VAT refund conditions - the most important information

Service-Tax

Active VAT taxpayers who have a VAT surplus on purchases over VAT on sales, after meeting certain conditions, may apply for a VAT refund. Lawmakers have introduced a new option to refund this tax to the entrepreneur's VAT account. What are the conditions for VAT refund under the new rules? In this article, we present the advantages and disadvantages of this solution.

What are the obligations of active VAT payers?

Active VAT taxpayers, regardless of whether they have registered for VAT obligatorily or voluntarily, must submit JPK_V7 for each settlement period and pay the resulting tax.

In the event of actions such as:

  • intra-Community acquisition of goods (CTS) - purchase of goods from the European Union,
  • intra-Community supply of goods (WDT) - sale of goods to the EU,
  • sale of services to the European Union for which the buyer is the taxpayer,

- entrepreneurs registered as VAT-EU taxpayers also submit VAT-EU summary information.

In order to determine the VAT to be paid, the value of input tax (VAT on purchases) should be subtracted from the value of output tax (VAT on sales). The difference is the amount to be deposited into the relevant bank account. From January 1, 2020, an individual tax micro-account is in force, to which entrepreneurs will pay, inter alia, VAT liabilities. Recently, the number of entrepreneurs' obligations has increased, and thus possible tax sanctions. The most important changes in recent months include:

  • the need to verify contractors' bank account numbers on the white list (sanctions for buyers in relation to transactions over PLN 15,000 gross),
  • mandatory split payment for part of the transaction (sanctions for transactions over PLN 15,000 gross for buyers).

Powers of VAT taxpayers

Having the status of an active VAT taxpayer means not only obligations but also privileges. The most important of them is the possibility of reducing the output tax by input tax. Deduction of VAT on purchases made by taxpayers is possible provided that the purchased goods or services will be used in connection with the performance of taxable activities. It should be remembered that the right to deduct VAT is granted not earlier than the period of receipt of the invoice. Not every purchase related to taxable activities gives the right to deduct VAT. The entrepreneur cannot reduce the output tax by input tax, among others when the sale has been documented with invoices or corrective invoices issued by a non-existent entity, the transaction documented with the invoice is not subject to taxation or is exempt from tax, the purchases relate to hotel or catering services. If the VAT deducted on purchases is greater than the VAT due resulting from sales invoices, then an active VAT payer may decide to transfer the overpayment to the next settlement period or apply for a refund of the excess VAT. VAT taxpayers wishing to apply for a VAT refund should verify the terms of VAT refund under the new rules. The legislator gave taxpayers the option of accelerated VAT refund, but not every entrepreneur will be satisfied with this form, as it only applies to tax refunds to the VAT account. In practice, this means less formalities, faster return of funds, but at the same time limiting the possibility of their use. The taxpayer may not voluntarily dispose of the funds accumulated on the VAT account.

VAT refund conditions under the new rules

The basis for receiving a VAT refund is the submission JPK_V7, in which the taxpayer applies for a refund of this tax within a specified period. VAT refund can now be easier and faster, provided that we decide to apply for it on a VAT account. What's more, the terms of VAT refund under the new rules, i.e. to the VAT account, do not require the taxpayer to meet any additional requirements. Entrepreneurs waiting for a VAT refund to the VAT account are guaranteed to quickly obtain cash, because this particular type of VAT refund is associated with the inability to extend the refund deadline by the head of the tax office. Art. 87 sec. 6a of the VAT Act
"At the request of the taxpayer, contained in the submitted tax declaration, the tax office is obliged to refund the tax difference referred to in paragraph 2, to the taxpayer's VAT account within 25 days from the date of submission of the settlement ”.

How to apply for a VAT refund to the VAT account?

We submit the application for a VAT refund to the VAT account together with JPK_V7. You should then select in JPK_V7 item P_55 "Return to the VAT account referred to in art. 87 sec. 6a of the Act ”. There is no need to submit a separate application for a VAT refund to the VAT account, it is effective to select the appropriate item in JPK_V7.

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Is it worth using the new VAT refund option?

The conditions for VAT refund under the new rules are much easier to meet than in the case of applying for an accelerated tax refund within 25 days to a traditional entrepreneur's account. Let us remind you that a taxpayer applying for an accelerated tax refund must meet a number of requirements specified in art. 87 sec. 6 of the VAT Act.

Another option is a VAT refund within the standard 60-day period to a traditional bank account. There are fewer conditions to be met then, but the waiting time for money - much longer. The deadline for the extended VAT refund is 180 days from the date of submitting JPK_V7.

Using the option of VAT refund to the VAT account is quick, less complicated and available to every entrepreneur, but on the other hand, you have to take into account that the possibility of using the returned funds will be limited. Only VAT, PIT, CIT, ZUS contributions, excise tax, customs duties and VAT resulting from purchase invoices can be paid from the VAT account to the seller's VAT account.

The decision on the procedure in which the entrepreneur applies for a refund of the VAT surplus belongs to the taxpayer himself, so it is worth analyzing the available options in relation to individual needs and compliance with the requirements set out in the VAT Act.