The PL VAT law defines the rules for determining sanctions in a situation where the taxpayer makes mistakes resulting in underestimating the tax liability or overstating the VAT surplus. Depending on the type of mistake and moment of correction , the legislator introduced four different levels of sanctions: 30%, 20%, 15% or 100%.
The basic penalties in VAT
According to the art. 112b p. 1 of the PL VAT Act, if the taxpayer has not submitted the VAT reports and the tax liability has not been paid, or if the submitted VAT reports shows:
- the amount of the tax liability is lower than the amount due,
- the amount of the surplus VAT to be refunded is higher than the amount due,
- the amount to be transferred to the next period is higher than the amount due,
- the amount of the surplus VAT or amount to be transferred to the next period, instead of showing the amount to be paid to the tax office
the tax authority will determine the appropriate correct amounts and specify an additional tax liability in the amount corresponding to 30% of the underestimated tax liability or the overstating VAT surplus to be refunded or to be transferred to the next periods.
The taxpayer may avoid the penalties if the corrected VAT report is submitted before the day of the audit initiation.
In situation where such a VAT correction is submitted after the tax audit and the taxpayer takes into account the irregularities found in it and pays the amount of the tax liability or return the undue amount of the refund, then the sanction is 20%.
Moreover, in case of the tax audit, if the taxpayer submits the corrections of VAT reports within 14 days from the date of the notification delivery and at least on the day of submitting this corrections, he will pay the tax liability or return the undue VAT amount, the level of the penalty is 15%.
The highest sanction is 100% and it applies to those taxpayers who use an “empty invoice” to deduct VAT. This penalty will apply to input tax resulting from these invoice.
Issuing an invoice for a receipt without a VAT number
Issuing an invoice to a receipt without buyer’s Vat number is subject to a sanction in the amount of 100% of the tax amount indicated on this invoice. Such penalty is also imposed on the buyer who enters such an invoice in the VAT register.
Incorrect use of MPP
Also, in situation when the taxpayer has issued the invoice without the special indication “split payment mechanism” (SPM), he may be fined with 30% of the tax amount for the supply of goods or services listed in ann. 15 to PL VAT law.
In the case the seller does not mark the invoice with the words SPM, the buyer will also may be exposed to sanction. If, despite of the existing obligation, he fails to make the payment in SPM system, the tax authority will impose the sanction in the amount of 30% of the tax amount shown on the invoice to which the payment will apply. The penalty will not be imposed only if the buyer will pay using the SPM.
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