A package of tax changes known as "Slim VAT 3" will come into effect on July 1, 2023. Initially, the law was scheduled to come into effect on April 1, 2023, but due to the protracted legislative process, most of the changes will not take effect until now.

This amendment introduces beneficial changes for taxpayers. The most important ones regarding VAT include:

1. Increasing the sales limit for small taxpayers to €2,000,000 – currently, the limit is €1,200,000. This value will be the same as for small taxpayers under income tax. The amendment will expand the group of taxpayers eligible to use the cash method of VAT settlement and to apply quarterly VAT settlements
2. Clarification of the rules for applying the conversion rate for correction invoices when the invoice was issued in a foreign currency – the exchange rate on the correction invoice will be the same as the exchange rate on the original invoice. If a collective correction invoice is issued, the taxpayer will be able to convert either at a separate exchange rate for each item or at the exchange rate in effect on the day preceding the issuance of the correction invoice
3. clarification of the period for which the intra-Community supply of goods (ICS) is declared, in the case where the taxpayer receives documents confirming the ICS after a period of 3 months (the moment of tax liability instead of the moment of delivery),
4. Abolition of the formal requirement to have an invoice for intra-Community acquisitions of goods (ICA) when deducting input VAT. An invoice will no longer be a formal requirement for tax deduction. This will mean that input and output VAT on intra-Community acquisitions of goods will always be settled in exactly the same settlement period, and consequently, VAT on intra-Community acquisitions will be fully neutral for the taxpayer. Consequently, this change will eliminate the need to monitor whether the three-month deadline for receiving an invoice has been exceeded
5. liberalization of conditions for faster VAT refunds for so-called cashless taxpayers,
6. abolishing the obligation to agree with the head of the tax office the proportion for deducting input tax and the forecast protocol, and instead introducing the requirement to notify the head of the tax office about the adopted proportion,
7. increasing the amount allowing for the taxpayer to consider the proportion determined as 100%, if this proportion exceeds 98%, from the current PLN 500 to PLN 10,000,
8. introducing a new, additional possibility for "third parties" to be released from joint and several liability. This possibility would apply to the situation where the taxpayer acquiring the receivable changes (changes from one factor to another). The existing taxpayer would be released from liability by transferring the VAT amounts directly to the VAT account of the new taxpayer who acquired the receivable (the new factor),
9. introducing the option to waive the requirement to print fiscal documents issued using cash registers by taxpayers who use them to record sales. With the buyer's consent, the seller will be able to issue them electronically,
10. clarification of the rules for making corrections to tax due under the TAX FREE procedure,
11. Modifications to the amount of the additional tax liability imposed when the tax authority identifies an irregularity resulting in an incorrect tax settlement. Tax authorities will be required to follow specific guidelines when imposing the additional tax liability. The rate will no longer be rigidly defined, and the authority will be able to impose it up to the current rates (30% and 20%)
12. Modification of the due date for tax payments settled under the special EU and non-EU procedures via the OSS system and the import procedure via the IOSS system. The due date for tax payments will also expire if the last day of the deadline falls on a Saturday or a public holiday.

In addition to changes to the value added tax, the act also introduces other changes. The most important of these are:

1. consolidation of the issuance of binding information – binding rate information (WIS), binding excise information (WIA), binding tariff information (BIT) and binding information on origin (WIP) – by appointing the Director of the National Tax Information (KIS) – as the authority competent to issue them in the first instance and to consider appeal cases in the second instance (currently this information is issued by various authorities),
2. increasing tax-free amounts in inheritance and gift tax,
3. modification of the subjective scope of the rehabilitation tax relief and the conditions for using the so-called child tax relief,
4. extension of the list of income (revenues) on which personal income tax is charged at the rate of 19%,
5. changing the rules for making tax returns available to taxpayers via the e-Tax Office.

This article is for informational purposes only and does not constitute legal advice.

Rafał Knap

Legal Counsel
+48 22 856 36 60 | r.knap@kglegal.pl