As communicated to you in our newsletter No. 39/2021, a bill of the Minister of Finance, Funds and Regional Policy concerning amendments to the tax legislation introducing the “Polish Deal” (Polski Ład) was published on 26 July 2021 (hereinafter the “Bill”). The key change as regards VAT is the possibility to form the so-called VAT Groups for tax purposes as of 1 January 2022.
According to the Bill, taxpayers who meet all of the following conditions will be allowed to form a VAT Group:
Therefore, the possibility to form a VAT Group will not be connected with participation in a “tax capital group” (PGK) governed by the CIT Act.
A VAT group may be formed for a period of not less than 3 years and, throughout its duration, uninterrupted relations must exist between members of a VAT group. These are understood as:
In addition, according to the Bill, the composition of a VAT Group may not change during its term.
The Bill also defines the rules according to which a VAT Group is to operate, e.g. the VAT Group is to be represented by a VAT Group representative, with respect to its tax obligations arising from the VAT Act, the General Tax Act, Taxpayer Records And Identification Act and the National Tax Administration Act.
The main objective behind a VAT Group is that all members handle their tax compliance duties for VAT purposes together, while intra-group transactions are not subject to VAT. This means that:
Members of a VAT Group shall be jointly and severally liable for its VAT liabilities during the period in which the VAT Group holds a taxable status for VAT purposes and after the group loses such status.
The Bill is currently in the consultation phase. We will keep you informed about the further progress of the legislative work in this respect.
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