2020 brings many significant changes for taxpayers and we summarize some of the more important ones below.
1.Postponement of the new WHT regime
The Ministry of Finance (“MF”) has once again postponed the introduction of the mandatory withholding tax (“WHT”) regime applicable to payments exceeding PLN 2 million in the year made to the same counterparty. This regime will now fully enter into force on 1 July 2020. It is worth noting, however, that already starting from 1 January 2019 a modified definition of beneficial owner for the purposes of WHT took effect and tax remitters are obliged to exercise due diligence before applying reduced WHT rates or a WHT exemption.
Furthermore, the PLN 2 million threshold for annual payments subject to WHT will be calculated from 1 January 2020 even though the new regime takes full effect only from 1 July 2020.
2. So-called “Quick Fixes” related to cross-border trade
Poland was required to implement into local law the EU directive regulating the so-called Quick Fixes Package by 31 December 2019, however, this did not happen. On 23 December 2019, the MF published a statement postponing the implementation of these rules.
For the Polish text please see the page.
Nonetheless, the MF’s statement is not binding for the tax authorities and has no protective power for taxpayers. In the MF’s opinion taxpayers are entitled to either apply the VAT Act or to apply directly the European Council Directive, provided that provisions of the Directive are unconditional and sufficiently precise.
3. Ministry of Finance explanations regarding the so-called White List register of taxpayers
As of 1 January 2020, penalties will be imposed on taxpayers who make payments onto a bank account which is not included in the so-called White List register of taxpayers’ bank accounts if the payment exceeds PLN 15,000 gross and the invoice issuer is an active VAT taxpayer. Payments made to an unregistered bank account will trigger negative tax consequences for the payer. Specifically, such payments will not be deductible for CIT or PIT purposes. The payer will also bear joint and several liabilities together with the recipient of the payment for any VAT arising on the payment.
On 20 December 2019 the MF published explanations related to these regulations. To read the Polish text please go to a website.
Unfortunately, these explanations do not clarify some important questions, for example, (i) what procedures apply to the settlement of factoring transactions where a foreign entity participates as a factor or (ii) whether it is possible to submit a single notification to report to the tax authorities payments made to an unregistered bank account.
4. Ministry of Finance explanations regarding the split-payment mechanism
As of 1 January 2020, CIT and PIT penalties were introduced for payments made to VAT taxpayers for invoices documenting the delivery of goods or services specified in Annex 15 of the VAT Act whose gross value exceeds PLN 15,000. These penalties concern payments which are made without applying the split-payment mechanism.
On 23 December 2019 the MF published explanations regarding the application of the mandatory split-payment mechanism. For the Polish text please see the website. Unfortunately, these explanations also leave some unanswered questions; for example, relating to the technical aspects of payments made at points of sale where the use of credit cards is excluded.
The obligatory split-payment mechanism is a particular challenge for the construction industry. Both contractors and sub-contractors are obliged to analyze whether a given service is subject to the mechanism. We recommend verifying the impact of the new regulations on cash-flow and calculating the additional burdens required to meet financial obligations towards the tax authorities and contractors.
5. Purchaser’s NIP number must be added to receipts
From 1 January 2020 in the case of sales required to be registered on a fiscal cash register and confirmed by a receipt, an invoice may be issued to a VAT taxpayer only if the receipt contains the recipient’s VAT identification number. In practice, this means that the seller must record the purchaser’s tax identification number or NIP number, as it is known in Polish.
The issuance of an invoice based on a receipt which does not include the purchaser’s tax number will trigger a penalty amounting to 100% of the VAT due as indicated on the invoice. The same penalty is imposed on any taxpayer who includes such an invoice in its sales register.
6. Taxpayer’s individual tax account
From 1 January 2020 payments of PIT, CIT and VAT (except tax cards, VAT-14 and import VAT) must be made onto a tax account permanently assigned to an individual taxpayer; a so-called micro-account. Please note that PIT, CIT and VAT liabilities for December 2019 must also be paid onto the micro-account.
The micro-account number can be verified or generated via any IT device, such as a computer or smartphone, at any time using the internet generator provided on the MF’s website at the following address.
7. Mandatory online cash registers
From 1 January 2020, the obligation to use online cash registers applies to taxpayers who:
• provide repair services of motor vehicles, including tire repairs, their fitting, retreading and regeneration and services of changing tires and wheels for motor vehicles and mopeds,
• sell motor gasoline, diesel oil and gas for internal combustion engines.
If you have questions, please contact one of ASB Tax specialists: