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Tag: VAT 2014

A branch in Poland of a foreign company has the right to deduct VAT on purchased in Poland goods and services

NSA (Supreme Administrative Court) has ruled once again ( February 24th 2014 I FSK 353/13) the right for the foreign company permanent establishment in Poland to deduct the VAT from the purchased in Poland goods and services connected with the services related to the activities performed for the main company (headquarters).

 

The condition of that deduction is that the foreign company to show a relationship between purchases carried out by a branch in Poland and its activities abroad. It is important, however, that the foreign company conducts taxable activities.

It is worth noting that this is Supreme Administrative Court another judgment that confirms the right of VAT deduction by the branch (in the previous judgment from February 26th 2013 I FSK 493/12)

 

Starting from April 1st 2014 the car used for business and private purposes will be able to deduct 50% of VAT.

The primary purpose of the amendment is comprehensive regulation by the provisions of the tax on goods and services the rules for deducting expenses relating to cars and other motor vehicles with GVW up to 3.5 tones. The act is to implement the European Union law, and the direct basis for the introduction provided in the content of the amendments is a Council Implementing Decision of December 17th 2013 authorizing the Republic of Poland to apply measures derogating from Article 26. Point 1, point a and art. 168 of Directive 2006/112/EC on the common system of value added tax (Dz. Urz. UE L 353 z 28.12.2013, page. 51).

 

According to 2013/805/UE Poland was authorized to limit, up to 50%, the right to deduct VAT on the purchase, intra-Community acquisition, importation, lease or rental of motorized vehicles, as well as the VAT charged on expenses associated with these vehicles, if vehicle is not used exclusively for business. The above limitation shall not apply to motor vehicles the permissible laden weight of 3500 kg or vehicles that have more than nine seats including the driver’s seat, as well as the VAT paid on expenses, which are all related to the business of the taxpayer. In addition, Poland has been authorized to not to treat as a supply of services the use of the vehicle for which the above limitation shall apply for purposes other than those of business activity.

 

Starting from the beginning of 2014 the rules of taxation of advance payment in export of goods changed.

Until the end of 2013, this advance payment was subject to the taxation under the condition that the export of goods occurred within 6 months. According to the new provisions, if before the export of goods the taxpayer has received a full or partial payment, the 0% tax rate could be used to that partial payment under the condition that the export of goods is made within 2 months from the end of the month in which the taxpayer received the payment (unless a longer term is justified by the specifics of the export of the case, confirmed by the terms of delivery of that export).

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The current VAT rates continue to apply up to the end of 2016. As of December 31st 2013 came into force the Act amending the Act on tax on goods and services and certain other acts (Journal of Laws of 2013, position. 1608), which maintains the rate of 8 percent and 23 percent.

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Since 2014, the rules for determining the taxable amount will be completely changed (based on VAT Directive)

 

By the end of 2013

Since 2014

The tax base is the turnover. The turnover is the amount due on the   sale, which is decreased by the amount of tax due.
The amount due includes all benefits which are payable by the buyer or   a third party. Turnover  is increased by subsidies, grants and other payments of a similar nature which were   received and have a direct impact on the price (the amount due) of goods   which are supplied or services which are rendered by the taxpayer and is increased by the amount of tax due.
The tax base is everything which constitutes payment which was received/will be received by   that person who performs supply of the goods or renders services received from the customer or a third party including those obtained grants, subsidies and other payments of a similar nature which have direct impact on the price of supplied goods or services provided by the taxpayer.
The tax base in particular will be expected to cover commission, cost   of packing, transport and insurance.
It will not include granted discount to the customer and price   reductions which are included at the time of the sale.

 

In the case of the supply of goods which are equated with payable supply of goods, the tax base is calculated from the value of the purchase price of the goods or similar goods.
When there is no value of the purchase price the cost of production should be used. These amounts are determined at the time of delivery of the goods at the market price on the date of submission, not historical price.

From the 1st of January 2014, the sale of second-hand goods will be, with some exceptions, subject to VAT.

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Supply of services: tax obligation in VAT – changes in 2014.

 

Since 2014, as a general rule, tax obligation point shall be the moment when the services are provided.

The services provided partially for which payment was specified shall be considered as provided as well.

 

If, in connection with the provision of services consecutive terms of payment or settlement are set up, the service is deemed to be provided at the end of each period to which these payments or settlement refer, until the termination of the provision of the services.

For the service provided continuously for a period longer than one year, for which during a given year no terms of payment or settlement expire, the services are deemed to be provided at the end of each fiscal year, until the services are finally provided.

 

Currently, the month of the right to deduct an amount of VAT contained in an invoice or in a custom document arise in the month in which the taxpayer receives such a document.

Beginning from January 2014 according to a general rule it will be the month in which the tax point arose in the relation to bought goods and services. (more…)

Invoices: exchange rates.

 

In case of invoices issued after the supply of goods or services / receiving the prepayment taxpayer shall apply the average exchange rate of the National Bank of Poland from the last business day preceding the date of supply of goods or services / receiving the prepayment. In case of invoices issued before the supply of goods or services / receiving the prepayment taxpayer shall apply the average exchange rate of the National Bank of Poland from the last business day preceding the date of invoice.

Changes in the polish VAT in 2014 will include among others changes in issuing the invoices.

 
In case where the invoice date differs from the date of supply of goods/services, the invoice should include, besides the invoice date, the date of supply of goods/services.

 
Moreover, according to the new art. 106i par. 1 of the Polish VAT act, the invoice shall be issued no later than 15 day of the month following the month in which the supply of goods or services has been made/prepayment has been received.

 

Furthermore according to article 106i paragraph 7 of the VAT act specify the date, with which the invoice may be issued the earliest by defining it as not earlier than 30 days before:
 

  • the delivery of the goods or performance of the services,
  • prior to receiving of all or part of the payment for the delivery or the service.