in management or control of the contracting parties or holds shares in their capitals carrying at least 5% of all voting rights in each of them;
contracts with an unrelated non-resident that has an enterprise, branch or representative office in the territory of the Republic of Poland.
The following contracts are taken into account in ORD-U reports:
For related parties – contracts executed during the tax year with the same non-resident and the total receivables or total payables under these contracts exceeded the equivalent of €300,000;
For unrelated parties having an enterprise, branch or representative office in Poland – contracts where a single amount of receivables or payables exceeded the equivalent of €5,000.
The above thresholds expressed in EUR shall be converted into PLN at the average rate of exchange published by the National Bank of Poland as at 31 December of the year preceding the tax year in which the contract was concluded.
The amount of receivables or payables is determined on the basis of contracts executed in writing, invoices or bills issued or received, implying the existence of the contract, if the contract does not specify the amount of such receivables or payables, or if the contract is not executed in writing. Specific amounts of receivables or payables expressed in foreign currencies shall be translated into PLN at the average rate of exchange published by the National Bank of Poland as at 31 December of the year preceding the tax year in which the respective contract was concluded or the invoices or bills implying its existence were issued.
The above obligations result from art. 82 § 1 point 2 of the Tax Ordinance Act and the Regulation of the Minister of Finance on tax information (i.e. Journal of Laws of 2017, item 68) of 24 December 2002.
Additionally please be informed of the obligation to submit information on the IFT-2R form, regarding disbursements made and collected withholding tax (WHT). The information should include disbursements made for foreign recipients regarding among others:
dividends and other revenues from sharing in profits of legal persons,
services in the field of advising, accounting, market research, legal services, advertising, management and control, data processing, employees recruitment and personnel obtaining services, guarantees and suretyships, and performances of similar nature.
The information should include the total amount of disbursement made and total amount of collected withholding tax and should be made for each foreign taxpayer. Please, be informed, that the obligation to submit the IFT-2R form concerns also above mentioned payments when the remitter is not obliged to collect the tax under a double taxation avoidance agreement or the respective UE directive.
IFT-2 information is to be submitted by the end of the third month of the year following the tax year in which the payments were made (similarly to the information ORD-U). We also remind you, that IFT-2R form should be sent to the competent tax office, as well as to the foreign taxpayers receiving the payments (similarly to the information PIT-11). IFT-2R reporting applies also to payments made to permanent establishment run by foreign tax residents in Poland.
Additional reports for payments made to permanent establishments run by foreign residents in Poland
Please also note, that payments made to a foreign taxpayer running a permanent establishment situated in Poland, where a given payment relates to operations carried out by the permanent establishment, are not subject to withholding tax (WHT) provided that a Polish tax remitter obtains the certificate of tax residence of the foreign taxpayer and a written statement confirming that the amounts due are connected with the activity of this permanent establishment. However, if during the tax year the aggregate amount of payments made exceeded PLN 2,000,000 the Polish remitter is obliged to notify the competent tax authority the amounts (broken down by their types) disbursed to permanent establishment on which WHT has not been collected. Such notifications must identify the taxpayer running a permanent establishment in Poland, including the taxpayer’s full name, address, and tax identification number, as well as the address of the taxpayer’s permanent establishment. Notifications shall also be filed when making further disbursements of amounts due on which no tax has been collected.
Please be further informed that pursuant to Article 80 § 1 of the Criminal Fiscal Code, whoever, contrary to his/her obligation, fails to file a required tax information report in due time to the competent authority is liable to a fine up to 120 daily rates of a fine. A tax remitter who files a false report is liable to a fine up to a maximum amount of 240 daily rates of a fine. In case of a minor importance, the remitter is liable for a tax offence.
Should you have any questions or problems with proper performance of obligations described, you are kindly invited to contact us.
02.12.2019 New VAT regulations on intra-Community supplies, chain transactions and call-off stock
Please be informed that works on legislative amendments to the VAT Act are currently under way. Draft amendments provide for a significant reorganisation of the taxation principles of intra-Community supplies of goods and chain transactions. There are also plans to introduce new rules for carrying out call-off stock arrangements.
The anticipated changes result from the need to implement the Council Directive (EU) 2018/1910 of 4 December 2018. They also derive from the Council Implementing Regulation (EU) 2018/1912 of 4 December 2018 whose provisions shall be applied directly.
All Member States are required to implement the new regulations by 31 December 2019. Anyway, it should be expected that the aforementioned regulations of the Council Implementing Regulation will enter into force on 01 January 2020, regardless of the appropriate changes to the VAT Act being passed or not by this time.
I Changes in documenting the intra-Community supplies of goods
As of 1 January 2020, the taxable person acquiring goods will need to provide the supplier with a proper VAT identification number assigned by one of the Member States other than the country from which the dispatch or transport of the goods has originated. Additionally, in order to be able to apply the 0% rate, the vendor will need to submit a recapitulative statement containing the identification numbers of all acquirers to whom the goods have been transported or dispatched. Failure to provide the VAT identification number and the recapitulative statement will result in the necessity to apply the domestic VAT rates with respect to intra-Community supply of the goods.
Requirements related to providing the VAT identification number and including sales in recapitulative statements will be of material nature, rather than formal ones as it used to be.
The EU regulations also introduce new rules related to evidencing the intra-Community supplies from one Member State to another. After fulfilling certain conditions, a taxable person will be able to rely on the so-called presumptions of supply. It means that if vendors have certain documents, they will not be required to additionally demonstrate that there has been an intra-Community supply of the goods.
The conditions for the presumption of supply are regulated in the aforementioned Regulation, which means that they will be applied directly by taxable persons and tax authorities of all EU countries.
The scope of requirements for documentation depends on whether the supply is arranged by the vendor or the acquirer
Supply of the goods arranged by vendor
If supply of the goods is arranged by the vendor, the presumption of supply will apply in cases where the vendor demonstrates that the goods were sent or transported by them or a third party acting on their behalf, and is in possession of:
a) at least two items of evidence relating to the dispatch or transport of the goods, such as a signed CMR document or note, a bill of lading, an airfreight invoice or an invoice from the carrier of the goods; or
b) any single item of evidence referred to in pt. a) together with as one of the following documents:
an insurance policy with regard to the dispatch or transport of the goods, bank documents proving payment for the dispatch or transport of the goods;
official documents issued by a notary or a public authority, confirming the arrival of the goods in the Member State of destination;
receipt issued by a warehouse keeper in the Member State of destination, confirming the storage of the goods in that Member State.
Supply of the goods arranged by acquirer
If supply of the goods is arranged by the acquirer, the presumption of supply will apply in cases where the vendor will be in possession of:
items of evidence referred to in pt. a) or b), i.e. items of evidence required for the case of vendor arranging the supply, and
acquirer’s written statement confirming that the goods have been transported by that acquirer (or on their behalf) and indicating the country to which the goods have been transported; the acquirer shall furnish the vendor with the written statement referred to by the 10th day of the month following the supply.
In order to use the presumption of supply, items of evidence possessed by the vendor must be consistent (non-contradictory) and issued by at least two different entities independent from one another, the vendor, and the acquirer. The foregoing applies to situations where the dispatch or transport are arranged by the vendor as well was situations where they are arranged by the acquirer.
Please be informed that the aforementioned presumptions could be rebutted by tax authorities. In such an event, tax authorities should produce evidence indicating that the goods had not been transported from one Member State to another.
It should also be pointed out that the new regulations may in many cases mean the necessity for changing current procedures concerning the documentation of sales of goods to partners operating within the EU.
II Changes in documenting chain transactions in the EU
This change applies to transactions involving at least three entities from three different EU Member States, while the goods are directly transported or dispatched from the initial vendor to the final acquirer.
The EU legislator decided to harmonize the system for documenting such transactions in cases where the entity responsible for the dispatch or transport is the intermediary operator. Should the intermediary operator dispatch or transport the goods alone or through another entity to the final acquirer, then effective as of 1 January 2020, the prevailing rule is to ascribe the transport/dispatch to the supply made to the intermediary operator. Consequently, if three entities are involved in the transaction, then the intra-Community transaction will need to be recognized between the first and second taxable persons, while the transaction between the second and third taxable person will be treated as a domestic supply of goods in the country of their destination.
The new regulations also provide for an exception to the abovementioned rule, which applies when the intermediary operator is registered for VAT purposes in the Member State from which the goods are dispatched or transported and provides their supplier with a relevant VAT identification number issued in the country where the dispatch or transport of the goods has originated. In such situations, there will be a domestic supply between the initial supplier and the intermediary operator who in turn will recognize the intra-Community supply of goods to the third taxable person.
However, the regulations in question will not apply to dispatch or transport of goods outside the EU (Pursuant to draft provisions of the act amending the VAT Act, in such situations, the current regulations shall apply).
III Call-off stock
In accordance with the planned amendment, the current consignment stock procedure is to be replaced by a new uniform call-off stock arrangement throughout the EU.
New regulations will enable transport of goods to warehouses, so called call-off stocks, located in different Member States, while postponing the VAT settlement until the goods have been sold directly from such warehouses to a specified acquirer (no longer than within the period of 12 months after delivering the goods to the warehouse). The transfer of goods by the vendor to a warehouse located in a different Member State shall not be regarded as an intra-Community supply of goods. Also the acquirer shall not be obliged to recognize this as intra-Community acquisition of goods. Only a sale of goods from a warehouse to an acquirer in one of the Member States will mean the necessity to settle the intra-Community supply of goods by the vendor and intra-Community acquisition of goods by the acquirer. However, the vendor will neither be obliged to register themselves for VAT nor register a domestic sale in the country where the warehouse is located.
The basic difference between the current and planned regulation is the extension of the possibility to use the call-off stock arrangements also for trading activities. Furthermore, entities using the services of external warehousing entities will benefit from this solution.
The effects of expiration of deadline for picking up the goods will also be different. After 12 months, a taxable person will be obliged to recognize a deemed intra-Community supply of goods in the country where the dispatch or transport of goods has originated and a deemed intra-Community acquisition of goods in the country where the warehouse is located.
Furthermore, an additional condition was introduced whereby the goods delivered under call-off stock arrangements must be intended for a known acquirer, while it will be possible to "substitute" yet another acquirer in place of the previous one.
New regulations also provide for detailed rules on keeping records of the goods accepted to and released from a call-off stock, as well as additional requirements for reporting goods accepted under call of stock arrangements in recapitulative statements (e.g. the requirement to indicate the acquirer’s VAT identification number for whom the goods are stored and then re-reporting the same when the goods are released to the acquirer). Additional formal conditions that must be met by a taxable person, who intends to provide call-off stock services, have also been introduced.
If you have any questions or doubts regarding documentation of the intra-Community supply of goods, accounting of chain transactions, or the call-off stock arrangement, please do not hesitate to contact us.
10.10.2019 Eliminating VAT returns as of 1 April 2020
As of 1 April 2020, VAT-7 and VAT-7K tax returns will be withdrawn from the Polish VAT legal system. Since that date, taxpayers will be obliged to file the tax office with VAT records along with a tax return in the form of a new JPK-VDEK file compatible with the logical structures published on the website of the Ministry of Finance.
Micro-, small- and medium-sized enterprises will be obliged switch to JPK-VDEK as of 1 July 2020.
Additional sanctions have been introduced for non-compliance with the abovementioned obligations i.e.
financial penalty of PLN 500 for each error in the JPK_VDEK file that prevents verification of the taxpayer's records where, after being summoned by the tax authority, the taxpayer does not correct the identified error or fails to provide relevant explanations;
penalty for submitting a standard audit file (JPK) in a manner inconsistent with the published template (fine for a tax offense), and for failure to send the standard audit file (JPK), or for sending an unreliable or defective file, or sending the same after the deadline (fine up to 240 daily rates specified in the fiscal penalty code).
Please be advised that the rules for keeping VAT records will also change.
Therefore, you should take into account the need to adapt your accounting systems to the new reporting and recording obligations. Revision of taxpayer’s procedure of providing data to JPK is highly recommended before new regulations enter into force.
10.10.2019 Individual Tax Accounts as of 1 January 2020
As of January 2020, the payments of personal income tax, corporate income tax, value added tax and other public-charges will be paid to the tax authorities using an individual tax account identifying the taxpayer or withholding agent (so-called individual tax account).
The individual tax account number will be made available after providing the Taxpayer ID, in the Public Information Bulletin on the website of the Ministry of Finance or in the tax office.
10.10.2019 Rules for issuing invoices to receipts effective as of 1 January 2020
The rules for issuing invoices to receipts will change effective as of 01 January 2020. Since this date, in order to be able to issue an invoice to a receipt, such a receipt will have to include a VAT ID (NIP) of the buyer of the good or service.
If an invoice is issued for a receipt, which does not include a VAT ID (NIP) of the buyer, the tax authority will be able to impose a penalty equal to 100% of the amount of VAT shown on such an invoice.
Similarly, if a buyer of goods or services enters in the VAT records an invoice issued to a receipt which does include a VAT ID (NIP) of this buyer, the authority will also be able to impose a penalty equal to 100% of the VAT amount shown on such an invoice on the buyer.
10.10.2019 Bad Debts Relief under Income Tax regulations as of 1 January 2020
Pursuant to the Act of 19 July 2019 amending certain acts with a view to limiting payment gridlocks (Journal of Laws of 2019, item 1649), the so-called allowance for bad debts was provided for under the Personal Income Tax Act and under the Corporate Income Tax Act.
The aforesaid allowance gives the option to reduce taxable revenues by the amount of receivable, which is not paid within 90 days since its maturity date specified on the invoice or resulting from the contract (provided that such a receivable is not sold by the taxpayer). The taxpayer may reduce taxable revenues already at the stage of calculating the income tax installments. At the same time, a debtor who does not pay its contractual liability for at least 90 days will be required to reduce its tax deductible costs by the value of the unpaid debt.
Reductions and increases referred to above must be disclosed in the tax return for a given tax year.
The Act enters into force as at 01 January 2020. However the new law will not apply to transaction between related parties.
03.10.2019 Mandatory Split Payment and Removal of Reverse Charge Mechanism in domestic transactions
Please be reminded that the new regulations imposing the obligation to apply the split payment mechanism for certain categories of transactions will come into effect as of 1 November 2019.
The obligation will apply to payments for goods and services listed in the new Annex 15 to the VAT Act with respect to invoices with the total amount equivalent to PLN 15,000 or more.
At the same time, the legislator waived the reverse charge mechanism and joint and several liability for inter alia electronic goods, steel products, fuels or construction works, covering these categories of goods and services with a split payment mechanism (the existing Annexes 11, 13 and 14 to the VAT Act will be repealed, and the lists of goods and services contained therein will be transferred to Annex 15). Therefore, we would like to draw your attention to a significant change in the method of VAT settlements on the supply of the above mentioned goods and services. As of 1 November 2019, sales of these good and services will be subject to general rules of taxation, while the payments will have to be effected under the split payment mechanism (provided that the invoice amount is at least PLN 15,000).
In addition, the legislator introduced a new obligation related to issuing invoices. Since 1 November 2019 Invoices for the goods and services covered by the split payment mechanism will have to include an additional description i.e. 'split payment mechanism'.
The new regulations also provide for severe sanctions for:
failure to include the words 'split payment mechanism' on the invoice – a penalty in the form of an additional tax liability of 30% of the tax due under that invoice;
Failure to make payment under the split payment mechanism contrary to the obligation shall result in the sanction in the form of an additional tax liability in the amount of 30% of the tax due under such an invoice and in the form of inability to classify the expense as tax deductible (whereas the sanction regarding the income tax will take effect from 1 January 2020); in addition fiscal penalties may be imposed.
A regulation was also introduced, whereby the VAT account can be used for payment of other tax liabilities such as income tax advance payments, customs duties, excise duty as well as social security contributions.
Therefore, we recommend a thorough review of the goods and services sold and purchased as well as their proper classification under Annex 15, in order to be able to prepare properly for the new accounting rules applicable to such transactions. We would like to draw your attention to the importance of transitional provisions, which regulate separately ongoing transactions.
03.10.2019 New Matrix of VAT Rates and Binding VAT Rate Information (BRI)
Under recent amendments to VAT Act (Journal of Laws of 2019, item 1751), the so-called ‘New Matrix of VAT Rates’ has been introduced.
The amendments provide for the introduction of a new classification of taxable goods based on the Combined Nomenclature (waiver of codes of the Polish Classification of Economic Activities). However, the services will still be classified according to the Polish Classification of Economic Activities as per 2015 version.
At the same time, new annexes (Annex 3 and Annex 10) to the VAT Act were added, providing the lists of goods subject to reduced rates (i.e. 5% and 8%). The amended regulations introduce the same taxation rate for specific groups of goods and services. The anticipated effect is to be a uniform VAT rate for similar goods and services as well as the elimination of arbitrary and often not clear criteria determining the application of a given rate.
As a matter of principle, the new regulations will enter into force on 1 November 2019. However the new VAT rate matrix will become effective as of 1 April 2020 (except for inter alia certain books, magazines and e-books).
In addition, the option of applying for the Binding VAT Rate Information (BRI) has been introduced, allowing to obtain a binding classification based on codes of Combined Nomenclature, Polish Classification of Buildings or Polish Classification of Economic Activities, and to indicate the applicable VAT rate for a specific type of goods or services. BRI will be issued by the Head of the National Tax and Customs Information Office. In the course of the procedure for issuing the BRI, it will be possible to submit inter alia photographs, drawings, plans, certificates and other documents allowing to determine the characteristics of a given type of goods or services. The tax authorities will also be able to inspect samples of goods as well as carry out examinations and analyses. BRI will be binding for all tax authorities until it is changed or repealed, or until amendment of the tax regulations regarding a given good/service (in this respect, the BRI will be functionally similar to the General Interpretations issued by the Minister of Finance).
It will be possible to apply for BRI since 1 November 2019, however it will be binding upon tax authorities as of 1 April 2020 (because then the new rate matrix will come into force).
We recommend detailed analysis of the new Annexes 3 and 10 to the VAT Act in order to correctly classify the goods and services a given business supplies/provides. In case of difficulty in classifying the goods and services, one may consider applying for the Binding VAT Rate Information.
16.09.2019 White List of VAT Payers
Please be advised that the so-called "White List of VAT Payers" is available at: https://www.podatki.gov.pl/wykaz-podatnikow-vat-wyszukiwarka/ .
In addition to basic registration data (such as name, registered office address, taxpayer identification number, statistical number/REGON, date of registration for VAT purposes etc.), the new list of taxpayers contains also the taxpayers’ settlement account numbers reported to the relevant tax authorities.
Please note that as of 1 January 2020, any payments related to transactions with a value in excess of PLN 15,000 will have to be made to the counterparty's settlement account disclosed on the "White List". If this obligation is disregarded, one should expect severe sanctions in the form of:
inability to treat an expenditure referring to a payment made to an account not shown on the list as a tax deductible cost;
joint and several liability of the buyer of the goods or services for the VAT arrears of the supplier of those goods or services with respect to the tax payable on the supply for which payment was made to an account other than the one shown on the list.
Therefore, we encourage you now to regularly verify the presence of your domestic suppliers and customers on the White List of VAT Payers and to report any discrepancies or deficiencies (in particular the absence of the bank account on the list) to your business partners to avoid the sanctions provided for in the new regulations. We also encourage you to update your company's data by reporting all the bank account numbers used for your business operations.
The legal basis for introducing the list is the Act of 12 April 2019 amending the VAT Act and certain other acts (Journal of Laws of 2019, item 1018).
Should you have any questions or doubts, please do not hesitate to contact us.
01.09.2019 Limitation of the VAT Exemption related to the turnover below PLN 200,000
As of 1 September 2019, the tax exemption (related to the turnover below PLN 200,000) will not be available for taxpayers who:
deliver goods in connection with a contract concluded under an organized system dedicated to the conclusion of distance contracts, and
transact without the simultaneous physical presence of the parties, and
transact with the exclusive use of one or more means of distance communication until the conclusion of the contract, exclusively with respect to:
cosmetic or toilet preparations (Polish Classification of Goods and Services 20.42.1)
computers, electronic and optical products (Polish Classification of Goods and Services 26)
electrical appliances and non-electric household appliances (Polish Classification of Goods and Services 27),
machinery and equipment n.e.c. (Polish Classification of Goods and Services 28)
wholesale and retail parts for motor vehicles (Polish Classification of Goods and Services 45.3) and motorcycles (Polish Classification of Goods and Services 45.4).
Taxpayers providing debt collection services, including factoring services, are not entitled to the exemption as well.
29.06.2019 WHT limit postponed; MF explanation draft
On 28 June 2019, the Ministry of Finance once again postponed the implementation of art. 26 (2e) of the CIT Law. This means that until the end of 2019, corporate taxpayers will be able to apply WHT exemption or reduced WHT also for payments exceeding PLN 2 million. In order to benefit from WHT preferences in such cases, an additional statement made by the taxpayer's board members will not be required.
However, we would like to point out that the deferral of the above mentioned deadline does not lift the obligation to verify whether or not the foreign recipient is entitled to WHT tax exemption / tax rate reduction under the relevant double tax treaties and EU Directives. In particular, taxpayers are still required to carry out a beneficial owner test. Regardless of this verification, the taxpayers should also collect other required documents (i.e. the original certificate of residence, statements required for the application of the exemptions provided for under the EU Directives, or statements required when payments are made to recipient’s permanent establishment).
We would also like to draw your attention to fact that the above mentioned deferral of WHT provisions does not apply to individuals subject to personal income tax.
Please note that draft WHT explanations published in June suggest that higher verification requirements apply to payments between related parties or if the amount of a given payment exceed several thousands of PLN.
You can find Polish version of these explanations here: https://www.gov.pl/web/finanse/konsultacje-podatkowe-w-sprawie-objasnien-do-przepisow-w-zakresie-zasad-poboru-podatku-u-zrodla
31.05.2019 New cash registers regulations
On 1 May 2019, new regulations were introduced (Dz.U. of 2019, items 675 and 816), regarding online cash registers, which will ensure a direct and automatic transfer of information between particular cash registers and the Central Cash Repository. The repository is to be run by the Head of the National Tax Administration. The new regulations also provide for the obligation to provide training (until May 31, 2019) to people who keep records using cash registers. Finally, online cash registers are planned to be introduced at all taxpayers who supply goods or provide services to consumers. The implementation of new solutions is to take place gradually in relation to individual groups of taxpayers depending on the type of goods and services they supply/provide. New provisions also contain detailed regulations devoted to:
The method of keeping records (we would like to bring to your attention the modified letter designations for individual tax rates; existing letter designations may be used until July 31, 2019);
Terms and method of using online cash registers as well ascash registers with electronic or paper copy recording;
Method in which cash registers are ceased to use in the event of business activity termination or when these cash registers stop to operate;
Conditions for organizing and operating cash register service support;
The scope of mandatory technical inspections of cash registers and related deadlines.
This information does not contain a commentary on all introduced changes, but is only used to highlight the most important issues related to the new regulations entering into force.
Here you can find the original Polish wording of new cash register regulation:
31.01.2019 The Ministry of Finance has issued explanations on MDR
On January 31 2019, the Minister of Finance published explanations to new regulations on MDR. These explanations are important as they provide legal protection for taxpayers who apply them into their practice, likewise individual or general interpretations do. Comparing previous draft explanations with the final ones summarized on MF’s webpage suggests, among others, that:
any delays in the fulfillment of reporting obligations under MDR regulations will not cause negative consequences for obliged entities, provided that these obligations are properly performed by February 28, 2019 (if reporting is correctly performed since March 1, 2019 until April 30, 2019, then such delays will be treated as acts of a lesser significance);
reporting obligation under the MDR regulations will not arise if the qualified beneficiary criterion is not met and, at the same time, the cross-border criterion is not met either;
the mere fact of taking advantage of tax reliefs and preferences (R&D reliefs and the "Innovation Box" relief) is not subject to the reporting obligation on MDR basis. The disclosure obligation can only occur if a given arrangement meets criteria for being recognized as a tax scheme.
some situations will not require reporting (explanations stipulate typical categories of tax advisory services which will not be subject to the MDR reporting).
Please note that limitation of disclosure obligations as provided by the explanations is not only a consequence of clarifying the vague wording of tax provisions. In some cases, the mitigation of MDR restrictions results from the fact that the explanations explicitly ignores some of the statutory conditions. Obviously, the narrowing statutory MDR reporting obligations by the explanations is taxpayers-friendly. Nevertheless, it shows that the explanations will be used by Ministry of Finance to modify flexibly the statutory provisions.
You can find MF explanations here: https://www.podatki.gov.pl/mdr/objasnienia-podatkowe-mdr/
24.01.2019 Mandatory Disclosure Rules
On 1 January 2019, new provisions were introduced regarding the obligation to notify Polish tax authorities of "tax schemes", i.e the planned or implemented solutions aimed at tax optimization (Mandatory Disclosure Rules).
The introduced change represents a significant restriction of the taxpayers’ freedom of decisions aimed at limiting tax charges. We would like to draw your attention to the fact that failure in fulfilment information obligations will cause severe administrative and fiscal penalties, not proportionate to the seriousness of any violations.
The essence of the changes is that any solutions aimed at achieving tax benefits will have to be reported to the Head of the National Fiscal Administration (NFA) at the stage of their reconciliation / preparation for implementation. As a matter of principle, the reporting obligation will rest on promoters (e.g. tax advisors, attorneys-at-law, legal advisors). Additionally taxpayers who use optimization solutions and even entities supporting taxpayers in the correct implementation of such solutions (e.g. notaries) will also be required to report a given tax scheme.
Please note that tax schemes made available, implemented or prepared for implementation after 1 January , 2019 must be reported to the Head of NFA within 30 days following the date when they wer made available, implemented or prepared for implementation.
Additionally, we would like to point out that cross-border tax schemes made available / implemented or prepared for implementation before 1 January 2019, but not before 25 June , 2018 will also be subject to MDR reporting. In this case, the deadline for reporting them to the Head of NFA is June 30, 2019.
As far as national tax schemes are concerned, the MDR reporting will also be obligatory for tax schemes made available / implemented or prepared for implementation before 1 January 2019, but not earlier than before 30 November, 2018. In this case, the reporting deadline is 30 September 2019.
Information on reporting tax schemes has been presented in our Alert No. 6/2019.
HERE you can download Alert No. 6/2019 in pdf format (Polish version).
04.01.2019 New ordinances on transfer pricing
On 21 December 2018, the Ministry of Finance published several ordinances regarding transfer pricing regime effective as of 1 January 2019. The ordinances specify, among others:
the base interest rate (for PLN and selected currencies) and the margin used for loans that do not require reference to benchmark studies, provided that additional statutory conditions are met; we wrote about this in par. 1.5 of Alert No. 2/2019;2. detailed data that should be included in the tax documentation prepared for 2019; as previously reported, the new documentation rules may also be applicable to transactions made in 2018, at the taxpayer’s discretion; (we wrote more about this in par. V of Alert No. 2/2019);
the scope of information that taxpayers will have to provide to the Head of the National Tax Administration by the end of the 9th month of the year following the tax year; we draw your attention to the fact, that unlike the previous reporting, the scope of information is relatively broad and includes, among others, providing information on prices and basic assumptions made as part of the benchmark analysis performed by the taxpayer (as we indicated in par. 2.6.1 of Alert No. 2/2019, the scope of information will be significantly limited for domestic transactions);
the method of assessing the compliance of the conditions set in transactions made between related parties with the conditions that would be agreed upon between unrelated entities; the rules of estimating profits by tax authorities;;
the method and procedure for eliminating double taxation when making profit adjustments by the tax authorities; the ordinances regulate, among others, rules for initiating the procedure of communication between the Minister of Finance and the tax authorities of other countries - in the event of income double taxation.
Links to the ordinances (in Polish):
04.01.2019 Changes in VAT and tax on transactions in civil law (PCC) effective as of 1 January 2019
In our next Alert No. 5/2019 we present the changes in VAT and tax on transactions in civil law (PCC) effective from January 2019.
Significant changes in VAT relate mainly to the so-called bad debts relief. Additionally, new regulations on the taxation of vouchers have also been introduced. In PCC in turn, the reduction of the tax rate for loan agreements and the introduction of collective PCC-3 declarations are noteworthy.
HERE you can download our Alert No. 5/2019 (Polish version).
04.01.2019 Changes in PIT as of 1 January 2019
In our latest Alert No. 4/2019 we present the most important changes in personal income tax law (PIT) effective as of 1 January 2019.
We would like to pay your attention to:
the modified taxation rules for the sale of real estate acquired through inheritance,
new housing relief regulations,
new rules related to the initial completion of tax returns by tax authorities.
Most changes in PIT are correlated with similar changes in CIT (see Alerts No. 1/2019, 2/2019 and 3/2019).
Due to a significant number of tax changes that came into force this year, the new regulations in PIT have been mainly signaled by us, without detailed commentary.
Alert no. 4/2019 (Polish version), devoted to changes in PIT, can be downloaded HERE
03.01.2019 New WHT ordinances effective as of 1 January 1 2019
On 31 December 2018, the Ministry of Finance (MF) published a number of ordinances regarding WHT.
Below there is a brief commentary on the new regulations.
Until the end of June 2019, the Ministry of Finance postponed entry into force the obligation to collect WHT for payments exceeding PLN 2 million (suspension of applicability of Article 26 (2e) of theCIT Act); The deferral applies to a wide range of payments including dividends and other income derived from corporate profit sharing, paid out between domestic Polish entities (more information about obligation to collect WHT is presented in our Alert No. 1/2019 point 4.2).
New ordinances define electronic format of the following documents applicable when filed with the tax authorities:
a statement confirming that withholding agent performed verification procedure and holds all required documents for the purposes of applying the WHT exemption (or a reduced WHT rate), together with confirmation that this statement was submitted by all persons obliged to do so (more on this issue we present in our Alert No. 1/2019 item 5);
an application to obtain tax office’s opinion, based on which certain types of payments made between related parties benefit from WHT exemption (more on this issue in Alert No. 1/2019 item 6);
an application for a WHT refund to be submitted to tax office in cases where this tax was collected by the withholding agent at domestic statutory rates, i.e. without direct application of double taxation treaties nor national provisions providing for a WHT exemption (we discussed this in detail in Alert No. 1/2019 item 8 );
Below there are links to MF regulations (in Polish):
31.12.2018 Other CIT changes effective as of 1 January 2019
As of 1 January 2019, in addition to changes in WHT and transfer pricing provisions, other significant changes in corporate income tax regulations will enter into force.
We would like to draw your attention to new regulations regarding recognition of costs associated with the use of cars, the IP Box tax benefits and new rules for settling tax losses. All the changes in the corporate income tax that we considered significant were described in our Alert No. 3/2019.
HERE you can download the Polish version of extended information in pdf format.
27.12.2018 Changes in transfer pricing regulations effective as of 1 January 2019
On 1 January 2019, new regulations will come into force regarding transfer pricing documentation.
As a matter of principle, the legislator seeks to reduce administrative obligations for entities which were previously obliged to prepare such documentation due to exceeding defined level of turnover. However, as of the new year some entities, that until now were not required to prepare documentation, may be subject to this obligation. The new regulations make the obligation to prepare documentation (together with required benchmark studies) dependent only on the value of a transaction, i.e. without taking into account the turnover of the taxpayer for the previous reporting year.
The new transaction limits are generally, higher than those applicable to 2018, which is one of the main factors reducing workload to be involved in preparing documentation. Another important limitation apply to transactions concluded between domestic entities. Such transactions will not be documented at all provided that certain conditions are met.
Additionally, we would like to point out that transfer pricing documentation for 2018 may be prepared either under current regulations or under new regulations.
Before making a decision in this respect, it is worth assessing which of the options will be more favorable.
A detailed commentary on the new legislation can be found in our Alert No. 2/2019.
HERE you can download Alert No. 2/2019 in pdf (Polish version).
27.12.2018 Changes in WHT regulations effective as of 1 January 2019