Changes in VAT in 2017 - worth knowing

Service-Tax

From January 2017, an amendment to the VAT Act enters into force, which introduces many important changes from the taxpayers' point of view. In the article, we will follow the most important changes in VAT in 2017, for which entrepreneurs have to prepare.

Reverse charge from 2017

In terms of the reverse charge on the basis of VAT, three important changes should be distinguished:

  • extension of the catalog of goods subject to reverse charge (Annex 11)

  • reverse charge for the services mentioned (new appendix no.14)

  • the right to deduct VAT by entities trading in goods and services subject to the reverse charge mechanism.

Reverse charge - a wider catalog in Annex 11

The catalog of goods covered by the reverse charge mechanism has been joined by:

  • silver, unwrought or in semi-manufactured form or in powder form;

  • unwrought gold or in the form of a semi-finished product or in the form of powder, with the exception of investment gold within the meaning of Art. 121 of the Act;

  • unwrought or semi-finished platinum or in powder form;

  • gold-plated base metals or silver, not further worked than semi-finished - only silver, gold-plated, not otherwise worked than semi-finished;

  • silver-clad base metals and platinum-clad base metals, silver or gold, not further worked than semi-manufactured - only gold and silver, platinum-clad, not otherwise than semi-finished;

  • other non-ferrous metals and articles thereof; cermets; ash and residues containing metals and metal compounds - only base metal waste and scrap;

  • electronic integrated circuits - only processors;

  • jewelery and parts thereof and other jewelery and parts thereof, made of gold and silver or clad with precious metal - only parts of jewelery and parts of other jewelery made of gold, silver and platinum, i.e. unfinished or incomplete jewelery and distinct parts of jewelery, including coated or clad with precious metal.
     

Important!

The same limits will apply to processors (PLN 20,000) as for phones, consoles and laptops.

Annex 14 to the VAT Act - services subject to reverse charge


In art. 17 sec. 1 was changed point 8, according to which the taxpayers are legal persons, organizational units without legal personality and natural persons purchasing the services listed in Annex 14 to the Act, if the following conditions are jointly met:

  • the service provider is a taxpayer whose sale is not exempt from tax pursuant to Art. 113 paragraph. 1 and 9,

  • the service recipient is a taxpayer registered as an active VAT payer.

In Annex 14, the legislator indicated 48 services subject to a reverse charge, including:

  • construction work related to the construction of residential buildings (work related to the construction of new buildings, reconstruction or renovation of existing buildings);

  • works related to the demolition and demolition of buildings;

  • works related to the execution of gas installations;

  • fencing works;

  • plastering works;

  • installation works of construction joinery;

  • painting works;

  • glass works;

  • works related to the execution of roof structures;

  • concrete works.

Important!

Pursuant to Art. 17 sec. 1h, virtually all services listed in Annex 14 to the VAT Act will be subject to the reverse charge procedure if the service provider provides these services as a subcontractor. The exception is item 1 of the Annex (services for the transfer of greenhouse gas emission allowances referred to in the Act of June 12, 2015 on the greenhouse gas emission allowance trading scheme).

It should be emphasized that the new procedures apply to services in Annex 14, which were performed from January 1, 2017 (i.e. from the date of application of the new regulations). In order to determine the moment of performance of services, Art. 19a paragraph. 2 and 3 of the Act.

The right to deduct VAT by entities selling goods and services subject to the reverse charge procedure

In the new version of the VAT Act, Art. 86 sec. 10b point 3 indicates that the right to deduct VAT is available on the general principles specified in Art. 10 (VAT deduction in the period in which the tax obligation arises on the part of the seller), provided that the taxpayer includes the amount of tax due on these transactions in the tax return in which he is obliged to settle this tax, no later than within 3 months from the end of the month in which the tax obligation arose in relation to the purchased goods or services.

Verification of the validity of a VAT refund from 2017

New provisions have been added to the VAT Act (Article 87 (2b)) relating to the verification of the validity of VAT refunds. According to its content, this verification may include checking:

  • taxpayer settlements,

  • settlements of other entities involved in the trade in goods or services that are the subject of the taxpayer's settlement and

  • compliance of these settlements with the actual course of the transaction.

Changes in VAT in 2017 - accelerated VAT refund

An accelerated 25-day VAT refund period will still be possible, but the use of this privilege will be subject to a number of conditions to be met. An accelerated VAT refund will therefore be possible when:

1.the amounts of input tax (VAT related to purchases), shown in the tax return, 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,
  • other invoices 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;

2. the amount of input tax or the surplus of input tax over due tax, not settled in previous accounting periods and shown in the declaration, does not exceed PLN 3,000;

3. the taxpayer submits documents confirming the payment of the tax to the tax office (confirmation of the transfer made from the account given in the ceidg-1 declaration);

4.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 VAT returns for each settlement period.

Liability of representatives for registration for VAT

Pursuant to Art. 96 sec. 4b of the new version of the VAT Act, the representative who registered the taxpayer is jointly and severally liable with the registered taxpayer for the taxpayer's tax arrears arising from activities performed within 6 months from the date of registration of the taxpayer as an active VAT taxpayer. This liability may not exceed the amount of PLN 500,000.

Removal from the VAT register from 2017

The amendment to the VAT Act provides for many restrictions, which will result in the fact that an entrepreneur who is an active VAT payer may be removed from the list of taxpayers.

The full scope of events in which a VAT payer may be removed from the register of VAT payers can be found in Art. 96 sec. 9-9f.

The head of the tax office may delete the entity from the register of active VAT payers without informing it about it, if:

  • the taxpayer does not exist or

  • despite the documented attempts made, it is not possible to contact the taxpayer or his representative or

  • the data provided in the registration application turns out to be false or

  • the taxpayer or his representative does not appear at the summons of the tax authority or the tax inspection authority.

The taxpayer who:

  • suspended the performance of economic activity on the basis of the provisions on freedom of economic activity for a period of at least 6 consecutive months, or

  • obliged to submit the declaration referred to in Art. 99 sec. 1, 2 or 3, did not submit such declarations for 6 consecutive months or 2 consecutive quarters or

  • submitted for 6 consecutive months or 2 consecutive quarters the declarations referred to in Art. 99 sec. 1, 2 or 3, in which he did not show the sale and purchase of goods or services with the amounts of tax to be deducted or

  • issued invoices or corrective invoices documenting activities that have not been performed or

  • when conducting business activity, he knew or had reasonable grounds to suppose that suppliers or buyers involved directly or indirectly in the supply of the same goods or services acted in order to gain a financial advantage as a result of unreliable tax settlement.

Changes in VAT returns and summary information from 2017

Quarterly VAT returns not for new entrepreneurs

As it results from the new regulations, the quarterly VAT settlement will remain for the current small taxpayers and entities settling on general principles.

The quarterly VAT settlement (both on general terms and using the cash method) cannot be used by taxpayers:

  • registered by the head of the tax office as VAT payers active for a period of 12 months starting from the month in which the registration was made or

  • who in a given quarter or in the preceding 4 quarters delivered the goods referred to in Annex 13 to the Act, unless the total value of these deliveries, excluding tax, did not exceed, in any month of these periods, the amount of PLN 50,000.

Filing a VAT declaration only electronically

Pursuant to the amendment to the VAT Act (Article 99 (11b)), VAT returns will be submitted only electronically. According to the justification to the act, the general obligation for taxpayers to submit electronic declarations will be introduced from January 1, 2018. However, some taxpayers will be obliged to submit e-declarations from January 1, 2017. This obligation will apply to taxpayers:

  • obliged to register as EU VAT taxpayers;

  • who are suppliers of goods or provide services for which the taxpayer is the buyer in accordance with art. 17 sec. 1 points 7 and 8, and the buyers of these goods or services (participants of the reverse-charge trading);

  • obliged, in accordance with Art. 45ba of the Act of July 26, 1991 on personal income tax or art. 27 sec. 1c of the Act of February 15, 1992 on corporate income tax, for the submission of declarations, information and the annual tax calculation by means of electronic communication.

The introduction of such a solution is possible due to the increasing popularization of this type of means of communication.

Information summarizing the changes from 2017

EU VAT summary information, as well as VAT-27 and their corrections will be submitted only for monthly periods only in electronic form. This issue is regulated in Art. 100-101a of the VAT Act.

Sanctions on the basis of VAT since 2017

According to Art. 110a paragraph. 1 of the new VAT Act, the taxpayer must take into account the possibility of imposing sanctions by the head of the tax office (or the tax inspection authority) if it is found that the taxpayer:

1.in the submitted tax declaration, he showed:

  • the amount of tax liability lower than the amount due,
  • the amount of the tax difference refund or input tax refund higher than the amount due,
  • the amount of the tax difference to be reduced due tax for subsequent periods higher than the amount due,
  • the amount of the tax difference refund or the amount of input tax refund or the amount of the tax difference to be reduced due tax for subsequent periods, and should show the amount of tax liability to be paid to the tax office,

2. has not submitted a tax declaration and has not paid the amount of tax liability.

Then the head / authority determines the amount of tax to be paid in the correct amount and determines an additional tax liability in the amount corresponding to 30% of the amount of understating the tax liability or 30% of the amount of overstating the tax difference, input tax return or tax difference to reduce the tax due for subsequent periods .

VAT exemption limit 2017

From 2017, the VAT exemption limit will increase from PLN 150,000 to PLN 200,000. Importantly, in the case of entities starting their activity during the year, the limit is set proportionally.

Important!

Taxpayers whose total sales value in 2016 was higher than PLN 150,000 and did not exceed PLN 200,000 may benefit from a subjective exemption.