International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Poland: VATable and non-VATable transactions in Poland – allocation of input VAT

Szafarowska-Marta

Marta Szafarowska

Those dealing with VAT in other EU countries are surprised that, so far in Poland, taxpayers making both VATable transactions as well as activities that do not fall within the VAT regime, are entitled to deduct the whole amount of VAT resulting from purchases of goods and services where direct allocation to VATable and non-VATable activities is not possible.

The above solution has been particularly attractive to municipalities, but also to certain kinds of holding companies. However, to put an end to this situation, the Ministry of Finance has proposed new provisions that come into force from January 2016.

Under the new provisions, taxpayers performing both VATable transactions and activities that do not fall within the VAT scope will be obliged to deduct input VAT in line with the proportion representing the allocation of goods and services to those streams of activities. Then, once input VAT allocated only to VATable activities is established, it will be deducted on a pro rata basis (representing allocation of purchases to supplies subject to VAT and exempt).

The new provisions provide several methods to establish the initial proportion – the taxpayer should choose the most appropriate one for his individual situation. The methods refer to: (i) average number of employees dealing only with VATable transactions to average total number of employees; (ii) average number of hours devoted only to VATable transactions to total number of hours; (iii) turnover generated from VATable transactions to total revenues; and (iv) the surface of the building used for VATable transactions to total surface of the premises.

Throughout the year, taxpayers will be deducting VAT based on the initial proportion, established based on data available from the previous year. After the year-end the actual proportion will be calculated and the deduction corrected.

In general, those new rules will affect municipalities and public bodies performing also VATable transaction. Nevertheless, VAT deduction by certain types of holding companies may also be affected.

Marta Szafarowska (marta.szafarowska@mddp.pl)

MDDP

Tel: +48 22 322 68 88

Website: www.mddp.pl

more across site & bottom lb ros

More from across our site

The German government unveils plans to implement pillar two, while EY is reportedly still divided over ‘Project Everest’.
With the M&A market booming, ITR has partnered with correspondents from firms around the globe to provide a guide to the deal structures being employed and tax authorities' responses.
Xing Hu, partner at Hui Ye Law Firm in Shanghai, looks at the implications of the US Uyghur Forced Labor Protection Act for TP comparability analysis of China.
Karl Berlin talks to Josh White about meeting the Fair Tax standard, the changing burden of country-by-country reporting, and how windfall taxes may hit renewable energy.
Sandy Markwick, head of the Tax Director Network (TDN) at Winmark, looks at the challenges of global mobility for tax management.
Taxpayers should look beyond the headline criteria of the simplification regime to ensure that their arrangements meet the arm’s-length standard, say Alejandro Ces and Mark Seddon of the EY New Zealand transfer pricing team.
In a recent webinar hosted by law firms Greenberg Traurig and Clayton Utz, officials at the IRS and ATO outlined their visions for 2023.
The Asia-Pacific awards research cycle has now begun – don’t miss on this opportunity be recognised in 2023
An intense period of lobbying and persuasion is under way as the UN secretary-general’s report on the future of international tax cooperation begins to take shape. Ralph Cunningham reports.
Fresh details of the European Commission’s state aid case against Amazon emerge, while a pension fund is suing Amgen over its tax dispute with the Internal Revenue Service.