VAT - page 3

According to the latest judgment of the Regional Administrative Court in Gliwice on bad debts relief, taxpayers may adjust the tax due (in reference to unrecoverable debts) even when two years have passed from the end of the year in which the invoice was issued.

According to a recent judgement of the Supreme Administrative Court (NSA) of 10 February 2017 (file ref. I FSK 628/15), an interruption in transport prevents the application of 0% rate of VAT.

The old adage goes: "all good things come to an end soon". And, therefore, the holiday season draws to a close - we can feel it every day when we spend more and more time in traffic jams. We also receive more and more correspondence - both by post and by email. As it turns out, the increased activity is currently characteristic not only for business entities but also for tax authorities and tax audit bodies...

The refund of tax on goods and services, and more specifically, returning the difference between input tax and output tax, is quite important for entrepreneurs, as it influences their decisions and business plans or sometimes even the financial liquidity of the company. It is a kind of paradox, as VAT should be a neutral tax for the entrepreneurs. It is not surprising that the majority of entrepreneurs want the VAT refund to be as quick as possible. The legislator, implementing (at least in my opinion) the principle of VAT neutrality, indicated in art. 87 par. 2 of the Act of 11 March 2004 on the tax on goods and services that in principle the refund of the tax difference shall be made within 60 days from the date of submitting the tax declaration by the taxpayer. However, the next sentence of the provision states that when the specified refund amount requires additional verification, the tax office may extend the above period until the process of verifying the declaration of the taxpayer, including inspection activities, tax audits or tax proceedings, has been completed.

As of 1 January 2016 the Act of 10 September 2015 amending the Tax Ordinance Act and certain other Acts (Journal of Laws of 2015, item 1649) amending the provisions on default interest rates for tax arrears which arose after 1 January 2016 has become effective. The scheme for calculating the standard rate as such is unchanged, that is it equals 200% of the standard Lombard loan interest rate increased by 2 percentage points which means that, at present, it equals 8%. What is indeed changed is the amount of interest rate and conditions of applying the reduced rate, what is more, an increased rate has been introduced. The increase of the interest rate is supposed to encourage the taxpayers to adjust their tax returns on their own, its reduction, on the other hand, is to hinder any possible abuse as regards various crucial issues, such as VAT or excise tax.

On October 22, 2015, the Court of Justice of the European Union: (hereinafter: CJEU) issued its judgement in the case of Stehcemp sp. j. Florian Stefanek, Janina Stefanek, Jarosław Stefanek (C-277/14), in which it referred to the fundamental issue in the common VAT system regarding the taxable person’s right to deduct VAT paid from transactions considered as “suspicious”. Although the decision was made in favor of taxable person, it does not entirely solve the problem of taxpayers, whose suppliers turn out to be frauds.

The job of a tax advisor is to keep tax issues from overwhelming a business. Therefore, hand in hand with our Client, we struggle to come up with such schemes of company’s functioning which would earn the name “business first”.

A taxpayer declaring an excess of input VAT over output VAT has the right to either carry it forward to the following tax period or to obtain a refund to a bank account. The shortest period in which the tax office will refund VAT is 25 days.

This time, I would like to write a few words about fees that can be frequently encountered in hotel services branch. I mean fees connected with cancelling or “no show” and their calculation on the ground of value added tax (hereinafter referred to as VAT). I would like to draw your attention particularly to the so-called attrition fee, which is a fee for rooms that are booked but eventually not used.

Our clients have been recently asking more and more questions about VAT treatment of notices to pay penalty fees and contractual interests for failure to perform provisions of an agreement. Such notices may occur, for instance, when it is necessary to inform counterparties on payment delays. A party who issues a notice, not only charge fees on its issuance, but also settle the tax due for this issuance, including the amount of tax on the invoice. Is this the right thing to do? Since I look at such situations more and more often, I would like to explain in brief how notices to pay shall be settled in respect of VAT.