Tax Partner at RSM Poland
On 24 June 2019, the Governmental Legislation Center published a draft act amending the VAT Act and the Penal and Fiscal Code. The draft, being primarily a transposition of EU quick fixes regulations, introduces most solutions in the same form as the EU legislator did. We would like to draw your attention to some essential consequences of implementing these changes into the Polish regulations, the good news being they are good for taxpayers.
Documentation of Intra-Community transactions
We will start from the documentation of intra-Community transactions. The published draft act lacks any regulations on documenting the transport of goods within the territory of the Community under the intra-Community supply. We have discussed this in detail on our blog, in part four of a series on quick fixes. The fact that these regulations are missing in the Polish legislation is by no means an oversight on the part of the legislator. The new regulations for documenting intra-Community transactions can be found in the Council Implementing Regulation (EU) 2018/1912 of 4 December 2018 amending Implementing Regulation (EU) No 282/2011 as regards certain exemptions for intra-Community transactions. Thus, the new regulations will enter into force as of the beginning of 2020, and there is no need to include them in amended national legislation.
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Chain transactions in a new version
Like most Member States, Poland has transposed new principles of chain transaction settlement into its national legislation in accordance with what is suggested by the EU legislator, unlike, for example, Germany, which has decided that third-country entities shall be covered by simplified “chains”, as well. Thus, for chain transactions involving import or export, the principles of determining the place of supply of goods remain the same.
Call-off stock revolution
The most comprehensive changes will affect consignment warehouses. From early 2020, we are going to call them ‘call-off stock’ under the VAT terminology. This changed name is a trifle, though. What comes as the greatest novelty is a radical change of the perception of what call-off stock actually is: not a physically separated space any more, but a procedure. Moving away from the material nature of a consignment warehouse and introducing a call-off stock procedure means that taxpayers will no longer need to engage in disputes with the tax authorities as to whether a consignment warehouse in Poland must be a space separated with the proverbial four walls.
Another important change that will make it easier for taxpayers to use the call-off stock procedure is that its practical application has been improved. Firstly, moving goods to another Member State using the call-off stock procedure shall no longer be considered a domestic supply of goods in the country of destination. The purchaser of goods shall recognise the intra-Community acquisition of goods (ICA) in the country of destination, whereas the vendor shall recognise the intra-Community supply of goods (ICS) in the country from which the goods are dispatched. Poland has already introduced similar solutions; yet, from now on they will be uniform in all EU Member States.
The new regulations will particularly benefit entrepreneurs operating in Poland in the trade sector, as they did not have the right to use the call-off stock solution so far. Any storage of goods for resale precluded this option. Thus, it seems that this procedure will now become available for more entities as compared with consignment warehouses operating according to the old rules. What is more, the call-off stock procedure is going to offer an additional option of changing the purchaser during the procedure, of course provided that relevant conditions are met. On the other hand, what may be bad news for taxpayers is that the period for collecting goods from a warehouse will now be shorter, i.e. not 24 but 12 months. You need to keep this in mind in order to comply with the obligation to include the transaction in your tax return in due time.
The quick fixes amendment of the EU and national legislation uncovers the importance of high standards in legislation. Even though the new solutions apply to all Member States and must be quick by definition, their introduction was preceded by a necessary consultation process with stakeholders and a far-reaching information campaign. And there was a sufficient time for a reasonable vacatio legis. However, this is something to think about. The principle that the end justifies the means does not really work when it comes to taxes, and the Polish taxpayer has been sorely tried here for quite some time now. Those amendments that are adopted quickly tend to be followed by clarifications, explanations, guidelines and commentaries shortly after they have entered into force. It is easy to predict the result: amended amendments to… amendments. We can only hope that things will finally go back to normal.
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