Poland: Amendments to VAT Act

Aug. 21, 2019 Poland

The Parliament recently adopted several important amendments to the VAT Act. The most important change is the new VAT rates classification that will come into force from 1 April 2020.

The Combined Nomenclature (CN) will replace the Polish Classification of Goods and Services (PKWiU) in respect to the classification of goods for VAT rates purposes. However, for services the PKWiU will still be valid. We set out below some key changes:

  • Effective from 1 November 2019, VAT rates for E-books and E-magazines will reduce from the current rate of 23% to 5% and 8% respectively.
  • The rates for many goods currently benefitting from reduced rates will be increased to the standard 23% rate. After 1 April 2020 this may create the obligation for the seller to change the invoicing procedures and adjust prices. The application of incorrect VAT rates may lead to additional tax obligations.
  • Some products that are currently subject to the standard rate may benefit from a reduced rate. For buyers this may create the need to review and potentially correct VAT rates on purchase invoices to ensure that input VAT is settled correctly. For sellers, however, this could mean an opportunity to reduce prices and increase margins.

From 1 November 2019 taxpayers will be able to apply for Binding Rate Information (BRI) which is a new instrument which allows taxpayers to ask the tax authorities to formally confirm that the VAT rate which they are applying is correct. In the case of tax disputes, the BRI will be binding for the tax authorities.

The Parliament also finally accepted the mandatory split payment mechanism on transactions involving any of 150 goods and services listed in the act (for further information see the article here). From 1 November 2019 this mandatory split payment will apply to transactions exceeding PLN 15 000. Non-compliance with the new rules such as making payments without using the split payment or issuing an invoice without the statement “split payment mechanism” (in Polish “mechanizm podzielonej płatności”) may lead to a penalty.

How ASB can help you?

The above changes will require action from businesses to ensure compliance and avoid penalties. The ASB team will be happy to help by reviewing your currently applied VAT rates under the new rules. On request and if appropriate ASB can prepare an application for Binding Rate Information. We can also advise whether your business is subject to the mandatory split payment.

If you have questions, please contact our specialists:

Matthew O`Shaughnessy
Head of Tax
E: moshaughnessy@asbgroup.eu

Łukasz Bączyk
Tax Director
E: lbaczyk@asbgroup.eu

Jarosław Szajkowski
Project Manager
E: jszajkowski@asbgroup.eu

Photo: AbsolutVision