Act amending VAT Law, Polish Tax Code and Polish Fiscal Penal Code has been published. The amending act, among others, introduces additional 30% sanction for improper settlement of VAT, limitation of quarterly settlement of VAT and significant changes in relation to the refund of VAT surplus in 25 days.
Below we present the most important, in our view, aspects of the amending act. Most of these changes will come into force from January 1, 2017.
Tax authorities determine the additional tax liability if a taxpayer:
This sanction amounts to 30% of understatement of VAT liability or overstatement of the amount of VAT refund.The sanction will not be imposed if:
In case the taxpayer corrects VAT settlements and pays the respective amounts after the tax audit or within control proceedings, then the penalty amounts to 20%.
The above-mentioned additional tax liability will amount to 100% of understatement of VAT liability or overstatement of the amount of VAT refund if overstatement or understatement results in whole or in part from invoices documenting fraud.
The refund of VAT surplus in 25 days will be performed on the following conditions:
Elimination of the possibility of quarterly settlement of VAT for taxpayers other than small taxpayers. Moreover, also newly established entities will not have possibility to file VAT returns quarterly in the first twelve months of activity.
Reverse charge mechanism also for construction services
The amending act extends the reverse charge mechanism on various types of construction services (the list of these services is specified in Appendix no. 14 which will be added to the Polish VAT Act). For example, this mechanism will apply to construction of residential and non-residential buildings - works related to the construction of new buildings, rebuilding or refurbishment of existing buildings (.
In case when a proxy registers a given taxpayer for VAT purposes, he becomes jointly and severally liable for the taxpayer's VAT arrears arisen within 6 months as of the registration date, up to the amount of PLN 500k.
In practice it will mean that proxies, advisors or accountants will be reluctant to register for VAT purposes any taxpayers on their behalf.
In case you are interested in further analysis on how the above mentioned VAT amendments affect your daily business, please do not hesitate to contact our local advisors.
More information can be found on the Polish website: TPA Poland