SLIM VAT in Poland – package of new solutions in Polish VAT
As of 1 January 2021, the so-called SLIM VAT package amending the provisions of the VAT Act entered into force. Even though the Ministry of Finance has announced that these provisions include solutions simplifying VAT settlements as “simple, local and modern”, some of these changes can hardly be regarded as simplifications, and might raise doubts related to VAT settlements. Recently, the Ministry of Finance has also prepared a draft clarification of these regulations, but not everything is clarified, and taxpayers are waiting for the final version of these clarification, which hopefully will eliminate their doubts.
Below, we summarize the main changes proposed as part of the SLIM VAT package.
SLIM VAT – simplification or new obligations for the taxpayers?
Correcting invoices – the most problematic changes
SLIM VAT introduced the rules under which taxpayers - supplier of goods / service - can reduce their VAT base without waiting for confirmation that the purchaser received the corrective invoice. In accordance with the new regulations, the taxpayer can reduce the VAT base in the period in which the taxpayer issued a correcting invoice, but provided that the taxpayer possesses documentation which confirms that the taxpayer agreed with the purchaser on the conditions for decreasing the VAT.
On the other hand, the purchaser is obliged to reduce the amount of input VAT in the tax settlement period in which the conditions of reducing the VAT base were agreed / fulfilled. This means that the purchaser without a correcting invoice, provided that the conditions agreed have been met, must reduce the input VAT. Thus, the purchaser must control the agreed factors in order to account for the VAT correctly. As a result, the regulations of the SLIM VAT package do not facilitate VAT settlements as announced by the Ministry of Finance, but introduce many doubts and new duties for taxpayers at the beginning of the new year.
- Extending the deadline for input VAT deduction from three to four months – which means that taxpayers might deduct input VAT in the month in which they receive an invoice and the three following months without having to correct previous VAT returns.
- Introducing the possibility of choosing the rules on converting the VAT tax base expressed in a foreign currency into PLN for the purposes of VAT settlements in accordance with rules on converting income resulting from the provisions on income tax, but not vice versa, i.e. taxpayers cannot use rules from VAT to convert the tax base in the income tax expressed in a foreign currency.
- Extending the deadline from two to six months for applying 0% VAT rate for advance payments in case of export of goods.
- Introducing the possibility of VAT deduction from the invoices related to accommodation services for resale.
- Introducing the limitation of validity of the Binding Rate Information for five years from the date of its issue.
- The limit of undocumented so-called gifts of small value is increased from PLN 10 to PLN 20.