Changes in VAT in 2014 in Poland:
1. Invoices: issuing of 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.
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.
2. 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.
3. VAT deduction
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.
However, there are some exceptions to this rule in case of intracommunity acquisition. In such cases to be able to deduct VAT according with general rule the tax payer must receive an invoice confirming this acquisition within 3 months after the month of supply/completion of the services. Otherwise taxpayer will be obliged to move the deducted amount of VAT to the month in which the invoice has been received.
4. Supply of services: tax obligation in VAT
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.
5. The sale of second-hand goods will be, with some exceptions, subject to VAT.
Exempted from VAT will be the supply of goods used solely for business activities exempt from VAT, if it was not allowed to deduct the input VAT from the acquisition, import or production of those goods. Example of the exempted sale of goods starting from the 1st of January 2014: goods bought and used by insurance agents only to insurance brokerage, which is exempt from VAT. In case of sale of goods used also to taxable activities current VAT rules will apply only to the end of December 2013 and beginning the 1st of January 2014 this sale will be taxed.
6. The taxable amount
Since 2014, the rules for determining the taxable amount will be completely changed (based on VAT Directive)
By the end of 2013
|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.
7. The rules of taxation of advance payment in export.
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) Thus the time that the goods should be exported would be considerably shortened (from 6 months to 2 months), and the lack of export of goods will result in taxation of the advance payment with the regular tax rate of 23%.
What is VAT?
VAT is a consumption tax, charged on most goods and services traded for use or consumption in the EU. It is levied on the “value added” to the product at each stage of production and distribution. The “value added” means the difference between the cost of inputs into the product / service and the price at which it is sold to the consumer. VAT is charged when VAT-registered (taxable) businesses sell to other businesses (B-2-B) or to the final consumer (B-2-C). VAT is intended to be “neutral” in that businesses are able to reclaim any VAT that they pay on goods or services. Ultimately, the final consumer should be the only one who is actually taxed. Businesses are given a VAT identification number and have to show the VAT charged to customers on the invoices.
The VAT system in the EU is governed by a common legal framework – the VAT Directive. In the EU, there is a minimum standard VAT rate of 15%, above which Member States are free to set their own national VAT rates. Member States decide how to spend the revenue they receive from VAT receipts, except for a small percentage of this total (around 0.3%) which is paid towards the EU budget.
VAT is one of the main sources of government revenue for all Member States and one of the three own resources of the EU.
How does the VAT system work?
Under the legislation currently in force a taxable person is any individual, partnership, company or whatever which supplies taxable goods and services in the course of business. The VAT due on any sale is a percentage of the sale price but from this the taxable person is entitled to deduct all the tax already paid at the preceding stage. In this way, the final VAT paid is made up of the sum of the VAT paid at each stage.
Goods supplied between taxable persons in different Member States are exempted with a right to deduct the input VAT if they are sent to another Member States. This is known as an “intra-EU supply”. The VAT number of the taxable customer can be checked using the VAT Information Exchange System (VIES).
The VAT due on the transaction is payable on acquisition of the goods by the taxable customer in the Member State where the goods arrive. This is known as “intra-EU acquisition”. The customer accounts for any VAT due in his normal VAT return at the rate in force in the country of destination.
VAT on supplies of goods to final consumers is paid at the place where the goods are located except for distance selling which is taxed in the Member State where the goods are dispatched.
VAT on services to taxable persons is paid at the place where the customer is established. The customer will account for VAT on the services in the Member State where he is established, applying the VAT rate of that country. VAT on services to final consumers is paid at the place where the supplier is established, unless a specific rule applies.
Depending on the nature of the service, VAT may need to be paid in another Member State than that where the taxable customer or the supplier is established. This is for example the case with services connected to immovable property; transport of passengers; cultural, artistic, sporting, scientific, educational, and entertainment services, e-services or telecom services.
Given that EU law only requires that the standard VAT rate must be at least 15% and the reduced rate at least 5% (only for supplies of goods and services referred to in an exhaustive list), actual rates applied vary between Member States and between certain types of products. In addition, certain Member States have retained separate rules in specific areas. The detailed application of VAT varies according to the administrative practices of each Member State within the framework set out by EU legislation.