Tax
Forvis Mazars is a global integrated firm with presence in major economies of the world, so we understand the complexities of tax in today’s global economic climate.
1. Change of VAT rates - from November, VAT rates may be confirmed by the Binding Rate Ruling
On 1 April 2020, the VAT rate matrix is modified. Until then, VAT rates are applied on the basis of the Polish Classification of Goods and Services (PKWiU). Whereas, the new matrix for VAT rates will be based on the Combined Nomenclature (CN).
After the amendment enters into life, previously issued individual rulings on VAT rates shall no longer apply and shall lose their protective power. In the context of upcoming changes, it is advisable to verify the VAT rates applied (especially the reduced ones).
The new regulations provide for a possibility to apply for the so-called Binding Rate Ruling (Wiążąca Informacja Stawkowa), which is to help determine and confirm the correct VAT rate for goods or services.
It will be possible to apply for Binding Rate Rulings from 1 November 2019.
2. Obligatory split payment from 1 November 2019
On 1 November 2019, an obligatory split payment mechanism is introduced. The obligatory application of split payment will concern sensitive goods and services listed in the new Appendix to the VAT Act (e.g. steel products, scrap, smartphones, laptops, car parts, construction services) whose value on the invoice exceed PLN 15,000 gross.
After these changes, the taxpayers will still be able to make the so-called “voluntary” settlements in the split payment mechanism.
3. Change of definition of “first settlement” from 1 September 2019
On 1 September 2019, the definition of “first settlement” of buildings and constructions was changed. At present, the commencement of usufruct of buildings, constructions or their parts for own purposes (without purchasing or renting them first) may also be considered “first settlement”.
The change of definition of the “first settlement” is crucial for taxing real estate transactions; therefore, if you plan to sell or purchase real estate, we recommend to verify meticulously the intended transaction beforehand.
4. Gradual introduction of the on-line cash registers obligation
From 1 January 2023, all taxpayers registering sales for the benefit of natural persons not running economic activity shall be required to have on-line cash registers.
However, such an obligation will be applicable earlier to car workshops (from 1 January 2020), hotels, pensions, restaurant facilities (from 1 July 2020), hairdressers, beauticians, doctors, lawyers, builders, gyms (from 1 January 2021).
On-line cash registers are already available for purchase from May.
1. Change of approach towards settling leaseback
In line with the previous tax practice, a leaseback transaction was recognized for VAT purposes as two separate supplies of goods or supplies of goods and services (depending on whether it was financial or operating lease). Whereas, usually both operations were subject to VAT.
Notwithstanding, on 27 March 2019 the Court of Justice of the European Union ruled a judgement (case C-201/18 regarding Mydibel) which implied that the leaseback should be treated for VAT purposes as an unanimous financial service exempt from VAT.
The change in approach concerning the taxation of leaseback transactions may lead to questioning the right to deduct VAT from invoices documenting settlements in the scope of leaseback.
In order to secure settlements regarding leaseback, we recommend applying for an individual ruling.
2. Court judgment regarding the moment of considering a service supplied - tax point on the day of signing the protocol, not termination of works
On 2 May 2019, the Court of Justice of the European Union (CJEU) pronounced a judgement, in which the point of supplying a construction service had been addressed (case C-224/18 regarding Budimex). Theses resulting from CJEU’s judgment are universal, thus this ruling is of significant importance not only for the construction industry, but also for entrepreneurs from other sectors.
The CJEU’s judgment is not precise enough to specifically determine on its basis when exactly the service may be considered supplied in case the works’ acceptance protocol was signed. Yet, it allows to contractually settle the moment of supply of a service (VAT point arousal).
In case you are interested in implementing the solution enabling the settlement of VAT from services on the basis of the works’ acceptance protocol (and not in the moment of their physical termination), we recommend verifying contracts concluded with contractors and applying for an individual ruling.
3. Revolutionary judgement regarding fuel cards
In the judgement of 15 May 2019 (case C-235/18 regarding Vega International), the CJEU ruled that when an issuer of fuel cards provides clients with such cards, then they are not selling fuel for their benefit but providing a financial service. This ruling is contradictory to the previous practice of settling VAT in respect of fuel cards in Poland. In consequence, a client who deducted VAT in respect of fuel purchased with a fuel card may be considered required to correct it.
Due to this CJEU judgement, it is recommended to verify contracts with lessors or fleet companies and secure settlements in respect of fuel cards with an individual ruling, since previous rulings may be deemed outdated.
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