Poland, like some other EU countries, missed the January 1 2020 deadline to implement the EU VAT changes regarding ‘quick fixes’. The plan was that as of April 1 2020, the implementation should be finally completed and the transition period of that untypical situation for the Polish taxpayers will be ended. However, until now, the amendment of the Polish VAT Act is yet to be accepted by the Polish parliament and remains under process.
Consequently, after reviewing the scenario to consider the extra challenges put forward by the COVID-19 outbreak, the implementation process might also not be met soon.
For Polish taxpayers, the implementation of the ‘quick fixes’ package means that there are some changes which will influence the wording of the Polish VAT Act, in respect to:
Call off stocks;
Chain transactions; and
The buyer’s VAT registration number and the requirement to show EU delivery with 0% VAT rate.
These three of four topics regarding ‘quick fixes’ have been already regulated in the Polish Act, however in a different way when compared to the one proposed by EU law.
It can be argued that the implementation of the VAT Directive would help to solve many problems regarding the determination of movable transactions in the chain. It should be emphasised that existing applicable Polish regulations in the area of chain transactions are more complicated than the simplification resulting from the amendment of the EU Directive (which states that in case of goods that are the subject of a chain transaction that is shipped or transported from the territory of one member state to the territory of another member state, the shipment or transport of these goods is generally attributable to a delivery made to an intermediary).
Even though there are some details that have not been addressed in the proposed wording to the VAT Act, this rule makes the situation of VAT treatment of a chain simpler for Polish VAT taxpayers.
The intermediary entity referred to above refers, other than the first in the chain, to a supplier of goods who sends or transports the goods alone or through a third party acting on his behalf. In practice, there may still be some questions with respect to the term “organisation of the transport” which is crucial to determine an intermediary entity in the chain. Consequently, it should be determined that:
By whom or on whose behalf the transport is affected. Who bears the risk for the accidental loss of the goods during the transport?
Which entity bears transport costs?
Which entity arranges organisation (either directly himself or through a third party acting on his behalf) of a cross border transport i.e. contact with transport / logistic company? The person who either makes the transport himself on his own behalf or contracts the transport with a third party who will act on his behalf.
On the other hand, there might still some practical issues with proof of providing the supplier with a VAT identification number for intra-Community transactions of the purchaser of the goods. Even though there still remain some issues to be manage and to solve the new EU VAT treatment with respect to a chain transaction, it seems to be very attractive for the Polish taxpayers.
Additionally, new ‘quick fixes’ regulations makes the call of stock procedures in Poland more interesting compared to the one existing so far in domestic VAT regulations. It is because of the fact that new EU regulations make it possible to cover goods also for commercial purposes – while currently there are domestic regulations regarding only goods for production and service activities purposes.
In regard to new regulations on the evidence (documentation) of cross border transportation, most probably they will not become popular for the Polish taxpayers when compared to domestic regulations which already exist in the Polish VAT Act. The Polish internal regulations seem to still be more flexible when compared to the rules introduced by Regulation (EU) No. 282/2011, which have been amended since January 1 2020, and are based on two categories of documents relating to the dispatch or transport of goods (A and B).
As part of the ‘quick fixes’ package, there is a new obligation with respect to the buyer’s VAT registration and the requirement to show EU delivery in the recapitulative statement (EC sales list). These new EU obligations are generally currently in force in Poland however they are not as strict as the requirements resulting from the amendment of the EU law.
Since the Polish VAT rules have not yet been updated in time for the start of 2020 (and in practice there is still a question about the moment of implementation), Polish registered VAT taxpayers are permitted to follow the revised EU VAT Directive, adjusted for the Implementing Regulation 282/2011. However, generally businesses should not mix and match in case of specific topics between the updated VAT regulations and old domestic Polish VAT rules.
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