Slim VAT 2 package to have its first reading
On 1 June 2021, the bill which is to introduce the so-called Slim VAT 2 package was sent to the Polish Sejm to have the first reading.
SLIM VAT 2 offers additional solutions, on top of those included in the first SLIM VAT package in force since January 2021, which are to facilitate VAT settlements.
The major changes are:
- implementation of the judgment of the European Court of Justice in case C-895/19 and waiver of the 3-month period for settlement of output VAT from intra-Community acquisition, import of services and supply of goods for which the buyer is the taxpayer as a condition for deduction of input VAT in the same account period, which in fact restores the legal status in force before 2017. However, with respect to intra-Community acquisition of goods, the requirement of invoice receipt by the taxpayer within 3 months of the end of the month in which the tax obligation arose will be retained. If the invoice is received at a later date, the taxpayer will be entitled to deduct the input VAT in the tax return in which the output VAT for intra-Community supply was accounted for,
- extending the time for benefitting from the bad debt relief from 2 to 3 years and extension of the scope thereof – it will be possible to benefit from the relief also in a situation where the debtor is an exempt VAT payer or a natural person – consumer (provided that some additional conditions are met),
- the possibility to deduct VAT after the end of the deadline for deduction on a current basis by extending the number of account periods in which the taxpayer will be entitled to make the deduction by adjusting the return – the adjustment would be possible not only, as it is now, in the period in which the right of deduction arose, but also in three (two with respect to taxpayers who make settlements on a quarterly basis) successive account periods, subject to a 5-year period of limitation.
- extension of the time limit for filing information on motor vehicles used solely for business (VAT-26) from 7 days to the 25th day of the month following the month of the first expense incurred in connection with the vehicle,
- the possibility (optional, in addition to the current option) to file a joint statement of the supplier and buyer regarding selection of taxation of real estate supply directly in the notarial deed,
- introduction of regulations which confirm the existing practice:
- with respect to chain transactions which directly indicate which supply is to be considered movable (export or intra-Community supply) if the goods are sent or transported by the first or last entity in the chain,
- with respect to negative adjustments resulting from intra-Community acquisition of goods, import of services and supplies for goods in which the buyer is the taxpayer – the new regulations will indicate that:
- adjustments to the taxable base and output VAT are made in the settlement for the period in which the reason for decrease of the taxable base occurred, and
- input VAT adjustment in the settlement for the period in which the taxable base was adjusted.
- the possibility for a taxpayer who accounts for the tax on import of goods directly in the tax return (a simplification under Art. 33 of the VAT Act) to correct the return within 4 months if the taxpayer failed to account for the tax in the original return.
- the possibility to transfer funds between two VAT accounts maintained by different banks,
- the possibility to get a permit for release of funds from the VAT account if the outstanding tax amounts were deferred or spread into installments,
- the possibility to allocate funds accumulated in the VAT account to pay a contribution to KRUS (farmers’ social security fund).
The additional simplifications seem useful for taxpayers, and the direction of the changes should generally be evaluated as positive.
The new regulations, with some exceptions, are to take effect as early as 1 October 2021.
Should you have any questions or doubts regarding the issues discussed here, we are ready to assist you.