Poland: VAT Group Treatment

After consultations with the European Union Committee held on 16 November 2020, Poland plans to allow VAT groups. No official draft of amendment to the Polish VAT Act has been published so far. The Ministry of Finance has, however, presented fundamental concepts behind VAT group treatment in Poland in a document published on its website and launched pre-consultations in this respect. The pre-consultations were completed on 7 June 2021. The results are not yet known.

The plan is to introduce the mechanism in two stages: as a pilot programme mainly for large enterprises and as an open model with the scheme available also to small and medium enterprises.

Polish VAT group treatment will be based on the assumption that no VAT will be charged on transactions between group members and that all the group members will be subject to joint taxation in terms of VAT. As a consequence, in the case of transactions between group members:

• there will be no obligation to issue invoices regarding intra-group transactions,
• split payments will not apply,
• there will be no obligation to verify whether payments to VAT group members are made on the bank account indicated on the White List.

Nevertheless, it will be necessary to keep simplified electronic records of activities within the VAT group ready for transmission to the tax office upon request.

The VAT group option will be open to members of a tax group (as defined in CIT law), if they are closely bound to each other by financial, economic and organisational links. Consequently, if a VAT group loses its group status for CIT purposes, it will no longer be eligible for VAT group treatment.

Also, some formal requirements will have to be met. In accordance with the document published on the website of the Ministry of Finance, a written contract will have to be concluded in order to create a VAT Group. It must indicate, amongst others, the duration of the contract, as well as an entity chosen from the group members being the group’s representative. The representative will be bound to fulfil all obligations resulting from the Polish VAT Act and other Acts on behalf of the VAT group, including filing of one joint SAF-T file for the whole group.

VAT group status will be accorded by the relevant tax office, which will register the group as a taxable person and strike off all the group members as taxable persons, provided the VAT group eligibility requirements are met. In the same way, all VAT group members will be jointly and severally liable for each other’s VAT compliance throughout the duration of the group.

The VAT Group treatment proposal is at the pre-consultation stage, which means that its assumptions may still change. We will keep you up to date with the progress of this legislation.

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