On 19 August, the President signed the Act of 11 August 2021 amending the Act on the tax on goods and services and the Banking Law, i.e. the so-called SLIM VAT 2 package. This Act contains a number of changes to organize and improve the system tax, as well as implementing the rulings of the Court of Justice of the European Union. Most of the provisions enter into force on 1 October 2021.
We present an overview of the amendments to the VAT Act along with an indication of their nature and impact on the taxpayer's activity.
Scope of territories considered to be within the EU
Description of a change
The change is the result of Brexit. The territories of the United Kingdom of Great Britain and Northern Ireland have been deleted from the scope of the EU Member States: the Isle of Man, the Channel Islands, Gibraltar. In addition, the amendment takes into account the IE/NI Protocol added to the Agreement on the withdrawal of the United Kingdom from the Union, which regulates the special status of Northern Ireland. According to it, from 1 January 2021, during the transition period, Northern Ireland is treated for VAT purposes as an EU Member State.
Nature of the change
Ordering – The IE/NI Protocol is directly applicable throughout the EU and does not require national legislative action.
Place of delivery of goods in chain transactions
Description of a change
In chain transactions, there are doubts as to which entity in the supply chain should be assigned the shipment or transport of goods, i.e. the so-called mobile delivery. This issue is important for determining the place of supply for the other transactions in the chain and, consequently, their taxation in the relevant country. It should be pointed out that transactions carried out before a movable supply are taxed in the country from which it is carried out. On the other hand, all transactions following a movable supply will be taxed in the Country of destination of the goods. The movable delivery itself is treated as export or WDT on the supplier's side and import or WNT on the buyer's side.
The SLIM VAT 2 package clearly determines that the above-mentioned movable delivery is attributed to the first supplier in the event that he organizes the shipment or transport. The same applies to the last buyer when it is he who arranges the shipment or transport.
Nature of the change
Clarifying – the change confirms the current practice.
Settlement of in minus adjustments in international trade
Description of a change
The change applies to the moment of adjusting the tax base for the import of services, WNT and the supply of goods for which the taxable person is their buyer. Until now, there were no provisions that would regulate the moment of settlement of such an adjustment. However, it was the accepted practice to settle it in the period depending on the reason for the correction. The change confirms this practice.
As a consequence of the amendment, if the adjustment reducing the tax base results from the following reasons:
existing at the time of the transaction (e.g. wrong quantity) – the adjustment should be accounted for for for the period during which the original transaction was cleared (retrospective adjustment);
after the transaction (e.g. granting a discount) – the adjustment must be settled on a regular basis, i.e. the month in which the adjustment was due.
In case of post-trade reasons, the practice was to make an adjustment after receiving the correction invoice. As a result of the amendment of the rules, the correction should be made after the reason for the amendment has come to light.
In addition, the legislator harmonized the tax reduction period calculated with the period during which the tax base adjustment was accounted for. This means that if an adjustment is made during a given period, the taxable person should reduce the input tax during the same period.
Nature of the change
Clarifying – the change confirms the current practice.
Settlement of imports in the simplified procedure
Description of a change
Under the simplified procedure for importing goods, when certain conditions are met, the tax-payer may account for the amount of tax due on importation in a declaration made in respect of the period during which the tax obligation on such imports was incurred.
Until now, the principle was that in the event of an incorrect settlement of the tax due on importation, the tax-payer loses the right to account for that tax. In this respect, the loss of the right concerns an improperly cleared tax resulting from a specific customs declaration.
The legislator introduced an facilitation for taxpayers by introducing the possibility of correcting a declaration in which the import tax was incorrectly decleared. This adjustment may be made within 4 months of the month following one in which the import tax obligation was incurred. However, the loss of the right to settle the tax will only take place after the end of these 4 months.
Nature of the change
Simplifying – extending the deadline for the taxpayer. It entered into force on 7 September 2021
A new form of resignation from VAT exemption for delivery of real estate
Description of a change
The supply of buildings, structures or parts of buildings is in principle exempt from VAT However, tax-payer carrying out such transactions may, in certain cases, opt for taxing this supply on account of the possibility of deducting VAT charged on goods or services purchased for the purpose of acquiring real-estate.
To date, the only permissible form of waiving the exemption was the declaration made before the date of delivery to the US semi-trailer competent for the buyer. The legislator, when introducing the SLIM VAT 2, allowed a second form – a notarial declaration that is concluded in connection with the delivery (e.g. a sales contract). Due to the amendment of the rules, no additional declaration is required to be sent to the tax authority.
Nature of the change
Simplifying – a new option for a tax-payer who gives up the exemption.
Waiver of the additional condition for deducting VAT (WNT)
Description of a change
The change applies to the condition which should be met in order to deduct input VAT during the same period in which the VAT due under the WNT is recorded. The VAT Act introduced two conditions which must be fulfilled in order to deduct input tax:
firstly, the tax-payer should receive an invoice documenting the transaction constituting the WNT within 3 months of the end of the month in which the tax liability was incurred,
secondly, the tax-payer should account for the VAT due under the WNT within 3 months of the end of the month in which the tax liability was incurred.
If these conditions are not met, the charged tax should be settled on a regular basis. However, the Court of Justice of the European Union considered that condition 2 is incompatible with Union Law as regards the adoption of a three-month period within which the tax-payer is obliged to settle the VAT due under the WNT. As a consequence of the judgment, the legislator has given up the 3-month deadline for condition 2.
It should be stressed that condition 1 remains unchanged at WNT. So far, if the tax-payer has received an invoice after the 3-month deadline but fulfilled condition 2, he may deduct the VAT charged during the period during which he received the invoice. In order to comply with the TSUE judgment, it was settled that, after the VAT due in the tax return (condition no 2 without a 3-month deadline) has been cleared and the invoice has been received after the deadline, the tax-payer may deduct VAT during the same period during which he showed the VAT due.
Due to the TSEU judgment, the condition of deducting VAT from service imports, supplying goods for which the tax-payer is the purchaser and WNT within his own company has been similarly revised (the 3-month deadline for settling the VAT due has been removed).
As a consequence of the change made, the right to deduct VAT will arise during the period in which the tax liability was established provided that the tax-payer shows the VAT due in the tax return. The invoice must also be received at the WNT in appropriate time.
Nature of the change
Implementing the TSEU judgment of 18 March 2021 in Case C-895/19. It valided in law on 7 September 2021
Extension of the deadline for deducting VAT by correcting the return
Description of a change
As from 1 January 2021 (the "SLIM VAT 1"), the deduction of VAT was introduced in a declaration made for one of the following 3 months (or the following 2 quarters) if the tax-payer did not make the deduction within the time limits set by the Act. However, in the case of deduction of VAT by way of correction of the return, it was still possible to do so only for the period in which the right to deduct arose.
The SLIM VAT 2 package expands the taxpayer's possibilities in this respect. The possibility of deducting VAT on the basis of correction of the declaration for one of the next 3 months (or 2 subsequent quarters) has been introduced.
The amendment therefore includes an extension of the deadline for deducting VAT by correcting the return. The new rules apply provided that the right to deduct arose after 30 September 2021.
Nature of the change
Simplifying – extending the deadlines for the taxpayer.
Deadline for submitting VAT - 26 is elongated
Description of a change
Taxpayers have the right to deduct 100% of the input tax on expenses incurred on motor vehicles used exclusively for business activities, if they submit information about these vehicles to the head of the tax office (VAT-26 form). The previous deadline for submitting it was 7 days from the date on which the first expense related to the vehicle was incurred.
The SLIM VAT 2 package extends this deadline to the 25th day of the month following the month of incurring the first expense related to the vehicle. However, this date may not be later than the date of sending the JPK_VAT7 (JPK_VAT7K).
If the taxpayer does not submit VAT-26 within the deadline, the information has effects from the first day of the month in which the information was submitted (so far it was the date of submitting the information).
The information shall be updated at the latest by the end of the month in which the vehicle is repurposed. Until now, the update had to be made at the latest before the date of the change.
Nature of the change
Upraszczająca – wydłużenie terminów dla podatnika.
Waiver of certain conditions for the application of bad debts exemption
Description of a change
As a result of the CJEU's examination of the compatibility of the provisions on relief for bad debts with EU law, it was necessary to resign from several conditions for applying the relief. The following have been abandoned:
the condition that the debtor has the status of an active VAT payer - both on the day of supply of goods or services and on the day preceding the submission of the return in which the relief is to be applied,
the condition that the debtor does not leave during restructuring, bankruptcy or liquidation proceedings.
In connection with the waiver of condition 1, it has been possible to apply the relief to claims against exempt VAT payers and consumers, however, in such a situation it is necessary that:
the claim has been confirmed by a final court decision and directed to enforcement proceedings,
the claim has been entered in the debt register,
consumer bankruptcy was declared against the debtor.
The waiver of condition 2 was also reflected in the purchaser's obligation to apply the tax adjustment. If the claim remains unpaid and the debtor, for example, is in the process of restructuring, he will have to reduce the input tax on the transaction for which he did not pay.
In addition, the current condition for applying the relief was modified, according to which 2 years could not have elapsed from the date of issue of the invoice documenting the claim, counting from the end of the year in which it was issued. This deadline has been extended to 3 years. Thanks to this, it is consistent with the limitation period for claims from business activity, indicated in the Civil Code.
Nature of the change
Implementing the judgment of the CJEU of 15 October 2020 in case C-335/19, but also introducing new and changing the existing conditions for applying the relief.
Changes to VAT accounts
Description of a change
One of the conditions for releasing funds from the VAT account by the head of the Tax Office is the lack of tax arrears. The SLIM VAT 2 package clarifies that this condition does not apply if these arrears have been deferred or spread into installments on the basis of a decision of the authority.
In addition, it was possible to apply to the head of the Tax Office with a request to release funds from the technical account, which is created by the bank after closing the VAT account and to which the funds remaining on the VAT account are transferred.
The tax authority shall issue a decision on the application within 60 days of its receipt. The possibility of consolidating funds accumulated on all VAT accounts has also been introduced. Until now, such a possibility existed only within one bank.
From 1 January 2022, the types of receivables that can be paid from the VAT account are to be expanded. Contributions to KRUS and farmers' health insurance have been added to the current catalogue.
Nature of the change
Clarifying and simplifying – new opportunities for taxpayers.
Clarification of the scope of sensitive goods covered by the PKWiU 2015 code:26.20.1
Description of a change
PKWiU 2015 code: 26.20.1 includes computers and other machines for automatic data processing. Currently, however, devices other than computers and other machines for automatic data processing (e.g. monitors) are excluded from this scope. The SLIM VAT 2 package eliminates this narrowing. The change affects the obligation to pay by means of the split payment mechanism.
Nature of the change
Clarifying but extending the obligations of the taxable person code: 26.20.1