Penalties for failure to submit a VAT-26 declaration
More than a month has passed since the entry into force of the new regulations on changes in VAT deductions. The greatest controversy arose over the expenses incurred for the purchase and day-to-day use of motor vehicles. From April 1, 2014, taxpayers are burdened with additional obligations that strictly apply to company cars. Failure to do so can lead to unpleasant criminal sanctions.
Tax obligations for company cars - VAT-26
As a result of the amendment to the Act of March 11, 2004 on tax on goods and services, the right to fully deduct VAT on company vehicles has been introduced, provided that they are used only for the purposes of business activity. However, even a one-off use of a given car for private purposes is excluded.
As a rule, the right to deduct VAT on motor vehicles has been limited to 50% of the value of the tax charged on an invoice or other document. This restriction was introduced both to the purchase of the vehicle and the expenses related to its current use, excluding fuel purchases (the fuel deduction was suspended until the end of June 2015). Entrepreneurs, however, have the right to benefit from the full deduction on the principles set out in Art. 86a.
The current limitation on the deduction of VAT does not apply to vehicles whose construction precludes their use for non-business purposes or renders their use irrelevant. This applies to cars that meet the relevant technical conditions in accordance with Article 86a para. 9 of the VAT Act.
The above restriction also does not apply to other vehicles with a total weight of up to 3.5 tons, which are used exclusively for business purposes, which should be confirmed with detailed vehicle mileage records and relevant regulations. Then the taxpayer has an additional obligation to report the vehicle - as a company one - to the competent tax office on the VAT-26 form, which results directly from Art. 86a paragraph 12 of the Act.
The right to a full deduction of VAT on company cars is granted only from the moment the car is reported to the tax office on the VAT-26 declaration. It must be delivered to the office of the tax authority within 7 days from the date on which the first expenditure related to the vehicle was incurred.
Therefore, the right to deduct VAT on company cars is strictly dependent on the submission of the above-mentioned form.This is a new obligation for taxpayers, which is also associated with certain criminal sanctions provided for in the Fiscal Penal Code.
Failure to submit the VAT-26 declaration
If the entrepreneur fails to fulfill his obligations regarding tax settlements, the tax authorities apply penal sanctions provided for in the Act of 10/09/1999, the Fiscal Penal Code. The change in VAT deductions also brought about the need to introduce new regulations regarding sanctions - in a situation where the taxpayer fails to comply with the obligation to submit a VAT-26 declaration.
As of April 1, 2014, a new Art. 56a, which relates directly to the declaration in question. According to its wording, a taxpayer who does not submit information, submits it after the deadline or contains information inconsistent with reality, thus making tax deductions contrary to the provisions of the VAT Act, is subject to a fine of up to 720 daily rates.
Art. 56a § 1 of the Polish Fiscal and Penal Code
"A taxpayer who, contrary to his obligation, does not submit to the competent tax authority the information referred to in Article 86a (12) of the Act of March 11, 2004 on tax on goods and services, or submits it late or provides data inconsistent with it in reality, when deducting the tax contrary to the provisions on tax on goods and services, is subject to a fine of up to 720 daily rates. "
If the offense is of a minor nature, the taxpayer is subject to a fine as for a tax offense.
When will the taxpayer avoid the fine for not submitting VAT-26?
Taxpayers can avoid criminal sanctions if the VAT-26 return was submitted to the tax office after the deadline. However, it is imperative that the provision of information takes place before:
- commencement of verification activities by the tax authority in relation to VAT,
- delivery of a notice of intention to initiate a tax inspection in the field of VAT,
- commencement of tax proceedings regarding VAT, if the above two situations did not take place.
In connection with the above, people who have not yet reported or who do so without meeting the deadlines, can breathe a sigh of relief. If no tax proceedings regarding VAT have been initiated against them and they have not received a notification of such intention - the penal sanctions discussed above will not be applied. A sufficient penalty for entrepreneurs is the mere fact that they will not be able to deduct VAT from all expenses incurred until the date of reporting the vehicle to the tax office.