VAT changes proposed in the New Deal

In the draft amendments to the tax laws called the "Polish Deal" adopted on October 29, 2021 by the Sejm and the Senate, the following changes in the field of VAT were proposed, which will come into force on January 1, 2022:

Establishment of a VAT Group

From January 1, 2022, a VAT group will be able to be created by taxpayers related financially, economically and organizationally:

  1. established in the territory of the country or
  2. not established in the territory of the country to the extent that they conduct business activity in the territory of the country through a branch located in the territory of the country.

The criterion of financial linkage will be met if one of the taxpayers being a member of the VAT group holds directly over 50% of the share capital of the other taxpayers who are members of this group.

The economic linkage criterion will be met if:

  1. the main activity of members of the VAT group is of the same nature or
  2. the types of activity carried out by members of the VAT group are complementary and interdependent, or
  3. a member of the VAT group carries out activities which are wholly or largely used by other members of the VAT group.

The organizational linkage criterion will be considered fulfilled if:

  1. legally or in fact, directly or indirectly, are under joint management, or
  2. organize their activities wholly or partially in agreement.

The conditions for the existence of financial, economic and organizational ties between members of a VAT group will have to be met continuously for the period in which this group has the status of a taxpayer.

The VAT group will acquire the status of a VAT taxpayer on the date specified in the contract for the establishment of the VAT group, but not earlier than on the date of formal registration.

Importantly, the entity will be able to be a member of only one VAT group, and the VAT group will not be able to be a member of another VAT group.

The creation of a VAT group means that the supplies of goods and the provision of services by entities belonging to this group will not constitute activities subject to VAT.

Option to tax financial services

From 1 January 2022, a taxpayer will be able to choose VAT on the financial services he provides. The proposed amendment is based on the German model with the option to tax financial services provided exclusively to taxpayers. Financial services provided to retail clients (non-taxable natural persons) will continue to be obligatorily exempt from tax.

According to the draft amendment, the taxpayer will be able to resign from the VAT exemption referred to in Art. 43 sec. 1 point 7, 12, 38-41 of the Polish VAT Act, provided to taxpayers, and choose their taxation, provided that:

  1. is registered as an active VAT taxpayer;
  2. submits to the head of the tax office a written notification of the choice of taxation of these services before the beginning of the accounting period from which he resigns from the exemption.

Fast VAT refund for the so-called cashless taxpayers

From January 1, 2022, a tax preference will be introduced, consisting of VAT refunds within 15 days from the date on which the deadline for submitting the declaration / correction of the declaration has expired. The indicated tax preference for a fast VAT refund would apply to taxpayers meeting jointly the criteria of:

  • high share (minimum 80%) of total recorded sales using online / virtual cash registers that enable connection and data transfer between the cash register and the Central Repository of Cash registers
  • high share (minimum 80%) of received payments made with the use of payment instruments, including the use of the credit transfer service
  • the amount of the total recorded sales value using online / virtual cash registers, which for the next 12 months directly preceding the period for which the taxpayer applies for a refund in the settlement should not be less than PLN 50,000.

The taxpayer should meet the above conditions for three consecutive accounting periods, and in the case of a taxpayer with quarterly settlement for one tax period, directly preceding the period for which the taxpayer applies for a refund.

Changes to the WIS

According to the proposed amendment, the Director of the National Tax Information will refuse to issue the Binding Rate Information (WIS) if the scope of the application for the issuance of the WIS, on the date of submission of the application, is the subject of the concluded investment agreement.

The investment agreement (PI) is a new institution to be introduced into the Tax Ordinance, in the form of an agreement between the investor and the tax authority regarding the tax consequences of the planned investment in Poland.