1. New rules for issuing an invoice on the basis of a receipt
Starting from the new year, in the case of a sale documented by a receipt, the vendor can only issue an invoice to the acquirer if the underlying receipt features the acquirer’s taxpayer identification number (NIP). If a sale is documented by a receipt, the vendor is required to issue an invoice to the acquirer upon request:
- with the acquirer’s VAT number – if the acquirer’s NIP number is indicated on the receipt; or
- without the acquirer’s VAT number – if the acquirer is an individual; in this case, the invoice does not contain the acquirer’s NIP number and the acquirer is not entitled to deduct input VAT.
The new amendment restricting the vendor’s ability to issue invoices on the basis of a receipt recording the sale does not apply to taxi services, except for renting a passenger car with a driver.
The new law also sets out certain sanctions for vendors issuing invoices with the acquirer’s NIP number in order to record a sale documented by a receipt without the acquirer’s NIP number. Sanctions are also imposed on acquirers who then record such invoices in their VAT ledger. For taxpayers other than individuals, the tax authorities can impose a fine of up to 100% of the amount of tax indicated on the invoice issued for a sale documented by a receipt without the acquirer’s NIP number. For the same breach, individuals are liable to a fine or prosecution for a tax offence.
The new rules on issuing an invoice on the basis of a receipt apply from 1 January 2020 for sales recorded using a fiscal cash register after 31 December 2019.
2. Loss of the right to file quarterly returns
Starting from the new year, taxpayers who supply the goods or services listed in Annex No 15 to the VAT Act (covered by mandatory split payment) may be required to file monthly VAT-7 returns. This means that the list of taxpayers who may lose their right to file quarterly settlements, despite having the status of a small enterprise, has been made even longer.
This amendment applies to taxpayers who, in a given quarter, or in the four preceding quarters, supplied the goods or services listed in Annex No 15 to the VAT Act. A taxpayer would not lose the right to file quarterly settlements if the total net value of transactions covered by Annex No 15 to the VAT Act does not exceed PLN 50,000 in any month in these periods.
Although this amendment has been in effect since 1 November 2019, taxpayers who were not eligible to file quarterly settlements on that date will be required to file monthly returns from January 2020.
On the other hand, a taxpayer would not lose its right to file quarterly settlements if it supplies the goods listed in item 92 of Annex No 15 to the VAT Act (fuel), irrespective of value, and is made:
- at a petrol station or liquefied petroleum gas (LPG) station to a standard vehicle tank; or
- by a supplier of piped natural gas through its own transmission or distribution networks.
From January 2020, a taxpayer who has lost the right to file quarterly returns is required to file a VAT-R update return in which it ticks a box in item 50, enters “January” in item 56, and in item 57 – enters “year 2020”. The deadline for updating return submissions is 8 January 2020, since in this case the applicable law does not specify any special deadline requirements.
3. Purchase of goods under the call-off stock procedure
From 1 January 2020, the provisions implementing Council Directive (EU) 2018/1910 of 4 December 2018 amending Directive 2006/112/EC as regards the harmonisation and simplification of certain rules in the value added tax system for the taxation of trade between Member States to Polish law should come into effect.
Unfortunately, as of this day, the implementing bill had not been passed.
According to the bill, which currently remains at the legislative stage, an EU taxpayer who supplies its own goods to Poland under the call-off stock arrangements does not recognise intra-Community acquisitions of goods where:
- goods are dispatched or transported by a payer of VAT, or by a third party on its behalf, from a Member State to Poland, with a view to those goods being supplied at a later stage to another payer of VAT who is entitled to dispose of the goods as the owner (the “acquirer”) in accordance with an existing agreement between both taxable entities;
- the payer of VAT dispatching or transporting the goods has not established a business in Poland, and does not have a fixed establishment there;
- the acquirer is registered as a payer of EU VAT, and both its name or business name as well as its NIP number preceded with the PL code are known to the taxable person to which the goods are dispatched or transported, at the time when the dispatch or transport begins;
- the payer of VAT dispatching or transporting the goods records the transfer of the goods in a dedicated ledger, and discloses the EU VAT number of the Polish taxpayer in the recapitulative statement.
The Polish taxpayer recognises VAT on intra-Community supplies, whereas an intra-Community acquisition of goods is deemed to take place at the time of transferring the right to dispose of the goods as the owner to the acquirer, provided that the transfer is made within 12 months after the arrival of the goods to the warehouse as call-off stock.
If a Polish taxpayer transfers goods to another EU Member State under the call-off stock procedure, it will not recognise the intra-Community acquisition of goods in Poland after meeting the statutory conditions. First of all, the right to dispose of the goods as owner to an EU acquirer must be transferred within 12 months after the arrival of the goods in a warehouse in another EU Member State.
Because of not implementing the bill so far, there is an opportunity to choose the provisions of the Directive or the current bill.
4. Intra-Community supply of goods in 2020
From 2020, the conditions for applying exemptions with respect to intra-Community supplies of goods has been amended. This reform results from the obligation to implement Council Directive (EU) 2018/1910 of 4 December 2018. Under this amendment, the current formal prerequisites for applying the zero rate for intra-Community supplies of goods become material prerequisites. Starting from this year, the conditions for applying the zero rate for intra-Community supplies of goods include:
- the EU acquirer holding a valid VAT identification number and disclosing it to the supplier;
- the submission of a recapitulative statement containing the correct disclosure of a given intra-Community supply of goods, unless the supplier can duly justify his deficiency to the satisfaction of the relevant authorities.
These prerequisites were reflected in the planned amendments to Article 42 of the VAT Act, which Poland was required to implement by the end of previous year. From the justification to the draft amendment, it appears that explanations for irregularities in a recapitulative statement may specifically include circumstances where the supplier:
- disclosed an incorrect period of the intra-Community supply of goods in the recapitulative statement;
- made an unintended error with respect to the value of a disclosed supply; and
- accidentally provided an old tax identification number for the acquirer, where the existing number has been changed, for example, as a result of the restructuring of the company.
In addition to the modified conditions for applying an exemption for intra-Community supplies from VAT, there are also amendments involving the evidence required in order to apply the exemption (the zero rate) to intra-Community supplies of goods.
The provisions introduce the presumption that the goods subject to intra-Community supply were transferred from one Member State to another Member State. If the tax authority believes otherwise, it would be required to present evidence showing that the goods were not dispatched or transported from one Member State to the territory of another Member State.
The presumption applies, provided that the vendor is in possession of:
- at least two non-contradictory documents listed in Group A, issued by two different parties that are independent of each other, of the vendor and of the acquirer (such as a CMR and an invoice from the carrier of the goods); or
- any single evidence from Group A, together with any single item of non-contradictory evidence of Group B, confirming the dispatch or transport, issued by two different parties that are independent of each other, of the vendor and of the acquirer (such as for example a CMR and an insurance policy).
Where the goods were transported by the acquirer or a third party on its behalf, the vendor must additionally have a written statement from the acquirer, stating that the goods have been dispatched or transported on the territory of another Member State. The statement must provide: the name and address of the acquirer; the quantity and nature of the goods; the date and place of the arrival of the goods; in the case of supplying means of transport, the identification number of the means of transport; and the identification of the individual accepting the goods on behalf of the acquirer.
- a signed CMR document;
- a bill of lading;
- an airfreight invoice; or
- an invoice from the carrier of the goods.
- an insurance policy with regard to the dispatch or transport of the goods or bank documents proving payment for the dispatch or transport of the goods;
- official documents issued by a public authority, such as a notary, confirming the arrival of the goods in the Member State of destination; or
- a receipt issued by a warehouse keeper in the Member State of destination, confirming the storage of the goods in that Member State.
5. Services that must be registered using on-line cash registers
Starting from 1 January 2020, sales have to be registered using an on-line cash register by providers of the following services:
- the repair of motor vehicles and mopeds, including tyre repair, fitting, retreading and regeneration, as well as replacing tyres or wheels for motor vehicles and mopeds; and
- sales of petrol, diesel fuel and gas for combustion engines.
Earlier, the tax relief on the purchase of registers was only available when purchasing online registers. Therefore, taxpayers did not take advantage of tax relief when purchasing registers with copies recorded on paper, or with copies recorded electronically.
Taxpayers who were not required to record sales and who started to record sales using the cash registers referred to in section 6a of the VAT Act, as well as those who have not been using cash registers or the registers referred to in Article 145a section 1 of the VAT Act to record their sales, are entitled to deduct from input tax 90% of the net purchase price of a cash register, up to PLN 700. If that amount is higher than the output tax in a given settlement period, they are entitled to a refund of the resulting difference to the taxpayer’s bank account at a bank with its registered office in the country, or to the taxpayer’s account kept with a cooperative savings and credit union of which it is a member, or to deduct the output tax in subsequent settlement periods. The above tax relief is available provided that the cash register was purchased within six months of the date on which sales are first recorded.
In the context of these regulations, taxpayers providing services involving the repair of motor vehicles and mopeds, as well as taxpayers selling petrol, diesel fuel and gas for combustion engines, may obtain a refund of up to PLN 700 when purchasing an online cash register.
1. A wider catalogue of non-tax-deductible expenses depending on how the payment was made
On 1 January 2020, the PIT Act and the CIT Act introduced a wider list of expenses that cannot be deducted, depending on how they have been paid for. In practice, this novelty is an adjustment of two amendments in tax law that were announced in 2019.
The first of the new situations in which an expense is not tax-deductible is where payment is made to an account on the white list of payers of VAT, which we discussed in our newsletter No 02/2019. Earlier, the white list of VAT payers has been for information purposes only, whereas from the beginning of 2020 it provides a benchmark for applying certain sanctions for deducting non-tax-deductible expenses. A sanction may apply if all four of the following conditions are met: 1) an active VAT payer, being the supplier of goods/ the provider of services, made a payment for the supply of goods/services, confirmed by an invoice; 2) the payment was made by bank transfer to an account not included on the white list of VAT payers on the date on which the transfer was initiated; 3) a given transaction was settled through a bank account; and 4) the taxpayer failed to notify the head of the relevant tax office, within three days from the date of the transfer initiation, that it paid the due amount by bank transfer to an account not included on the white list of VAT payers on the date on which the transfer was initiated.
The second situation applies to taxpayers who do not use the split payment mechanism, which we have described in the 7th and 11th editions of our newsletter. A sanction may apply if the following conditions are all met: the payment concerns a transaction that must be settled through a bank account, the invoice is specifically marked “split payment mechanism” (Polish: “mechanism podzielonej płatności”) but the mechanism was not applied.
Taxpayers to whom such conditions apply are not able to make deductions on their expenses, or are required to reduce their tax deductibles if they have already made such non-deductible expenses.
2. Calculating income earned by intermediaries for transferring funds in the case of making payments to an account not included in the VAT white list
Another sanction was imposed on 1 January 2020, this time affecting anyone making payments to accounts not included in the white list of VAT payers. The sanction applies to taxpayers who intermediate in transferring funds, and means determining the taxable income they earned as result of such intermediation. The sanction may be imposed after all the following conditions are met:
- on the basis of an agreement executed with a supplier of goods/services registered as an active payer of VAT or with an acquirer of goods or services, a taxpayer is required to collect the amounts due from the acquirer of goods or services for the supply of goods or services, confirmed by an invoice;
- the taxpayer has paid the due amounts to an account not included on the white list of VAT payers on the date on which the transfer was initiated;
- the transaction was settled through a bank account; and
- the taxpayer failed to notify the head of the relevant tax office, within three days from the date of the transfer initiation, that it paid the due amount by bank transfer to an account not included on the white list of VAT payers on the date on which the transfer was initiated.
A taxpayer who meets all of these conditions may be sanctioned in the form of income calculated as at the date of initiating the transfer. This income will be calculated in the same amount as a payment made to an account not included on the white list of VAT payers on the date on which the transfer was initiated.
3. Relief from VAT on bad debts for creditors and the duty to increase the taxable base by debtors
To the end of 2019, income from non-agricultural economic activities and income from special branches of agricultural production had also included amounts receivable, i.e. amounts that had not been actually paid, despite being owed to the creditor. This situation changed from 1 January 2020, thanks to a new Article 26i of the PIT Act. According to the new provisions:
- creditors became entitled to reduce their taxable base (bad debt relief) by any amounts due to them that are recognised as receivables but have not been paid. Relief from VAT on bad debts may be used by taxpayers in their annual tax return, as long as 90 days have passed from the payment date specified on the invoice or in the contract, unless the debt has been paid or sold by the date of filing the tax return; and
- debtors are required to increase their taxable base by any outstanding amounts they owe and are recognised as tax-deductible expenses. This increase is to be disclosed in their annual tax return, as long as 90 days have passed from the payment date specified on the invoice or in the contract, unless the debt has been paid by the date of filing the tax return.
‘Bad tax relief’ can be claimed as long as all of the following conditions are met: 1) the debtor is not subject to bankruptcy, restructuring or liquidation on the last day of the month preceding the date of filing the tax return; 2) it has been less than two years since the end of the calendar year in which the relevant invoice was issued, or the relevant contract was concluded; and 3) the transaction must be executed in relation to the creditor’s business and the debtor’s business from which they earn income subject to income tax in Poland.
On the basis of the same rules, from 1 January 2020, creditors became entitled to decrease their taxable base, and the debtors are required to increase their taxable base.
4. Increasing the threshold for small payers of personal income tax
Until the end of 2019, the PIT Act defined small taxpayers as those whose gross income did not exceed the PLN equivalent of EUR 1,200,000 in the preceding year. From the beginning of 2020, a new threshold of EUR 2,000,000 was introduced for small personal income taxpayers. When converted into PLN, it means that the threshold has been raised by nearly PLN 3,500,000.
This amendment is very advantageous to personal income taxpayers, since it means that more businesses are able to:
- deduct up to 150% of the qualified expenses on account of the research and development tax relief;
- make tax advances on a quarterly basis; and
- make a one-off depreciation of not brand new fixed assets with a value exceeding PLN 10,000.