1. Entry into force of split payment mechanism 
2. From 1 July increased responsibilities in terms of SAF-T for SMEs 
3. Special Economic Zones will cover the whole country
4. New rules for VAT treatment of vouchers
5. A scan of a certificate of residence insufficient

1. Entry into force of split payment mechanism

From 1 July 2018 long-announced split payment method will come into force to Polish VAT system. From this moment within the payment for goods or services net amount will be separated and paid to the seller and VAT amount will be transferred by the purchaser directly to the special bank account, so called VAT account. Essential issue related to VAT account are limitations for disposal of resources in the account (primarily they will be used to regulate VAT obligations), as well as formalized procedure of disbursement of funds (based on application to the head of tax office).

What is important it is the purchaser, who will be entitled to choose in what form he wants to make a VAT payment for an invoice. There are two possibilities: transferring the amount due (gross amount) directly to the bank account of the seller – as before, or using split payment mechanism. Above issue concerns most of entrepreneurs. They are worried about negative impact of new regulation on condition of their companies, especially on cash flow.

Taking the above, it is important for taxpayer to verify whether their contractors will use the option to pay  invoices with the use of split payment mechanism, or they will pay their duties on the previous conditions. What is important to note that there are no obstacles to establish future settlement rules between contractors in this matter. It is also worth considering to make an exemplary simulation of an impact of split payment mechanism on current settlements of taxpayer.

As a result of existing doubts of taxpayers tax authorities have already issued first individual rulings in this matter. According to one ruling the company shall have on VAT account enough funds to pay tax in order to benefit from tax relief consisting of percentage decrease of tax liability due to the voluntary application of split payment mechanism (e.g. Director of National Fiscal Information of 18 May 2018, no. 0114-KDIP1-1.4012.104.2018.2.KBR)

1. From 1 July increased responsibilities in terms of SAF-T for SMEs 

To the end of June 2018 obligation of transferring tax registers and accounting documents in SAF-T form on tax authorities demand was related only to so called large entrepreneurs. From July 2018 additional documentary obligations related to submission of SAF-T will be imposed on micro, small and medium entrepreneurs. These entities will be obliged to provide the tax authority with accounting documentation in a special form upon request. Required structures for accounting books include e.g. accounting books, tax book of incomes and expenditures or revenue register, bank statements, warehouse or VAT invoices. As a result it is worth verifying if a taxpa is ready for this additional obligation.

1. Special Economic Zones will cover the whole country

So far only activity of entrepreneurs within a special economic zone enabled to benefit from certain states support, e.g. in a form of public aid connected with exemption from income tax. Taking into account number of problems related to functioning of special economic zones (such as complicated and time consuming procedure of incorporation of new territories to the zones) legislator decided about extension of territory in which entrepreneurs are entitled to benefit from facilitations. The government prepared a project of an act on supporting investments of 10 May 2018.

The act proposes almost total resignation from territorial restrictions related to possibility of obtaining support in a form of exemption from income tax. The support will be available to entrepreneurs from the whole country, as a rule regardless of the place of their business.

Project provides the possibility to use the tax exemption by entrepreneurs within duration of decision about support. It will be issued for definite period of time (from 10 to 15 years) on entrepreneurs request by a ministry competent for economy.

This right will be expiring at the end of period for which decision was issued. It may be also repealed in cases enumerated in the act. In case of repealing the decision about support an entrepreneur is obliged to pay income tax on income resulting from repealed decision.

The act was signed on 1 June 2018 by the President. Most of the provisions of the act are to come into force within 14 days from the day of its announcement.

1. New rules for VAT treatment of vouchers 

At the end of April on website of Government Legislation Centre was published a project of an act amending VAT Act. The project is implementation of two changed Directives of the EU Council – the Directive regarding the treatment of vouchers as well as the Directive regarding certain value added tax obligations for supply of services and distance sale of goods.

The two definitions of vouchers were added to the VAT Act: single-purpose vouchers (SPVs) and multipurpose vouchers (MPVs). As a single-purpose voucher shall be treated voucher for which the place of supply of goods and value of tax are known at the time when voucher is issued. All other vouchers should be treated as multipurpose vouchers.

The project also adds an additional chapter regulating taxation of vouchers. The issuer of a single-purpose voucher will be obliged to pay VAT on the first placing on the market. In case of multi-purpose vouchers, VAT will be due at the moment when the goods are supplied or services are performed.

The planned amendment relates also to changes in electronic services. Planned changes assume e.g. introducing a threshold in amount of PLN 42,000 relating to annual net value of electronic services provided to European consumers, to the amount of which taxpayers will be able to settle VAT according to the domestic rules.

1. A scan of a certificate of residence insufficient

Although one of the most important tax obligations of taxpayer’s – submitting of CIT-8 return – elapsed for most of taxpayers at the end of March, it is still important to correctly document place of residence of contractors for tax purposes which shall be proved by tax certificate of residence.

Form of certificate is important taking into account the possible tax consequences. In case of potential tax audit, tax remitter shall prove that he was entitled to apply a preferential rate or to non-collecting tax. Infringement in this matter may result in questioning the applied tax rate.

Form of certificate was the subject of ruling of Director of National Fiscal Information of 24 April 2018 (no. 0111-KDIB2-3.4010.44.2018.1.LG)

Applying company had doubts whether certificate in paper form is the only possible form that can be shared to the contractors in order to confirm the tax residency. In its opinion certificate of residence acquired in a paper form and then scanned and sent in a PDF form per e-mail enables company to apply tax rate resulting from a relevant double tax treaty.

Tax authority did not agree with taxpayer’s standpoint. In tax authority’s opinion, scans of certificates received by tax remitters whereby the foreign taxpayers received them in a paper form should not be treated as official documents entitling to application of a tax rate resulting from double tax treaty or be exempted from collecting the withholding tax.

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