The latest amendment to the provisions of the VAT Act was introduced under the Amending Act on December 1st, 2016. This change sets forth new rules for quarterly VAT settlements which became effective as of January 1st, 2017.
In its previous version, this provision stipulated the possibility of filing quarterly VAT returns by the wide group of taxpayers. Until that moment, legal persons, organizational units without a legal personality, and natural persons, who are individual entrepreneurs (taxpayers under the meaning of Art. 15 VAT) were entitled to make use of this option, provided that they made the notification of their choices to the relevant tax authority.
At the beginning of 2017 in the view of the adopted amendment to Article 99 Paragraph 3 of the VAT Act, quarterly VAT settlements would remain available only for so-called small taxpayers (irrespective of the method of accounting they use – accrual or cash basis), if they notified the head of a revenue office thereof in writing no later than on the 25th day of the second month of a quarter for which a quarterly tax return is to be filed for the first time.
According to the current regulation, a small taxpayer is:
- a taxpayer in whose case the value of sales (including the amount of tax) did not exceed the PLN equivalent of EUR 1 200 000* in the preceding tax year (the limit for 2017 is 5 157 000 PLN),
- a taxpayer running a brokerage firm, administering investment funds, being an agent, contractor or another person providing services of a similar character, except for sale on commission – if the amount of commission or of other forms of remuneration for provided services (including the amount of tax) did not exceed the PLN equivalent of EUR 45 000* in the preceding tax year (the limit for 2017 is 193 000 PLN)
However, it is worthwhile to bear in mind that the legislator also introduced exceptions to the abovementioned rule of applying. The specified “privilege” shall not apply to the small taxpayers such as:
- so-called new active taxable persons for VAT purposes – within 12 months following the month in which the registration by the relevant tax office was made; or
- taxpayers who supplied the goods (referred to in Schedule 13 to the Act) in a given quarter or in the four quarters preceding it, unless the total amount of said supplies less the tax amount did not exceed 50,000 PLN in any month during the above periods.
Besides this, it is worth drawing attention to Art. 15 of transitional provisions of the amending act, which stipulates the above restriction for the small taxpayers who set up a taxed activities, to those only who were registered as taxable persons for VAT purposes in the fourth quarter of 2016 (i.e. after September 30th ). Consequently, they are obliged to submit VAT returns on a monthly basis, as of January 1st, 2017.
To sum up, since January 2017 every taxpayer who is not qualified as a small taxpayer will be required to submit the VAT-7 return, even if they previously decided for quarterly VAT returns.
Ultimately, referring to the reasons for introducing the abovementioned amendments, it has to be related to the government bill, which implies that the proposed solution is primarily focused on sealing the tax system, by preventing fraud on VAT refunds (within a reduced deadline) by the entities who participate in the carousel fraud.
*the currency conversions into PLN of amounts denominated in EUR shall be made at the average exchange rate of EUR announced by the National Bank of Poland as of the first working day of October of the preceding tax year, rounded off to 1000 PLN.