Recently enacted legislation amended the Polish VAT law as set out below. These changes are effective as of 1st January 2019.
Bad Debt Relief
Poland allows for bad debt relief, in accordance with the EU VAT Directive, which provides that suppliers, subject to certain conditions, can claim relief from VAT due on domestic supplies of goods and services that they made. This is applicable in situations where they received no payment for the relevant supply.
If after a specified time period, the payment remains outstanding and has not been sold on, the debt is deemed as “irrecoverable” and the supplier may use this debt relief procedure. Under it, the supplier may reduce the value of the supply and output VAT on those unpaid for domestic supplies. By the same token, the customer must repay to the tax authority the corresponding deductible input VAT amount. In Poland, from 1st January 2019, the period after which a debt is considered as “irrecoverable”, has been shortened to 90 days from 150 days.
This is potentially beneficial for Polish businesses as it allows them to claim back VAT sooner than was previously the case. However, it will e necessary to consider the specific facts relating to the bad debt and ensure appropriate records are kept in order to enjoy the relief.
Treatment of vouchers
The EU Vouchers Directive introducing rules for the harmonised VAT treatment of vouchers in the EU, has been implemented. The new rules define both the notion and types of vouchers and identify the tax point and the tax base for the separate voucher types. Importantly, the VAT treatment of a transaction depends on the nature of the voucher: a “single-purpose” voucher is taxed at the point of sale, whereas a “multi-purpose voucher” is taxed at the time of redemption. For more information, please read our story on the new EU voucher rules.
E-commerce simplification rules for digital services
Poland has enacted EU Directive 2017/2455 ,which implements the following EU-wide registration and invoicing simplification rules for companies carrying out cross-border business-to consumer sales of electronic services:
- The launch of an annual EUR 10,000 turnover threshold applicable to EU suppliers. Unless this threshold was exceeded in the previous year or until it is exceeded in the current year such services will be subject to VAT in the country where the supplier belongs.
- Businesses using the Mini One Stop Shop (MOSS), no longer need to follow the cumbersome practice of applying local invoicing rules for all the Member States to which supplies are made. Instead, they may simply use the invoicing procedures of their Member State of identification.
- Moreover, non-EU established businesses that possess an EU VAT registration number, may make use of the non-EU MOSS scheme, eliminating the requirement to register in each Member State in which they provide electronic services.
If you would like more advice on how these developments impact your business, please do get in touch with us to discuss how we can help you.