VAT group in Poland as from 1st January 2023

VAT group is a new structure which will be introduced in Poland allowing for joint VAT settlement of the affiliates entities. Initially, the regulations regarding VAT group were to enter into force as from 1st July 2022. However, the Polish Ministry of Finance decided to postpone this till the 1st January 2023.

It is recalled that the VAT group can be established by the entities connected financially, organisationally and economically. To create a VAT group, it is necessary to conclude a written agreement on its creation, for the period not shorter than 3 years.

The creation of VAT group has many advantages. First of all, this structure helps to reduce the documentation and simplify the VAT settlement. The main assumption of the VAT group is reporting the one collective JPK file, instead of the separate VAT reports sent by individual related companies and lack of the invoices between the entities within the VAT group. Additionally, the activities that are performed between group members will not be the subject of VAT. This will result in considerable savings and better financial liquidity.

The structure however, carries also dangers for the VAT group members. Above all, the entities of the group will be jointly liable for the obligations of all its members. The VAT group will be obligated to calculate the VAT proportion during the term of the group. The proportion should be based on the share in taxed and non-taxed activities of each of the entities included in the group separately.

The VAT groups have been introduced in many EU countries. Based on the experience of other countries, the process of implementing the VAT group is a complex process and brings with it both new opportunities and certain risks.

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