Time limits for VAT refunds - it's worth knowing

Service-Tax

The taxpayer with a surplus of input tax over the due tax may decide on the date of tax return (in accordance with Article 87 (1) of the VAT Act). However, this decision should be carefully considered. The taxpayer must consider what his settlements will look like in the coming months, as it may turn out that the tax due will be higher than the input tax. It is also possible to return only part of the surplus and the remainder can be shown as the amount to be transferred. Check what are the deadlines for VAT refunds!

Deadline for VAT refunds - 60 days

The basic deadline for VAT refund is 60 days from the date of submission of the settlement, regardless of the type of purchases made or the tax rate of goods or services sold. In addition, this term also includes persons - after submitting an appropriate application - providing services and deliveries of goods abroad, but not carrying out taxable sales in Poland. However, the term does not apply to taxpayers who did not perform taxable activities in a given period.

Shorter return period - 25 days

The taxpayer, pursuant to art. 87 sec. 6 of the VAT Act of March 11, 2004, meeting the relevant conditions may apply for an earlier refund of the excess input tax over the tax due. It is 25 days from the date of submission of the invoice.

However, it should be emphasized that since 2017 it has been more difficult for taxpayers to apply for a VAT refund in a shorter period, as additional conditions have been introduced under the amendment to the PIT Act. The conditions that must be met are:

  • the amounts of input tax shown in the tax declaration, excluding the amount of the transfer of the VAT surplus on purchases from the previous period, result from:

    • invoices documenting the amounts of receivables that have been fully paid via the taxpayer's bank account at a bank established in the country or the taxpayer's account at a cooperative savings and credit union of which he is a member, indicated in the identification application referred to in separate regulations,

    • invoices, other than those paid by bank transfer, documenting receivables, if the total amount of these receivables does not exceed PLN 15,000,

    • customs documents, import declaration and decisions referred to in art. 33 paragraph 2 and 3 and article. 34 and have been paid by the taxpayer,

    • import of goods accounted for in accordance with art. 33a, intra-Community acquisition of goods, the provision of services for which the taxpayer is their recipient, or the supply of goods for which the customer is the taxpayer, if the tax return shows the amount of tax due on these transactions,

  • the amount of input tax or the excess of input tax over due tax, not settled in previous accounting periods and shown in the declaration, does not exceed PLN 3,000,

  • the taxpayer submits documents confirming the payment of tax to the tax office via the taxpayer's bank account or the taxpayer's account at a cooperative savings and credit union,

  • the taxpayer for the next 12 months directly preceding the period for which the taxpayer applies for a refund within 25 days:

    • was registered as an active VAT taxpayer,

    • submitted declarations for each accounting period.

Invoice corrections and a shorter return period

Invoice corrections do not affect the right to a shorter return period, as the taxpayer is not able to predict whether they will be needed. The correction invoice should be settled for the period in which it was received.

Compensation and a shorter return period

The tax authorities do not allow for the refund within 25 days if the invoices were paid through compensation. As the Director of the Tax Chamber in Katowice claims in the individual interpretation of June 12, 2015, ref. No. IBPP2 / 4512-272 / 15 / WN:

(...) it should be noted that the Applicant, by submitting an application for an earlier refund, in a situation where the amounts of input tax shown in the declaration result from invoices documenting transactions, will be settled by deducting mutual claims (compensation) - he will not be entitled to a refund of the difference in VAT (resulting from these invoices) within 25 days from the date of submission of the invoice. This is because the settlement of invoices by setting off mutual receivables does not meet the provisions of Art. 87 sec. 6 point 1 of the Act and in the event of a surplus of input tax over the due tax, it does not constitute the basis for applying for a refund of the above-mentioned surplus at an earlier date.

Extended return period - 180 days

Taxpayers running a business in or outside the country, who did not perform taxable activities in a given accounting period, are entitled, in accordance with art. 87 sec. 5a of the VAT Act, the right to direct VAT refund within 180 days. This occurs when the taxpayer has no taxable activities in a given accounting month, and the purchase is related to taxable activity entitling to deduct input tax. However, for this purpose, an application must be submitted with the declaration. Alternatively, you can also transfer the input tax for settlement in the next billing period.

Art. 87 sec. 5a of the VAT Act:

Where the taxpayer has not performed in the tax period activities taxed in the territory of the country and the activities listed in article 1. 86 sec. 8 point 1, the taxpayer is entitled, upon his justified request submitted with the tax return, to return the amount of input tax deductible from the tax due in connection with business activity conducted in the territory of the country or outside this territory, within 180 days from the date of submission of the tax return, subject to Art. 86 sec. 19. Upon the taxpayer's written request, the tax office shall make the refund referred to in the first sentence within 60 days, if the taxpayer submits a property security to the tax office. The provisions of paragraph 1. 2, second and third sentences, para. 2a-2c and sec. 4a-4f shall apply accordingly.

Also, in the absence of a taxable sale, the taxpayer may apply for a tax refund within 60 days. However, before that, he has to submit a property security to the tax office in the amount corresponding to the amount of the tax refund applied for. Then, the property security is released on the day following the day on which 180 days have elapsed from the date of filing the tax declaration. The taxpayer may also submit a property security 13 days before the expiry of the return date, in which case the refund will be received within 14 days from the date of security.

Return period extended for an indefinite number of days

Pursuant to the provision of Art. 87 sec. 2 of the Act, the head of the tax office may extend the deadline for VAT refund. This occurs when the validity of the taxpayer's declaration requires additional verification. The verification is carried out as part of inspection activities, tax inspection or tax proceedings pursuant to the provisions of the Tax Ordinance Act and inspection proceedings pursuant to the provisions on fiscal inspection. The exact date of completion of the checking activities is never known, but the tax authority is obliged to provide the taxpayer with at least an indicative date.