VAT changes effective from 1st April 2011

VAT changes effective from 1st April 2011

Amendments to the VAT law have been introduced with effect from 1st April giving taxpayers scarcely four days to adjust to the new rules.

The most significant changes to the VAT law for business include:

·        VAT is extended to cover free of charge supplies whether or not connected with a taxpayer’s business activity.

·        The revised definition of free of charge services which more precisely mirrors the definition included in the VAT Directive.  Any free of charge services rendered for the personal benefit  of a taxpayer or the taxpayer’s  employees or any other free of charge services, even though the taxpayer did not have the right to set off input VAT against output VAT when acquiring the goods connected to these services, is now treated as payable service that is subject to  VAT.

·        Re-invoicing - the VAT law has now been brought into line with actual re-invoicing practice.

·        A customs agency may now represent a taxpayer even though it is not entitled to provide tax advisory services under the tax advisory law nor to provide bookkeeping services under the accounting law.

·        The reverse charge mechanism has been introduced for trading in scrap metal and rights to greenhouse gas emissions.  Where both the supplier and acquirer are VAT payers, the obligation to calculate VAT regarding the supply is transferred from the supplier to the acquirer (a similar solution to that applied in respect of the importation of services where the party rendering services is a foreign entity).

·        The obligation to provide security for import VAT as a condition of tax settlement due to import of goods in a tax return has been abolished.

 ·        The VAT exemption for medical care services has been widened to include medical care services closely related to the services provided in favour of medical care institutes at their premises.  In addition, the exemption now also covers medical services acquired by a taxpayer in its own name but for the benefit of third parties (medical care packages are as a rule VAT free).

·        The 0 per cent tax rate has been widened to include aircraft, aircraft parts and aircraft repair and maintenance services as well as harbour storage services.

·        Tax havens – the prohibition on the deduction of input VAT on services imported from tax havens has been abolished.

·        Return of VAT to foreign entities – subject to satisfying certain conditions it is now possible to apply for a return of VAT irrespective of whether the taxpayer is registered in Poland for VAT.

 ·        The date of payment for VAT in respect of the import of services and the supply of goods based on the reverse charge mechanism is 25th day of the month following the month, in which tax obligation arose.  The change is applicable to taxpayers not registered as active VAT payers.

For further information or assistance with tax matters please contact Anna Szyszka (who is both a qualified lawyer and a registered tax adviser) at:

E:            anna.szyszka@olrlegal.com

T:            +4822 584 4840

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