Important changes to VAT from 1 April 2020

Jan. 31, 2020 Poland

Liquidation of VAT return forms and introduction of new JPK_VAT (SAF-T) Starting from the VAT settlement for April 2020, large companies will be obliged to replace the traditional VAT-7 return form with a new JPK_VAT (SAF-T; so-called “VDEK”). For other taxpayers, this obligation will apply from the VAT settlement for July 2020. The new regulations do not eliminate VAT tax returns, however, they significantly modify the rules of their preparation and submission. In effect, the rules regulating monthly JPK_VAT submissions will change.

What exactly will change?

Instead of submitting JPK_VAT and VAT returns (VAT-7 or VAT-7K), taxpayers will submit a new, extended, JPK_VAT containing data from both documents. This will be one document, covering either a monthly or quarterly settlement period, without most of the attachments that were required when submitting traditional VAT-7 or VAT-7K returns. However, due to EU regulations, recapitulative statements, that is, VAT-UE and VAT-UEK, will still need to be submitted as a separate document.

The new JPK_VAT (VDEK) will require taxpayers to provide important additional data. For various types of sale transactions, there will be a new requirement to designate transactions into so-called product groups or document types, for example:

For the supply of goods:
• waste exclusively specified in items 79-91 of Annex 15 to the VAT Act acquires the designation "05”;
• buildings, structures, and lands acquire the designation „10”.

For the provision of services:
• intangible services, such as consulting and accounting, management, training, and head offices services, acquire the designation „12”.

Other additional designations include, for example:
• intra-community distance selling from Poland which acquires the designation „SW”;
• sales transactions with related companies which acquire the designation „TP”;
• transactions covered by the obligatory split-payment mechanism acquire the designation „MPP”.

Moreover, the new JPK_VAT will also need to contain some other proofs of sale, for example:
• internal summary documents covering sales registered via fiscal cash registers will acquire the designation „RO”;
• internal documents „WEW” which confirm, for example, the free of charge disposal of goods.

The scope of data allowing for correct input tax settlements will also change, however, to a lesser extent. For example, there will be a need for additional designations for transactions covered by the obligatory split-payment mechanism.

Consequences for taxpayers of non-compliance

In the case where taxpayers submit VAT records containing errors or inaccurate data, a fine of up to PLN 500 may be imposed by the tax office for each mistake. To avoid such penalties taxpayers will need to bring their accounting, financial and IT systems into line with the new regulations. They should also periodically monitor and analyse the correctness of the new designations of different business transactions.

Preparing for the changes and ASB assistance

At this stage, it is necessary to undertake an analysis of the types of transactions which your business performs in order to assign to them the required designations according to the new JPK_VAT scheme.

To avoid errors, and the resulting financial penalties, on request ASB’s tax and IT teams can provide support to help you to adapt your IT systems and procedures to the upcoming changes. In particular, ASB offers assistance in three stages:

Stage 1 – performing a tax review during which we will:
• establish the type of company (large-, medium-, small- or micro-entrepreneur) to determine the month of commencing reporting under the new VAT regulations,
• analyse accounting documents to determine the types of transactions reported by your business (divided into groups) for VAT purposes;

Stage 2 - tax and IT support in the technical implementation of the new reporting requirements into your accounting system if it has such functionality, or through an appropriate external application;

Stage 3 - creating individualized procedures to identify and correct any errors that may occur during reporting VAT settlements under the new scheme.

If you have questions, please contact one of ASB Tax specialists:

Anna Szafraniec

CEE VAT Compliance Manager

Jarosław Szajkowski
Project Manager - Tax Adviser

Łukasz Woźniak
Senior Tax Consultant

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